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Opportunities for Competition or Savings under Blanket Purchase 
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Report to the Committee on Oversight and Government Reform, House of 
Representatives: 

United States Government Accountability Office: 
GAO: 

September 2009: 

Contract Management: 

Agencies Are Not Maximizing Opportunities for Competition or Savings 
under Blanket Purchase Agreements despite Significant Increase in 
Usage: 

GAO-09-792: 

GAO Highlights: 

Highlights of GAO-09-792, a report to the Committee on Oversight and 
Government Reform, House of Representatives. 

Why GAO Did This Study: 

The Federal Acquisition Regulation (FAR) allows agencies to establish 
blanket purchase agreements (BPA) under the General Services 
Administration’s (GSA) Schedules Program, where contracts are awarded 
to multiple vendors for commercial goods and services and made 
available for agency use. BPAs are agreements between agencies and 
vendors with terms in place for future use; funds are obligated when 
orders are placed. When establishing BPAs under schedule contracts, 
agencies must follow procedures regarding the number of vendors 
considered, request discounts, and conduct annual reviews in accordance 
with requirements. This report assesses selected agencies’ use of 
schedule BPAs and evaluates whether they considered more than one 
vendor when establishing BPAs and placing orders under them, took 
opportunities for savings, and conducted annual reviews. To conduct 
this work, GAO reviewed a sample of 336 schedule BPAs and 352 fiscal 
year 2007 orders and met with officials. 

What GAO Found: 

In fiscal year 2008, civilian agencies obligated $3.2 billion under 
schedule BPAs—up 383 percent from fiscal year 2004. GAO estimates that 
DOD’s obligations ranged from $0.5 to $4.7 billion, placing total 
obligations in 2008 between $3.7 and $7.9 billion. GAO was unable to 
determine more fully DOD’s obligations because DOD does not utilize 
fields in the federal procurement data system to distinguish schedule 
BPAs from other BPAs. DOD has begun to take actions to address this 
issue. Civilian agencies’ use of BPAs for services grew significantly 
faster—475 percent—than their overall services contracting between 2004 
and 2008. Contracting officers use BPAs for flexibility and speed, 
noting, for example, advantages in disaster response preparation and 
when funding for a fiscal year is unknown. 

Of the BPAs GAO reviewed, 64 percent had been competed—meaning, for 
purposes of this report, that more than one vendor was considered—when 
established. For 12 percent of BPAs that had not been competed, 
contracting officers provided a variety of justifications, some of 
which appear inconsistent with sound procurement policy. The FAR is not 
clear about justification requirements for BPAs awarded with limited 
competition, including to one vendor. Also, the majority of BPAs had 
been awarded to a single vendor, which resulted in a lack of 
competition when placing orders because the FAR does not currently 
require competition of orders under single award BPAs. Multiple award 
BPAs—awarded to more than one vendor for the same requirement—provide 
an opportunity to benefit from further competition when placing orders, 
but many contracting officers placed orders directly with one vendor 
without further competition. Congress recently enhanced competition 
requirements for multiple award contracts, but the application of this 
requirement to schedule BPAs has not yet been established. Some of the 
BPAs GAO reviewed had lengthy durations, exceeding 5 years. 

GAO found no evidence that agencies sought discounts when 47 percent of 
the BPAs reviewed were established. In the other cases, some 
contracting officers explicitly requested, or even demanded, discounts, 
while others merely encouraged them. Agencies frequently received 
discounts when they requested them. For instance, the Justice 
Department was able to save $20 million under a BPA where the 
contracting officer requested and received discounts. However, at 
times, such opportunities were missed when discounts were not 
requested, even when the estimated amount of the BPA was in the 
hundreds of millions of dollars. 

Contracting officials rarely conducted the required annual reviews. The 
reviews for only 19 of the 320 BPAs that required them addressed all of 
the FAR elements. By not conducting annual reviews, agencies miss 
opportunities for savings and can run the risk of violating competition 
requirements. One contracting officer was unaware that the underlying 
GSA schedule contract had expired, and orders continued to be placed 
under the BPA—a potential violation of the Competition in Contracting 
Act. 

What GAO Recommends: 

GAO recommends that the Office of Federal Procurement Policy (OFPP) 
clarify when establishing a BPA using the limited source justifications 
of the FAR is appropriate; increase competition under BPAs; and provide 
guidance on annual reviews. GAO also recommends that GSA assist 
agencies with language for discount requests. OFPP and GSA concurred 
with the recommendations. 

View GAO-09-792 or key components. For more information, contact John 
Hutton at (202) 512-4841 or huttonj@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Civilian Agencies' Use of Schedule BPAs for Services Has Increased 
Significantly, but DOD Data Issues Preclude an Accurate Picture of 
Total Government Use: 

Agencies Did Not Take Full Advantage of Opportunities for Competition: 

Agencies Often Did Not Seek or Receive Discounts from Schedule Pricing: 

Agencies Generally Did Not Comply with the Annual Review Requirement 
and Missed Opportunities for Savings: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Comments from the General Services Administration: 

Appendix III: Comments from the Department of Health and Human 
Services: 

Appendix IV: Comments from the Department of Homeland Security: 

Appendix V: Comments from the Social Security Administration: 

Appendix VI: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Procedures when Placing Orders under Schedule BPAs: 

Table 2: Number of Schedule BPAs Reviewed from Five Civilian Agencies: 

Table 3: Number of Schedule BPAs Reviewed from Defense Agencies: 

Figures: 

Figure 1: Procedures and Discounts when Establishing Schedule BPAs: 

Figure 2: Obligations for Orders under Schedule BPAs for Products and 
Services--Civilian Agencies, Fiscal Years 2004 to 2008 (in Constant 
Fiscal Year 2008 Dollars): 

Figure 3: Order Competition under Single and Multiple Award BPAs: 

Figure 4: Range of Discounts Received by Agency: 

Abbreviations: 

BPA: Blanket Purchase Agreement: 

CECOM: Communications and Electronics Command: 

CICA: Competition in Contracting Act: 

DFARS: Defense Federal Acquisition Regulation Supplement: 

DHS: Department of Homeland Security: 

DLA: Defense Logistics Agency: 

