The federal government spends tens of billions of dollars each year on information technology (IT) products and services. Federal acquisition regulations allow for noncompetitive contracts in certain circumstances. Some noncompetitive contracts act as “bridge contracts”—which can be a useful tool to avoid a lapse in service but can also increase the risk of the government overpaying. There is currently no government-wide definition of bridge contracts.
The Government Accountability Office (GAO) was asked to review the federal government’s use of noncompetitive contracts for IT. This report examines the extent that agencies used noncompetitive contracts for IT; the reasons for using noncompetitive contracts for selected IT procurements; the extent to which IT procurements at selected agencies were bridge contracts; and the extent to which IT procurements were in support of legacy systems.
As part of its investigation, GAO analyzed Federal Procurement Data System-Next Generation (FPDS-NG) data from fiscal years 2013 through 2017. GAO developed a generalizable sample of 171 fiscal year 2016 noncompetitive IT contracts and orders awarded by the Department of Defense (DOD), Department of Homeland Security (DHS), and Health and Human Services (HHS)—the agencies with the most spending on IT, to determine the reasons for using noncompetitive contracts and orders, and the extent to which these were bridge contracts or supported legacy systems.
From fiscal years 2013 through 2017, federal agencies reported obligating more than $15 billion per year, or about 30 percent, of IT contract spending on a noncompetitive basis.
GAO found, however, that DOD, DHS and HHS contracting officials misreported competition data in the Federal Procurement Data System-Next Generation (FPDS-NG) for 22 of the 41 orders GAO reviewed. GAO’s findings call into question competition data associated with nearly $3 billion in annual obligations for IT-related orders.
DHS identified underlying issues resulting in the errors for its orders and took corrective action: DHS miscoded four orders, three of which were orders awarded under single award contracts. DHS officials told us that orders issued from single award contracts should inherit the competition characteristics of the parent contract. However, as FPDS-NG currently operates, contracting officers have the ability to input a different competition code for these orders. In this case, each of the single award contracts was competitively awarded and therefore all the subsequent orders issued from these contracts should be considered competitively awarded, as there are no additional opportunities for competition. DHS has taken actions to address this issue.
DHS officials stated that in conjunction with DOD they have asked the General Services Administration (GSA), which manages the FPDS-NG data system, to modify FPDS-NG to automatically prefill competition codes for orders awarded under single award contracts. DHS officials noted that GSA expects to correct the issue in the first quarter of fiscal year 2019, which should mitigate the risks of agencies miscoding orders issued under single award contracts in the future. DHS officials have also provided training to their contracting personnel that single award orders must inherit the characteristics of the parent contract.
DOD and HHS, however, had limited insight into why the errors occurred. GAO says that without identifying the issues contributing to the errors, DOD and HHS are unable to take action to ensure that competition data are accurately recorded in the future, and are at risk of using inaccurate information to assess whether they are achieving their competition objectives.
GAO found that DOD, DHS, and HHS primarily cited two reasons for awarding a noncompetitive contract or order: firstly that only one source could meet the need (for example, the contractor owned proprietary technical or data rights) or that the agency awarded the contract to a small business to help meet agency goals.
GAO estimates that about 8 percent of 2016 noncompetitive IT contracts and orders at DOD, DHS, and HHS were bridge contracts, awarded in part because of acquisition planning challenges. GAO previously recommended that the Office of Federal Procurement Policy define bridge contracts and provide guidance on their use, but it has not yet done so. GAO believes that addressing this recommendation will help agencies better manage their use of bridge contracts.
Additionally, GAO estimates that about 7 percent of noncompetitive IT contracts and orders were used to support outdated or obsolete legacy IT systems. Officials from the agencies GAO reviewed stated these systems are needed for their mission or that they are in the process of modernizing the legacy systems or buying new systems.
GAO recommended DOD and HHS identify the reasons why competition data for certain orders in FPDS-NG were misreported and take corrective action. DOD and HHS concurred. No recommendations were made to DHS.