OMB orders agencies to report on competition for contracts

The Office of Management and Budget is shining a light on competition in contracting, with a new directive that agencies review their procedures and report back on how to maximize the use of competitive practices.

"The acquisition workforce has a number of tools to facilitate the efficient and effective use of competition," Office of Federal Procurement Policy Administrator Paul Denett wrote in a memorandum to senior procurement officials. "I am concerned that we are not taking full advantage of these tools, especially in the placement of task and delivery orders under indefinite-delivery vehicles."

Federal competition levels on a percentage basis have remained relatively constant since the early 1990s, with around 60 percent of contract dollars awarded competitively. But total contracting dollars have climbed steadily over the past decade and noncompetitive contract amounts have grown steadily as well, according to OMB data.

"The lack of meaningful competition for orders has taken on increased significance in recent years with the growth of obligations through task and delivery orders," Denett said, referring to the system by which an agency uses expedited procedures to buy under a pre-established contract agreement. Such orders comprised 14 percent of contract dollars in fiscal 1990, but rose to 52 percent of dollars in fiscal 2005, Denett said.

Reminding officials that all federal agencies have someone designated to promote competition, Denett called on them to "reinvigorate the role of the competition advocate."

The memo instructs such advocates to develop new annual reports, the first of which will be submitted to OMB in late December. After reviewing competition levels at the agency and establishing plans and goals to maximize competition, the competition advocate must report on competition trends and recommendations.

The procurement chief also said he would propose a series of changes to the Federal Acquisition Regulation, the main contracting rule book, some of which were recommended in a draft report by an independent acquisition panel last year.

Among Denett's suggestions are that agency competition advocates report annually on contract awards and management of task and delivery orders of more than $1 million; noncompetitive contracts awarded on an "urgent and compelling need" basis be limited to the minimum duration necessary with senior approval needed for those lasting more than one year; sole-source awards be announced on the FedBizOpps portal; competition rules on major multiple award contracts be strengthened to ensure that several companies have the opportunity to bid; and evaluation factors be clearly spelled out in large task and delivery orders so competing proposals can be assessed properly.

Denett also targeted the transparency of data in the Federal Procurement Data System, the government's central contracting storehouse, calling on the General Services Administration to develop a report that would distinguish between minor contract actions, such as a vendor address change, and significant actions, such as a contract modification or new agreement. He said the new report would enable better analysis of contract use and the workload carried by acquisition personnel.

Steven Kelman, who drove the acquisition reforms of the mid-1990s when he served in Denett's role and is now a professor of public management at Harvard University's John F. Kennedy School of Government, agreed that competition on task and delivery orders has been a problem. But he said rule changes that took place a few years ago helped to address that by generally requiring that at least three bids be received for such orders, and pushing agencies to justify why that level of competition was not achieved if they had fewer bids.

"In some sense, the heavy lifting on improving competition for task and delivery contracts has already been accomplished with the statutory and regulatory changes over the past few years," Kelman said. "This is sort of icing on that cake."

Kelman said new reporting requirements imposed on competition advocates would likely amount to more bureaucratic paperwork, but he welcomed several of the other proposed rule changes as a useful way to approach the issue.

Marcia Madsen, who chaired the acquisition advisory panel, expressed satisfaction with the extent to which OMB picked up on the group's recommendations. "Most of the things they could do, they've done," she said. Madsen said additional proposed measures, like formalizing the minimum number of bids required on task and delivery orders, would have to be taken up at the legislative level.

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