DOD: Department of Defense: 

EDA: Electronic Document Access: 

FAR: Federal Acquisition Regulation: 

FEMA: Federal Emergency Management Agency: 

FPDS-NG: Federal Procurement Data System-Next Generation: 

GSA: General Service Administration: 

NIH: National Institutes of Health: 

TACOM: Tank-Automotive and Armaments Command: 

TSA: Transportation Security Administration: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

September 9, 2009: 

The Honorable Edolphus Towns: 
Chairman: 
The Honorable Darrell Issa: 
Ranking Member: 
Committee on Oversight and Government Reform: 
House of Representatives: 

Federal contracting officers can choose from a variety of contracting 
mechanisms when buying goods and services. For example, they can award 
new contracts, issue orders under existing contracts at their agency, 
or issue orders under other agencies' contracts. The General Services 
Administration's (GSA) Schedules program is an interagency contracting 
mechanism used by many federal agencies. Under this program, GSA awards 
contracts to multiple vendors for commercially available goods and 
services and federal agencies place orders under the contracts. 
Agencies may establish blanket purchase agreements (BPA) under GSA's 
schedule contracts.[Footnote 1] BPAs are intended to be a simplified 
method of fulfilling repetitive needs for supplies and services that 
also provide an opportunity to seek reduced pricing from vendors' 
schedule prices. Agencies may award BPAs to one vendor (known as a 
single award BPA) or to more than one vendor (multiple award BPAs), and 
then issue individual orders to fulfill requirements for goods and 
services as they arise. 

BPAs are not contracts, but rather agreements between government 
agencies and vendors with terms and conditions, including prices, in 
place for future use. The Federal Acquisition Regulation (FAR) was 
amended in 2004 to require agencies to follow certain procedures when 
establishing and ordering from schedule BPAs and to document annual 
reviews to determine: whether each BPA still represents the best value; 
whether the GSA schedule contract under which the schedule BPA was 
established is still in effect; and whether the agency has exceeded its 
initial estimated purchase amount under the BPA, indicating a potential 
for discounts when more orders are placed. 

You expressed interest in understanding more about federal agencies' 
use of schedule BPAs. Accordingly, we assessed (1) the extent to which 
agencies use schedule BPAs, what they buy with them, and why agencies 
use them; (2) whether agencies are competing BPAs and the orders under 
them; (3) whether agencies are taking advantage of opportunities for 
savings by seeking discounts when using these BPAs; and (4) whether 
agencies are conducting the required annual reviews. 

To conduct our work for each objective, we used an electronic data 
collection instrument to review 336 schedule BPAs and the largest 
fiscal year 2007 order under each, the most recent available data at 
the time we began our work.[Footnote 2] Our scope included five 
civilian agencies and three defense agency locations. We reviewed 263 
BPAs from the following agencies: the departments of Agriculture, 
Health and Human Services, Homeland Security, and Justice and the 
Social Security Administration. These agencies represented roughly 80 
percent of the civilian dollars obligated under schedule BPAs in fiscal 
year 2007, based on data provided by GSA from the Federal Procurement 
Data System-Next Generation (FPDS-NG), the government's primary 
database for information on procurement actions.[Footnote 3] Because 
the Department of Homeland Security (DHS) had obligated the largest 
dollar amount, we selected all 155 of the department's BPAs under which 
orders were placed during fiscal year 2007. Therefore, our findings 
reflect the full universe of DHS schedule BPAs used in fiscal year 
2007. We selected a random sample of 30 schedule BPAs from each of the 
other four civilian agencies; our findings for those agencies are 
projectable to those agencies. We were unable to review 12 of the BPAs 
in our sample because some agencies could not locate the files. 

Because the Department of Defense (DOD) does not use available codes in 
FPDS-NG to identify its schedule BPAs, our methodology for selecting 
the defense locations (discussed in appendix I) was more complex. We 
reviewed a random sample of 29 BPAs used by the Marine Corps Systems 
Command, 30 from the Naval Air Systems Command, Naval Air Warfare 
Center, and all 14 of the schedule BPAs the Air Force District of 
Washington used during fiscal year 2007. Our findings are projectable 
only to the DOD locations selected. 

To assess the extent to which agencies are using schedule BPAs, we 
analyzed data from FPDS-NG for fiscal years 2004 to 2008 for civilian 
agencies. For DOD, given the data limitation discussed above, we 
constructed an estimate of its fiscal year 2008 usage based on our 
analysis of 100 randomly-selected procurements that we identified as 
BPAs using DOD's contract naming system. We identified, via DOD's 
online contract retrieval system, those in our sample that were in fact 
schedule BPAs and applied this percentage to DOD's total spending under 
BPAs in general. 

For each objective, we supplemented our file reviews with follow-up 
questions when documentation in the file was insufficient. When agency 
officials did not respond to our questions or did not provide 
documentation that supported their response, we report these responses 
as providing no evidence. We also spoke with over 60 contracting 
officials across the agencies in our review about their use of schedule 
BPAs. Moreover, we spoke with officials from GSA to discuss the 
agency's role with respect to schedule BPAs and FAR requirements for 
competition, discounts, and annual reviews. We spoke with officials 
from the Office of Federal Procurement Policy about policies concerning 
schedule BPAs. 

A more detailed description of our scope and methodology is presented 
in appendix I. 

As we describe in our methodology, we performed extensive tests to 
assess the reliability of the automated information we used to select 
our collection of BPAs. For example, we confirmed that the information 
contained in the automated records reflected the information contained 
in the contract files. We based our estimate of DOD's use of schedule 
BPAs on information we verified using automated images of the contract 
records. Accordingly, we believe that the data we used to support our 
findings are reliable for our intended purposes. 

