Agencies plan to issue most stimulus contracts competitively

Federal agencies anticipate awarding the majority of their economic stimulus contracts competitively and through fixed-price arrangements, according to progress reports submitted to Congress on Monday.

That would put them in compliance with the $787 billion 2009 American Recovery and Reinvestment Act, which mandates that agencies follow governmentwide acquisition laws and regulations requiring them to maximize competition and use fixed-price contracts as often as possible. When contracts do not meet these two criteria, a public justification will be provided, the reports stated.

All 28 agencies receiving stimulus funds met Monday's deadline to issue the reports. The documents, which are posted on the Obama administration's central stimulus-tracking Web site Recovery.gov, provide details about individual program goals, contract expectations, spending outlays and oversight mechanisms.

Agencies receiving the largest percentage of stimulus funding offered wide-ranging expectations for meeting the administration's contract guidelines, often based upon their individual circumstances.

For example, the Commerce Department, which is receiving $7.9 billion in Recovery Act funding, said 84 percent of contract dollars will be awarded on a competitive basis. One percent will be set aside for a disadvantaged small business in the 8(a) program, and an acquisition strategy has yet to be determined for the remaining 15 percent.

A somewhat lower percentage of Commerce contracts -- 67 percent -- will be issued as fixed price agreements. An additional 14 percent will use a combination of fixed and other contract types, the report indicated. The remaining contracts will be issued on a cost-reimbursement basis, through time and materials awards or by a yet to be determined approach.

The Agriculture Department projected that it would award 94 percent of Recovery Act dollars competitively and 93 percent through fixed-price contracts. The majority of the $28 billion USDA is receiving through Recovery Act, however, will be disbursed through grants.

Other agencies, such as the Education Department, which will get $25 billion in Recovery funds, set goals based on their recent procurement history. Education said it plans to meet or exceed the fiscal 2008 mark of awarding 84 percent of its contract dollars competitively and using fixed-price contracts 62 percent of the time.

The Energy Department, meanwhile, said it expects that more than 92 percent of its stimulus procurement dollars will go toward competitive contracts. But, it anticipates awarding only 3 percent through fixed-price deals, because much of its Recovery Act work will take advantage of existing management and operating cost-reimbursement contracts.

The U.S. Agency for International Development also has mission-specific concerns about using fixed-price contracts. The agency will use $38 million in Recovery Act money to deploy its Global Acquisition and Assistance System for processing contract and grant transactions. USAID said it plans to modify four existing contracts that were awarded competitively, and issue a fifth award later. But, the agency said time and materials task orders, with built-in performance measures that provide incentives for the contractor, are the wisest vehicle to use.

"Due to the nature of the worldwide deployment and the evolution of system requirements as additional field locations are brought into the deployment, it was determined unreasonable to price the previously competed task orders using [firm fixed-price] vehicles," the report said.

Many agencies appear to be following similar strategies of using pre-competed contract vehicles to move money out the door quickly. Agencies also benefit by relying on companies with which they have a pre-established business relationship.

The Recovery Act does not discourage such an approach. But, critics have noted that it limits the number of companies that can compete for lucrative stimulus contracts, and may unintentionally shut out the firms hit hardest by the recession.