Navy Awards Half Billion Dollars of Contracts without Competitive Bidding

Friday, June 05, 2009

In a report by the Defense Department’s inspector general issued May 11, an audit of 133 of 1,106 task orders from a prominent Navy program showed that 39 contracts, valued at $469.3 million, were awarded without adequate competition. The program audited was the SeaPort-e. This is an online resource that allows the Navy to access and issue task orders so personnel can execute engineering projects. SeaPort-e awards indefinite delivery-indefinite quantity (IDIQ) contracts with a cost ceiling of $47.8 billion. Based on the sample, the inspector general estimates that 29.3% of all contracts were given out with little or no competition. In addition, the audit found that 109 of the 133 investigated task orders did not sufficiently specify how the Navy would evaluate a contractor’s performance and that Navy officials did not conduct adequate market research. Thus SeaPort-e customers may not have always received the best value. The findings from this audit have led the inspector general to estimate that 89% of SeaPort-e contracts do not meet quality assurance standards. 

 
SeaPort-e allows varying time periods for contractor bidding ranging from 11 to 25 days depending on the size of the contract being awarded. Yet the inspector general audit found that these periods were often shortened, leading to only one bid for a contract.
 
Critics of SeaPort-e claim that the program’s lack of clear management accountability was a factor in these deficient contracts. Naval Sea Systems Command operates the Web portal, yet it claims that authority to enforce procurement regulations belongs to its military customers, and that they are just intermediaries between the military customers and the contractors. However, the military customers have not enforced regulations themselves. 
 
Many believe defense contract awards in general have become nearly automatic, with little oversight. President Obama’s proposed FY 2010 budget calls for beefing up of the Defense Department’s acquisition workforce. 
-Kyle Kuersten
 
IG Finds Conflict in the Acquisition Regulation (by Matthew Weigelt, Federal Computer Week)

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