We conducted this performance audit from June 2008 to August 2009 in 
accordance with generally accepted government auditing standards. Those 
standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe the 
evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

Background: 

The FAR states that a BPA is a simplified method of filling anticipated 
repetitive needs for supplies or services that functions as a "charge 
account," with terms and conditions agreed upon when the BPA is 
established. A BPA is not a contract; therefore, the government is not 
obligated to purchase a minimum quantity or dollar amount and the 
contractor is not obligated to perform until it accepts an order under 
the BPA. BPAs do not obligate funds; funds are obligated when an order 
subsequently is placed.[Footnote 4] 

Agencies may establish BPAs under GSA's Schedule program contracts. 
Subpart 8.4 of the FAR provides procedures for using GSA schedule 
contracts, including establishing and ordering from BPAs. Prior to the 
issuance of the FAR in 1984 as the governmentwide procurement 
regulation, "blanket purchase arrangements," a vehicle similar to BPAs, 
were permitted to be established with schedule contractors, if not 
inconsistent with the terms of the schedule contract, as early as the 
1950s. 

Schedule BPAs use the pre-established terms and conditions of the GSA 
contract (such as prices and delivery terms) as a starting point, but 
ordering agencies may add terms and conditions, such as discounted 
pricing, as long as they do not conflict with those of the GSA 
contract. Each schedule BPA must address the frequency with which 
orders will be placed; invoicing procedures; discounts; delivery 
locations; time and requirements, such as the amount or quantity the 
agency expects to purchase under the BPA and the work the vendor will 
perform. The potential volume of orders under a BPA, as indicated by 
the estimated amount or quantity, provides an opportunity to seek 
discounts from the GSA schedule contract prices. 

From the first issuance of the FAR until 1994, agencies establishing 
schedule BPAs were required to follow the simplified acquisition 
procedures of Part 13, which emphasized "adequate" or "maximum 
practicable competition" at the time orders were placed. From 1994 
until 1997, the FAR and subsequent GAO bid protest decisions indicated 
that the policies and procedures of Part 13 did not apply to schedule 
BPAs and that agencies were to follow the procedures of Subpart 8.4 for 
placing orders on schedule BPAs, but not for their 
establishment.[Footnote 5] Beginning in 1997, the FAR applied the 
ordering procedures in Subpart 8.4 to the establishment of schedule 
BPAs, including such steps as considering information about the supply 
or service offered under schedule contracts or reviewing the catalogs 
of schedule contractors. It also encouraged agencies to seek discounts 
when establishing schedule BPAs. A 2004 amendment to the FAR clarified 
the BPA ordering procedures under Subpart 8.4 and explicitly required 
agencies to seek discounts. 

The FAR currently requires federal agencies to seek price reductions 
from vendors' schedule prices and to follow certain procedures when 
establishing schedule BPAs. Which procedures are to be followed depends 
on whether the BPA will be used to purchase a product or service 
performed for a fixed price or for a service performed at an hourly 
rate, and thus requiring a statement of work. Procedures for 
establishing schedule BPAs and seeking discounts are depicted in figure 
1. 

Figure 1: Procedures and Discounts when Establishing Schedule BPAs: 

[Refer to PDF for image: illustration] 

Is the BPA to purchase a product or a service performed for a fixed 
price? 

Yes: 
No statement of work required; 
Review price lists for more than three schedule contractors; 
Request discounts; 
Award BPA(s). 

No: 
BPA is for a service performed for an hourly rate (statement of work 
required); 
Provide the request for quotation (including the statement of work and 
evaluation criteria) to more than three schedule contractors that offer 
services that will meet the agency’s needs; 
Request discounts; 
Award BPA(s). 

Source: GAO analysis of FAR 8.4. 

[End of figure] 

Agencies may award a schedule BPA to a single vendor or to multiple 
vendors to fulfill the same requirement. The decision is to be based on 
a strategy that is expected to maximize the effectiveness of the 
BPA(s). The FAR states that, in determining how many BPAs to establish, 
contracting officers are to consider: 

* the scope and complexity of the requirement(s); 

* the need to periodically compare multiple technical approaches or 
prices; 

* the administrative costs of BPAs; and: 

* the technical qualifications of the schedule contractors. 

After the BPA is established, requirements vary for considering more 
than one vendor when placing orders, as shown in table 1. 

Table 1: Procedures when Placing Orders under Schedule BPAs: 

Requirement to consider other vendors: 
Single award BPA: None required for the duration of the BPA; 
Multiple award BPAs: No requirement to consider more than one vendor 
for orders under the micropurchase threshold ($3,000); Above the 
micropurchase threshold, forward the requirement, or statement of work 
and the evaluation criteria, to an appropriate number of BPA holders, 
as established in the agency's ordering procedures; 
DOD-specific requirement: Each order exceeding $100,000 shall be placed 
on a "competitive basis." 

Sources: GAO analysis of FAR and DOD FAR Supplement. 

[End of table] 

DOD is required to adhere to more stringent competition requirements 
than are at present applicable to civilian agencies. Section 803 of the 
National Defense Authorization Act for Fiscal Year 2002 directed DOD to 
amend its regulations to require that any purchase of services 
exceeding $100,000 under a multiple award contract be made on a 
competitive basis, subject to limited exceptions.[Footnote 6] DOD's 
implementation of this provision extended the competition requirement 
to orders under multiple award BPAs.[Footnote 7] Hence, for such orders 
exceeding $100,000, DOD contracting officers are required to either (1) 
notify as many schedule contractors as practicable of the purchase to 
reasonably ensure that offers would be received from at least three 
contractors and receive three offers (or determine in writing that no 
additional contractors could be identified that can fulfill the 
requirement) or (2) notify all contractors offering the required 
services under the applicable schedule and afford all responding 
contractors a fair opportunity to submit an offer and have that offer 
fairly considered. Congress recently took action to apply multiple 
award competition requirements that are similar to those in the 2002 
statute to all executive agencies. The implementing regulations have 
not yet been promulgated.[Footnote 8] 

Civilian Agencies' Use of Schedule BPAs for Services Has Increased 
Significantly, but DOD Data Issues Preclude an Accurate Picture of 
Total Government Use: 

We estimate that the federal government obligated between $3.7 billion 
and $7.9 billion by placing orders under schedule BPAs during fiscal 
year 2008. Civilian agencies reported spending almost $3.2 billion 
under schedule BPAs, with the five civilian agencies in our review 
obligating almost $2.3 billion of this amount, or almost 72 percent of 
total civilian agency obligations. Although orders under schedule BPAs 
(for goods and services) comprised only about 2.3 percent of civilian 
agencies' reported obligations during fiscal year 2008, usage of 
schedule BPAs by civilian agencies has grown substantially over time, 
by 382 percent from fiscal year 2004 to 2008 ($659 million to $3.2 
billion).[Footnote 9] 

