Although all federal contracts are supposed to be put out to bid, more than a third of them are non-competitive, that is there is only one vendor bidding on the chance to sell U.S. taxpayers goods and services.

The General Accounting Office (GAO) said that in fiscal 2013, the federal government agreed to $459 billion in contracts to purchase goods and services. Of that total, about $164 billion, or 35.7%, was in noncompetitive contracts.

There are several justifications the government can give for entering into a noncompetitive contract. One is that there is only one vendor qualified to provide the goods or service the government requires. But another is that there is an “unusual and compelling urgency” that requires the government to award the contract without competitive bidding. In these cases, there must be a risk of financial or other injury to the government caused by a delay in the competitive bidding process.

The GAO studied the urgency exception used in the years 2010 through 2012 by three federal entities: the Department of Defense, the Department of State and the U.S. Agency for International Development (USAID). Three percent of Defense’s noncompetitive contracts, amounting to $12.5 billion, fell under the urgency exception. The State Department had 12.5%t of its noncompetitive deals, worth $582 million attributed to urgency and USAID had only 1%, or about $20 million, under that category.

The most common use of the urgency provision in the Defense Department, according to an analysis by the Project on Government Oversight (POGO), were for combat operational needs in Iraq and Afghanistan and avoiding unanticipated gaps in program support.

The State Department and USAID used the urgency exception primarily to purchase services, such as security in State’s case and road construction for USAID, while the Defense Department relied on the exception about equally for goods and services.

The GAO report made several recommendations. It urged more guidance by the contracting agencies to its personnel in the use of correct procedures in using the urgency exception and to provide more oversight of the process. The report also recommended that the Office of Management and Budget provide guidance on the correct procedures to use when the duration of a contract awarded under the urgency exception exceeds one year.

-Steve Straehley

To Learn More:

GAO: Noncompetitive Contracts Need Stronger Oversight (by Neil Gordon, POGO Blog)

Noncompetitive Contracts Based on Urgency Need Additional Oversight (GAO) (pdf)

Competition for Pentagon Contracts Declines (by Noel Brinkerhoff, AllGov)

Since 2000, Defense Dept. has Issued $1.6 Trillion Worth of Contracts with Only One Bidder (by Matt Bewig, AllGov)