Despite 2002 Law, Defense Dept. Still Stifles Competition: GAO Two years after Congress directed the Defense Department to increase competition in its procurements through GSA schedules and other multiple award contracts, not much seems to have changed, the Government Accountability Office reported. (That’s the new name of the General Accounting Office.) GAO spot-checked 74 task and delivery orders issued by five defense buying organizations; 34 – nearly half — were awarded on a sole-source basis. Of the other 40 orders, only 15 received two or more offers. DOD will try again to gin up competition, said Deidre Lee, director of defense procurement and acquisition policy, in response to the report. She said the department will require higher-level review of contracting officers’ decisions to waive competition. She is also developing new rules explaining how waivers may be used. In Section 803 of the 2002 Defense Authorization Act, Congress required DOD contracting officers to solicit bids for services worth more than $100,000 from “as many contractors as practicable” and to make “a reasonable effort” to get at least three bids. Congress acted after a number of audits documented the lack of competition in schedules and other multiple award contracts. In a 2001 report, the Defense Department inspector general lambasted acquisitions offices for “the anemic level of competition” in their use of those contracts. The report said the vast majority of task orders in multiple award contracts go “to selected sources without providing all multiple award contractors a fair opportunity to be considered.” (SAA, 11/9/01) In implementing the congressional directive, DOD said contracting officers should solicit offers from enough contractors to ensure that at least three bids were received, or else document their efforts to attract three bids. That is not working, the GAO report shows. The report describes a procurement system that is stacked in favor of incumbents, discouraging other companies from bidding. GAO found contracting officers justified most sole-source orders on the grounds that only one company could provide the service or that the work was a follow-on to a previous order. Of 21 orders that were put out for competition, GAO said, the incumbents won 19. “One buying organization representative told us that program offices continually place pressure on the buying organization to award orders to incumbent contractors and that program offices have been very resistant when the buying organization insisted on seeking competition,” the report says. “Another buying organization representative stated that it is often difficult for a contracting officer to balance competition requirements with the desire of a program office to maintain an existing relationship with its incumbent contractor.” Defense acquisition rules permit contracting officers to waive competition in cases of urgent and compelling need, when only one company is capable of providing the service or when the order is a “logical follow-on” to a previous order. But GAO found, “DOD regulations do not specify what constitutes a logical follow-on.” Nor do the regulations define what constitutes a “unique” service. The investigators said many waivers were based on the incumbent contractor’s experience with the particular program, not on the uniqueness of its services. GAO said it did not try to determine whether the waivers were justified. Another GAO report faulted the IRS for limiting competition on its TIPPS-2 contract. See separate story.