We were unable to develop similar trend information for DOD due to the 
data's being unavailable, but for fiscal year 2008, we estimate that 
DOD obligated between $0.5 billion and $4.7 billion under schedule 
BPAs.[Footnote 10] Unlike civilian agencies, DOD does not use the 
available fields in FPDS-NG to distinguish its schedule BPAs from its 
traditional BPAs and indefinite delivery contracts.[Footnote 11] 
Therefore we could not readily determine DOD's overall usage of 
schedule BPAs or what DOD is buying under these BPAs. We attempted to 
use data from DOD's own procurement database (the DD350 database) and 
information from defense agency officials to identify schedule BPAs, 
but found additional inaccuracies. For example, we identified possible 
schedule BPAs for several Army organizations with obligations totaling 
roughly $319.8 million in fiscal year 2007. However, after further 
review and consultation with Army officials, we found that only about 
16 percent of this amount had actually been obligated under schedule 
BPAs. A DOD acquisition official informed us that the department is 
taking actions to implement new reporting procedures in FPDS-NG. 

Significant Growth in Use of Schedule BPAs for Services: 

Civilian agencies' use of schedule BPAs to purchase services has 
increased vastly more than their overall growth in services contracting 
in recent years. From fiscal years 2004 to 2008, civilian agency 
schedule BPA obligations for services increased by 475 percent, 
compared to a slightly negative growth in their overall service 
contracting. In addition, civilian agency schedule BPA purchases of 
services increased far more than their purchases for goods during the 
same time period. Figure 2 illustrates the trend in civilian agency 
obligations under schedule BPAs for products and services. We could not 
portray a similar analysis for DOD because of the data issue discussed 
earlier. 

Figure 2: Obligations for Orders under Schedule BPAs for Products and 
Services--Civilian Agencies, Fiscal Years 2004 to 2008 (in Constant 
Fiscal Year 2008 Dollars): 

[Refer to PDF for image: stacked line graph] 

Fiscal year: 2004; 
Products: $197.5 million; 
Services: $461.6 million. 

Fiscal year: 2005; 
Products: $416.4; million; 
Services: $1,332.8 million. 

Fiscal year: 2006; 
Products: $521.6 million; 
Services: $1,864.8 million. 

Fiscal year: 2007; 
Products: $532.9 million; 
Services: $2,247.1 million. 

Fiscal year: 2008; 
Products: $523.1 million; 
Services: $2,655.5 million. 

Source: GAO analysis of FPDS-NG data. 

[End of figure] 

The majority of schedule BPAs in our sample--74 percent of the 336 DOD 
and civilian agency BPAs we reviewed--were established to acquire 
services as opposed to goods. The most frequently cited broad 
categories of services in the BPAs we reviewed were management support 
services, other professional services, and program management/support 
services. The estimated purchase amounts when the BPAs were established 
ranged from $10,000 to $734 million, with the average estimated dollar 
amount just over $64 million. 

Specific examples of services acquired under the schedule BPAs in our 
review include: 

* a BPA established by DHS for a range of acquisition support services, 
including drafting performance work statements and quality assurance 
surveillance plans; 

* a BPA established by the Federal Emergency Management Agency (FEMA) 
to provide program management support for implementing the Pre-Disaster 
Mitigation Program; 

* several BPAs established by the Navy to obtain analytical support for 
budget formulation and execution and other activities; and: 

* a BPA established by the Food Safety and Inspection Service to obtain 
court reporting services. 

When the agencies established the BPAs in our sample to acquire goods, 
the most frequently cited categories were for data processing software; 
software and system configuration; and printing, duplicating, and 
bookbinding. For example, the Social Security Administration 
established a BPA to buy color copiers, and the Navy established a BPA 
to obtain software. Other examples of goods purchased through schedule 
BPAs in our sample include: 

* special purpose boats purchased by the Coast Guard for various law 
enforcement related missions; 

* body armor purchased by the Air Force; 

* laboratory equipment and supplies purchased by the Department of 
Health and Human Services; and: 

* fire engines purchased by the Forest Service. 

Agencies Used BPAs for Flexibility, Speed, and to Meet Small Business 
Goals: 

In addition to saying they use schedule BPAs to fulfill recurring 
needs, many of the contracting officials we spoke with cited BPAs' 
flexibility and the speed with which they can be used as reasons they 
chose to use them as opposed to other contract vehicles, such as 
indefinite delivery contracts. Several contracting officials noted that 
schedule BPAs do not require the government to commit to any minimum 
dollar obligation or amount, as would an indefinite delivery/indefinite 
quantity contract. For example, a contract specialist at DHS's 
Immigration and Customs Enforcement explained that his office does not 
receive funding, and therefore cannot obligate funds, until the budget 
is passed; in recent years, this has occurred during the second quarter 
of the fiscal year. Using a schedule BPA allows his office to be ready 
whenever it receives funds. Also, a contracting officer at FEMA said 
that she can establish a schedule BPA and have it ready for use when 
the agency has to respond to natural disasters and to conduct recovery 
operations without having to guarantee a minimum amount. However, some 
contracting officials noted that the lack of a binding contract can be 
a potential negative, since a vendor can decline to accept an order. 
One contracting official at the Marine Corps said that he prefers to 
have multiple BPA holders to ensure that vendors are available to meet 
the demand for goods and services. 

Contracting officers also indicated that the speed with which they can 
both establish BPAs and place orders under them is an advantage. For 
example, a contracting officer at the Marine Corps noted that schedule 
BPAs do not take a long time to negotiate because the solicitation 
process is streamlined and contracting officers are not required to 
advertise the solicitation on FedBizOpps, the Web site where government 
business opportunities greater than $25,000 are posted. As a result, he 
said it usually takes him a month or less to establish a schedule BPA, 
whereas it frequently takes him 3 to 4 months to award an indefinite 
delivery contract. Some contracting officers also told us that the 
ability to place BPA orders without competition is an advantage in 
terms of time saved. For example, a contracting officer at the Centers 
for Disease Control noted that a schedule BPA that has a broad scope of 
work makes it unnecessary to conduct a time-consuming competition each 
time he wants to place an order. A contracting officer at the Food 
Safety and Inspection Service stated that she can place orders under a 
single award BPA without further competition in less time than would be 
needed to meet the competition requirements for ordering directly from 
a GSA schedule contract. 

