Report: Defense made IT purchases without competition

The Defense Department has made a significant number of purchases without proper competition or justification, a recent inspector general report concluded.

The report (D2008-022) focused on Defense purchases in fiscal 2006 through two National Institutes of Health governmentwide acquisition contracts -- Electronic Commodities Store III and Chief Information Officer-Solutions and Partners 2 Innovations (CIO-SP2i). Both provide information technology supplies and services through task and delivery orders.

Richard Jolliffe, assistant Defense IG for acquisition and contract management, who performed the audit in conjunction with the Health and Human Services inspector general's office, reviewed 98 ECS III delivery orders valued at $33.2 million and 28 task orders for services under CIO-SP2i, which have a ceiling value of $697.6 million. Jolliffe concluded that the department failed to comply with a number of federal and Defense-specific regulations during these acquisition processes.

According to the report, Defense did not provide all eligible contractors with a fair opportunity to compete for as many as 95 orders and did not properly document the basis for 31 awards. This prevented Defense from ensuring that it received the best value for its purchases.

"The foundation of good contracting when using multiple-award contracts is competition, and its importance should not be overlooked," the report stated. "Failing to provide fair opportunity prevents the government from achieving savings through competition."

The report found that the department also failed to complete certain steps and establish mechanisms to ensure that contractors perform efficiently. In reviewing 28 task orders whose acquisitions were assisted by NIH, the inspectors general found numerous cases in which Defense officials did not allow contractors sufficient time to respond to requests for quotes and provided inadequate price analysis information and contract surveillance. Additionally, NIH contracting officials allowed out-of-scope work in several instances and did not prepare required documentation on the task orders reviewed.

The report concluded that Defense lacked effective internal controls over interagency acquisitions and did not justify using a non-Defense contract for 48 contract actions valued at $156.7 million. The department provided inadequate justification for an additional 62 contracts valued at $99.9 million. The report said the undersecretary of Defense of acquisition, technology and logistics is addressing those issues.

The report noted that these problems were not isolated to Defense procurements through NIH contracts. The IG reached similar conclusions in reports on Defense's use of NASA and General Services Administration governmentwide acquisition vehicles, and Defense officials said they are taking action to fix the problem. Shay Assad, director of Defense procurement and acquisition policy, reviewed a draft copy of the report and concurred with all of Jolliffe's recommendations.

Assad wrote that the Office of the Undersecretary of Defense for acquisition, technology and logistics will issue a memorandum to all contracting officers on the problems identified in the report and re-emphasizing acquisition regulations guiding interagency acquisitions. He said the office expected to issue the memo by Nov. 30.