IG: DOD contracting falls short

Office of the DOD Inspector General

Despite all efforts, the Defense Department is still not complying with the General Services Administration's regulations regarding competition when awarding orders to small businesses, according to a report issued recently by the DOD inspector general.

An audit was initiated to determine whether contracting officials followed established procedures when awarding orders to small businesses using GSA Federal Supply Schedules (FSS) and whether those officials used appropriate market research.

The results were not positive. The IG's office reviewed 124 contract actions awarded at 16 contracting offices in 2000 and 2001, and determined that inadequate efforts were made to ensure the government paid a fair price.

"Four prior Inspector General of the Department of Defense audits identified price reasonableness and Truth in Negotiations Act problems similar to the problems in this report," the audit reads. "Accordingly, DOD needs to take an aggressive role in monitoring its contract officials."

The audit specifically cited 71 contracts, worth a total of $259 million, awarded using FSS, as being particularly inadequate. It stated that there was "inadequate or no review of contractor price lists" in 88 percent of the orders for products, 82 percent for services and 75 percent for a combination of the two. It also said 70 percent of the contracts went through with no requests for discounts, and almost half were awarded on a sole-source basis instead of seeking multiple sources.

The IG's office made 12 recommendations, of which DOD concurred or partially concurred on 11. DOD rebuffed the recommendation to develop a trend analysis of the progress made in obtaining competition and multiple sources through the market research process.

"We agree that improved market research leads to increased competition. For that reason, we agree to address market research in our policy memorandum," the statement reads. "However, there is no database that includes a metric that could be used for measuring the increase in competition solely attributable to market research. The cost of establishing such a metric would outweigh any potential benefits."