Some agencies also use schedule BPAs to help meet their small business 
goals. A contracting officer at the Social Security Administration told 
us that he uses schedule BPAs in part because there are many companies 
on the GSA schedule that meet the requirements of the Small Business 
Administration's 8(a) business development program.[Footnote 12] We 
also reviewed a number of schedule BPAs, established by the Air Force 
to provide a wide range of advisory and assistance services, that 
involved teams of vendors often led by small businesses serving as 
prime contractors. 

Agencies Did Not Take Full Advantage of Opportunities for Competition: 

Agencies in our sample competed BPAs when establishing them--meaning 
that, for purposes of this report, contracting officers considered more 
than one vendor--64 percent of the time.[Footnote 13] For a small 
number of BPAs in our sample (12 percent) contracting officers 
documented their rationale for not competing. We found no evidence that 
the remainder, 24 percent of the BPAs in our sample, were competed. For 
instance, at the National Institutes of Health (NIH), we found no 
evidence that 18 of the BPAs included in our sample were competed when 
established. Competition is the cornerstone of the acquisition system, 
and the benefits of competition are well established. It saves the 
taxpayer money, improves contractor performance, curbs fraud, and 
promotes accountability for results. 

When orders are placed under GSA schedule contracts, the FAR allows 
contracting officers to limit the number of vendors they consider, 
which includes considering only one vendor. However, the FAR does not 
explicitly apply this provision to the establishment of BPAs. The FAR 
specifically lists some examples of circumstances in which limited 
competition may be justified, including instances when (1) the work is 
unique or specialized in nature and only one source is capable of 
responding; (2) the new work is a logical follow-on to a previous 
requirement; or (3) an urgent and compelling need exists[Footnote 14]. 
In assessing agencies' rationale for awarding BPAs directly to vendors 
without competition, we found justifications for doing so that were 
based on each of these circumstances. For example: 

* Agencies purchased software from vendors who were the sole authorized 
vendors holding a GSA schedule contract. 

* The Social Security Administration awarded a BPA for program 
management, technical management, and administrative support because it 
was a logical follow-on to previous work. 

* The Coast Guard awarded a BPA to bridge the gap between the 
expiration of one contract and the competitive award of the next 
contract. 

In addition, we found four instances in which schedule BPAs were issued 
directly to one vendor because the vendor was designated as a small 
business or as an Alaska Native Corporation-owned business.[Footnote 
15] 

However, we also found examples of justifications for awarding BPAs 
directly to one vendor that are not specifically mentioned in the FAR, 
some of which may not conform with sound procurement policy. A Navy 
contracting officer stated that it was not necessary to compete a BPA 
for engineering and technical services because GSA had already 
determined the vendor's schedule pricing to be fair and reasonable. 
[Footnote 16] In two instances at the Justice Department, the 
contracting officer in one case stated that the vendor had performed 
well on a previous BPA, and in the other, that the vendor provided a 
deep discount. 

We discussed the lack of clarity regarding the applicability of FAR 
provisions regarding limiting competition when establishing BPAs with 
officials from the Office of Federal Procurement Policy.[Footnote 17] 
They agreed that action is needed to clarify the relevant provisions of 
the FAR and noted that discussions are ongoing regarding implementation 
of the provisions of section 863 of the Duncan Hunter National Defense 
Authorization Act for Fiscal Year 2009, regarding competition 
requirements under multiple award contracts.[Footnote 18] 

Frequent Use of Single Award BPAs Resulted in Lack of Competition of 
Orders: 

The FAR allows a contracting officer to decide whether to award a BPA 
to a single vendor or to multiple vendors for the same requirement. In 
determining how many BPAs to establish, the contracting officer is to 
consider such factors as the scope and complexity of the requirement 
and the administrative costs of the BPA. Over half of the BPAs in our 
sample (60 percent or 200) were single-award BPAs, and of these, we 
found no evidence of competition when the BPA was established for 19 
percent or 37 of them.[Footnote 19] One of the single award BPAs, 
established in 2004, for which we found no evidence of competition had 
an estimated amount of nearly $60 million. 

Further, once a single award BPA is established, all orders may be 
issued directly with the vendor without additional competition. We 
found this to be the case for the vast majority of orders under the 
single award BPAs in our sample; only 10 percent had been competed. 
Indeed, a number of contracting officers we spoke with cited this 
feature of single award BPAs as an advantage. The dollar value of some 
of the non-competed orders was fairly significant; 45 of the orders not 
competed under single award BPAs were greater than $1 million. For 
instance, DHS issued one of these orders for $37.6 million for 
professional information analysis and intelligence support, and the 
Coast Guard issued a $13.1 million order for network integration, 
software, and system integration support services. 

Agencies established a number of single award BPAs of fairly long 
duration, resulting in an extended period of time under which orders 
could be placed without additional competition. The FAR currently 
suggests that schedule BPAs should not exceed five years in length, but 
permits BPAs of longer duration.[Footnote 20] We found 28 instances in 
which agencies established single award BPAs with durations of at least 
6 years, with a few single award BPAs in place for longer than 10 
years, and one for over 20 years. Furthermore, of these 28 instances, 
we found evidence that competition occurred when establishing the BPAs 
in only ten cases and that competition occurred when placing orders in 
only four of the cases. 

Agencies Did Not Take Full Advantage of Opportunities for Competition 
under Multiple Award BPAs: 

The FAR requires agencies to follow specific procedures to compete 
orders under multiple award BPAs that exceed the micropurchase 
threshold ($3,000). Specifically, agencies are required to forward 
requirements, or statements of work and evaluation criteria, to an 
"appropriate number" of BPA holders, with the determination of what 
constitutes an appropriate number left to the discretion of the 
contracting officer.[Footnote 21] Contracting officers competed 49 
percent of the orders above the micropurchase threshold with more than 
one vendor under the multiple award BPAs we reviewed.[Footnote 22] For 
32 percent of the orders, contracting officers placed the order 
directly with one vendor and did not compete it with other vendors, the 
appropriate number effectively being one. For example, the Department 
of Agriculture did not compete an order worth $1.2 million for fire 
engines. For the remaining 19 percent of these orders, we found no 
evidence that contracting officers competed the order with more than 
one vendor. We found no evidence, for example, to suggest that DHS 
competed a $2.1 million order under one of its multiple award BPAs for 
information technology. Figure 3 shows the percentage of schedule BPAs 
in our sample that were established with a single vendor or with 
multiple vendors and the dollar value of orders competed and not 
competed for each type. 

Figure 3: Order Competition under Single and Multiple Award BPAs: 

[Refer to PDF for image: combined vertical bar graph and pie chart] 

Number of single award BPAs: 200 (61.3%); 
Dollar value of orders competed: $9,427,473; 
Dollar value of orders not competed: $367,439,397. 

Number of multiple award BPAs: 126 (38.7%); 
Dollar value of orders competed: $27,182,493; 
Dollar value of orders not competed: $87,781,345. 

Source: GAO analysis of data obtained from contract files. 

Note: We were not able to determine the type, single or multiple award, 
for 10 of the BPAs in our sample. 

[End of figure] 

The defense supplement to the FAR contains additional competition 
requirements for DOD, specifically that DOD compete orders under 
schedule BPAs exceeding $100,000 or justify the award if an order is 
not competed.[Footnote 23] Of the 37 orders subject to this requirement 
included in our sample, DOD competed or properly justified as sole 
source 28 of them. For the remaining 9 orders, there was no evidence of 
competition. Recent legislation directs that acquisition regulations be 
amended to require executive agencies to place on a competitive basis 
any order exceeding $100,000 that is made under a multiple award 
contract, but the implementing regulations are still pending and the 
extent to which this requirement will apply to orders under schedule 
BPAs is not certain.[Footnote 24] 

Agencies Often Did Not Seek or Receive Discounts from Schedule Pricing: 

Agencies frequently did not seek discounts when establishing schedule 
BPAs and rarely tried to obtain better pricing when placing orders. 
[Footnote 25] We found no evidence that agencies requested a discount 
for 47 percent of the BPAs we reviewed, even though GSA notes that 
agencies' ability to negotiate discounts from schedule prices by 
leveraging their buying power through larger volume purchasing is one 
of the advantages of using schedule BPAs. By not requesting discounts 
when establishing schedule BPAs, agencies are missing opportunities to 
save money. 

Agencies frequently received discounts from GSA schedule prices if they 
requested them when establishing BPAs. For the 179 BPAs in our sample 
for which agencies requested discounts, discounts were received for 75 
percent of them. For example, the Department of Justice requested and 
subsequently received an 18 percent discount from the vendor's GSA 
schedule pricing for a BPA used to procure information technology 
services. This discount saved the government roughly $20 million from 
fiscal year 2006, when the BPA was established, through July 2009 when 
the last order was placed, based on obligation data in FPDS-NG. In 
another instance, two BPAs awarded to the same vendor highlight the 
importance of requesting discounts. A contracting officer requested a 
discount when establishing a Navy BPA for analytical support services, 
and the vendor provided a 5 percent discount from its GSA schedule 
prices. In contrast, when establishing a different BPA for similar 
services from the same vendor, the contracting officer did not seek or 
receive a discount. If he had done so and received the same 5 percent 
discount applied to orders placed during the life of the BPA, the Navy 
would have saved almost $87,000. In another instance, a contracting 
officer at the Marine Corps did not seek, and subsequently did not 
receive, a discount for a schedule BPA whose estimated value was $205 
million. 

Some contracting officers did not appear to understand the current 
requirement to seek discounts. In some cases, their rationale for not 
seeking discounts was based upon the statement in the FAR that GSA has 
already determined prices in the underlying schedule contract to be 
"fair and reasonable." However, this FAR statement addresses the fact 
that ordering activities are not required to conduct additional price 
analyses when ordering supplies and services not requiring a statement 
of work under the GSA schedule contracts. It does not negate the 
requirement to seek discounts when establishing schedule BPAs, which is 
clearly stated in FAR Subpart 8.4. One contracting officer said that 
using competition when establishing the BPA is the more significant 
determining factor for pricing, and thus he did not focus specifically 
on requesting discounts. 

Contracting officers who did request a discount usually included such 
language in the solicitation when establishing the BPA. In some cases, 
the contracting officer even made the offer of a discount a condition 
for awarding the BPAs--in effect, demanding a discount. For example, 
the request for quotation for two Navy BPAs stated, "Quoted prices, 
inclusive of fees must be discounted below GSA schedule prices." The 
Department of Agriculture included the following statement in the 
request for quotation for one BPA: "Provide a proposed discount off 
your normal GSA schedule rates for the entire BPA period of 
performance." The Air Force stated the following: "the contractor is 
expected to offer their (sic) best prices at or below the schedule 
price list." In other cases, the request for a discount was more 
tentative. For example, the solicitation for a FEMA BPA stated, "the 
Government requests that you consider offering a discount percentage 
beyond the GSA Schedule pricing…" In a few instances, the contracting 
officer requested discounts via email or during negotiations. For 
example, a DHS contracting officer requested discounts during 
negotiations to establish a schedule BPA to provide technical support 
services to the Office of Immigration Statistics. 

The discounts agencies received when establishing BPAs varied widely. 
Vendors sometimes offered a single, flat rate discount for all items 
offered under the BPA, but we found it was more common for vendors to 
offer a range of discounts, with some goods or services more heavily 
discounted than others. Vendors' flat rate discounts usually fell 
between 1 and 10 percent. For instance, the Air Force obtained a 10 
percent discount when establishing an estimated $99 million BPA to 
obtain advisory and assistance services. Some discounts were larger. 
DHS, for example, received a 76 percent flat rate discount on a $22 
million BPA established to purchase software and services. When vendors 
provided ranges of discounts, the minimum discount was most often 
between zero and 10 percent, while maximum discounts were more 
dispersed, with a majority ranging up to 30 percent. Some BPAs included 
discounts that varied by volume, while others included discounts that 
varied according to the product or service offered. For example, under 
a Department of Agriculture schedule BPA for software and associated 
maintenance, the vendor provided discounts ranging from 5 percent on a 
single order up to $250,000 to 20 percent on a single order over $1 
million. The Social Security Administration received discounts ranging 
from 15 percent off labor rates to 91 percent off software under one of 
its schedule BPAs used to purchase software, maintenance, consulting 
services, and training. Figure 4 demonstrates the wide range of 
discounts received by each of the agencies in our sample. 

Figure 4: Range of Discounts Received by Agency: 

[Refer to PDF for image: vertical bar graph] 

Agency: Department of Defense; 
Minimum discount: 0%; 
Maximum discount: 70%; 
Average flat rate discount: 6.2%. 

Agency: Department of Homeland Security; 
Minimum discount: 0%; 
Maximum discount: 100%; 
Average flat rate discount: 10.7%. 

Agency: Social Security Administration; 
Minimum discount: 0%; 
Maximum discount: 97%; 
Average flat rate discount: 4.8%. 

Agency: Health and Human Services; 
Minimum discount: 9%; 
Maximum discount: 34.9%; 
Average flat rate discount: 15%. 

Agency: Department of Justice; 
Minimum discount: 0%; 
Maximum discount: 55.8%; 
Average flat rate discount: 22.8%. 

Agency: United States Department of Agriculture; 
Minimum discount: 0%; 
Maximum discount: 20%; 
Average flat rate discount: 16.4%. 

Source: GAO analysis of data obtained from contract files. 

Note: For DOD, data reflects contract files reviewed from the Marine 
Corps Systems Command; Naval Air Systems Command, Naval Air Warfare 
Center, and Air Force District of Washington. 

[End of figure] 

Discounts Rarely Sought and Received for Orders: 

In addition to requesting a discount at the time the schedule BPA is 
established, agencies can request additional discounts when they issue 
orders, although the FAR does not require them to do so. The agencies 
in our review infrequently requested discounts when placing orders. Of 
the 352 orders we reviewed, agencies clearly requested discounts for 51 
of them. Contracting officers indicated that their rationale for not 
seeking additional discounts when placing orders was the fact that 
pricing was already established at the time the BPAs were awarded. As 
with discounts at the time a BPA is established, we found that agencies 
were more likely to receive discounts when they specifically requested 
them than when they did not. In some cases, agencies had negotiated 
discounts when establishing the schedule BPAs and were also able to 
obtain further discounts for orders. In the Department of Justice 
example noted above, in which the vendor provided an 18 percent 
discount for the BPA, the contracting officer received an additional 10 
percent discount for a $6.3 million order, saving $630,000. A vendor 
also provided an additional 45 percent discount for a $2.6 million 
order under a BPA for which the Social Security Administration had 
already received discounts when the BPA was established, resulting in a 
dollar savings of over $1 million. As an illustrative example of the 
potential for savings, had the contracting officer in another case we 
reviewed negotiated even a 2 percent discount for a BPA with an 
estimated amount of $205 million, it would have saved nearly $4 million 
based on obligations under this BPA from its establishment in 2005. 

Agencies Generally Did Not Comply with the Annual Review Requirement 
and Missed Opportunities for Savings: 

Contracting officers had not conducted the required annual reviews for 
the vast majority of the schedule BPAs we reviewed. The FAR requires 
contracting activities that establish schedule BPAs to conduct and 
document annual reviews containing three specific determinations: (1) 
the schedule contract, upon which the BPA was established, is still in 
effect; (2) the BPA still represents the best value to the government; 
and (3) quantities or amounts estimated when the BPA was established 
have been exceeded and additional price reductions can be obtained. 
[Footnote 26] Only about one-fourth of the 320 BPAs that required 
annual reviews contained evidence that the contracting officer had 
conducted some form of review, and only 19 addressed each of the 
required elements. We found that some contracting officers lacked 
familiarity with the annual review requirement. By not conducting 
annual reviews, agencies are missing opportunities for savings and may 
also run the risk of violating competition requirements if they place 
orders when the underlying GSA contract is no longer in effect. 

Few Contracting Officers Conducted Complete Annual Reviews: 

Contracting officers conducted annual reviews that addressed all of the 
required FAR elements for only 19 of the 320 BPAs in our sample that 
required an annual review.[Footnote 27] A number of contracting 
officers stated that they were unfamiliar with the FAR's specific 
annual review requirements for schedule BPAs. Contracting officers also 
cited heavy workloads and a lack of acquisition personnel as additional 
reasons for not conducting annual reviews. Some contracting officers 
said that they did not know the requirement existed at all. For 
example, when we asked if an annual review had been conducted, one 
contracting official at FEMA asked to which FAR requirements we were 
referring. 

In 63 additional instances, agencies did not complete all of the 
required elements of the annual review. In some cases, these reviews 
occurred while the contracting officers were conducting other 
activities associated with the BPAs. One contracting officer at the 
Department of Agriculture conducted a best value assessment when 
exercising an option year and verified that the GSA schedule contract 
was still in effect but did not document whether the original estimated 
BPA amount had been exceeded.[Footnote 28] In a case from the 
Department of Justice, a contracting officer verified that the GSA 
schedule contract was still in effect when issuing modifications to the 
BPA, but did not address any of the other required elements of the 
annual review. In other cases, contracting officers cited parts of the 
FAR outside of Section 8.4 when conducting their annual reviews and in 
doing so often did not complete required elements. When conducting 
annual reviews following sections of the FAR other than Part 8, 
contracting officers often did not verify that the underlying schedule 
contract was still in effect or check to see if obligations under the 
BPA had exceeded the estimated amount. Some also failed to conduct a 
best value assessment that would inform decisions about whether the BPA 
should be continued. In seven cases, contracting officers at the 
Department of Agriculture and the Coast Guard documented annual reviews 
using FAR Section 13.303, which covers traditional BPAs, but did not 
make sure that the GSA schedule contract was still valid and did not 
determine whether the estimated amounts of the BPAs had been exceeded. 
In four other cases, contracting officers cited FAR Part 17 when 
conducting an annual review, which includes requirements for the 
exercise of options. In another case, a contracting officer cited FAR 
Section 16.702, which covers basic agreements. 

We found only two contracting activities that regularly conducted some 
sort of annual review. Contracting officers at DHS's Citizenship and 
Immigration Services conducted annual reviews for 10 of the agency's 
schedule BPAs we reviewed, although not all contained each of the 
required elements. The head of the contracting office attributed the 
consistency to an extremely low staff turnover rate as well as a 
mandatory back-up system that ensures that staff members' workloads are 
always covered. In addition, all but one of the BPA files we reviewed 
at NIH contained some form of annual review, although, again, not all 
elements were always covered. An official responsible for NIH's BPA 
program told us that contracting officials generally conducted the 
annual reviews to identify and terminate BPAs that were not being used. 

Annual Reviews Present Opportunities for Savings: 

The required annual reviews present contracting officers with an 
opportunity to assess whether the BPA still represents the best value 
and to identify additional opportunities for discounts by determining 
whether the quantities or amounts estimated when the BPA was 
established have been exceeded and whether additional price reductions 
can be obtained. In some of the instances in which contracting officers 
conducted annual reviews, they determined that the schedule BPAs still 
represented the best value to the government in a variety of ways. For 
example, an annual review for a Health and Human Service BPA noted that 
the BPA still filled an existing need and provided continuity of 
service. A contracting officer managing a Marine Corps BPA checked that 
prices were still reasonable, while other annual reviews assessed 
whether market conditions had changed since the BPA was established. A 
contracting officer at the Social Security Administration used an 
annual review to obtain discounts. While conducting the review, he 
determined that the original estimated amount had been exceeded and 
successfully obtained discounts from the vendor. Contracting officers 
also informed us of instances in which conducting annual reviews helped 
them to better manage schedule BPAs. One contracting officer stated 
that when conducting annual reviews, she has occasionally found that 
prices for the schedule BPA have escalated, which led her to cease 
using those BPAs. 

By not doing the annual reviews, contracting officers missed 
opportunities for additional savings. For some of the BPAs in our 
sample, the BPA amount originally estimated had been exceeded, but 
because annual reviews were not conducted, agencies missed 
opportunities to obtain discounts. For instance, orders under a BPA 
established by the Marine Corps exceeded the BPA's estimated amount 
within the third year of a 10-year period of performance. Had the 
contracting officer conducted an annual review, he may have been able 
to use the volume of purchases as leverage to negotiate better prices 
with the vendor. 

By Not Conducting Annual Reviews, Agencies Risk Violating Competition 
Rules: 

As part of the annual review process, contracting officers are required 
to verify that the underlying GSA schedule contract--under which the 
BPA is established--is still in effect. BPAs established under the 
schedule contract using the procedures of Subpart 8.4 are considered to 
be issued using full and open competition.[Footnote 29] Thus, orders 
properly placed under a valid schedule contract, whether directly or 
via a BPA, meet the requirements for competition under the Competition 
in Contracting Act (CICA) of 1984.[Footnote 30] In the absence of a 
valid schedule contract, any order placed using a schedule BPA does not 
meet those competition requirements, unless the procedures used to 
obtain the order independently satisfy the CICA requirements.[Footnote 
31] Accordingly, if the underlying schedule contract has expired, 
subsequent orders using the schedule BPA may not be valid. We found one 
instance in which CICA was potentially violated among the BPAs and 
orders we reviewed. The underlying schedule contract for a Defense 
Logistics Agency BPA, under which the Navy placed an order in our 
sample, had expired. Although the Navy considered more than one 
schedule vendor when placing the order, this situation still involves a 
potential CICA violation because the underlying schedule contract had 
expired by the time the order was placed and it is not clear that 
statutory requirements for full and open competition were otherwise 
met. 

Conclusions: 

Schedule BPAs can provide federal agencies with a flexible and 
streamlined contracting mechanism for meeting repetitive procurement 
needs. However, especially in light of the significant increase in 
obligations under schedule BPAs, these potential benefits must be 
balanced with ensuring that this mechanism is used appropriately and 
serves the best interests of the government and the taxpayer. Based on 
the failure of contracting officers across the agencies in our review 
to leverage competition, seek better pricing through discounts, and 
monitor the use of schedule BPAs by conducting annual reviews, it is 
apparent that those interests are not being met in many cases. This is 
particularly true for procedural requirements when establishing and 
ordering under schedule BPAs that require the consideration of multiple 
vendors. The high use of single award BPAs, under which no further 
competition is required when placing orders of any amount, reduces the 
potential to harness the benefits of competition, including additional 
savings for the taxpayer. And the FAR's lack of clarity about the 
circumstances under which agencies can limit the number of vendors 
considered when establishing schedule BPAs, including establishing them 
with only one vendor, can lead to situations, such as we found, where 
justifications appear inconsistent with sound procurement policy. 
Further, the fact that so many contracting officers are either unaware 
of the requirement for annual reviews or simply are not conducting them 
means that opportunities are being missed to ensure that competition 
requirements are met and to seek better pricing from vendors. Finally, 
while some contracting officers clearly sought discounts from schedule 
prices, sometimes leading to millions in savings, many others did not. 

Recommendations for Executive Action: 

We are making the following three recommendations to the Administrator 
of the Office of Federal Procurement Policy: 

To ensure that federal agencies take greater advantage of the 
opportunities that competition provides under schedule BPAs: 

* take steps to amend the FAR to clarify when establishing a schedule 
BPA using the limited source justifications of the FAR, including when 
to only one vendor, is or is not appropriate; and: 

* consider including in the pending proposed FAR rule that implements 
the provisions of section 863 of the National Defense Authorization Act 
of 2009 an amendment to FAR 8.4 specifying that the requirement to 
place on a competitive basis any order above the simplified acquisition 
threshold (generally $100,000) under multiple award contracts also 
applies to orders under single and multiple award BPAs. 

To improve compliance with the FAR requirement to conduct annual 
reviews of schedule BPAs, increasing opportunities for additional 
savings and avoiding violations of competition rules, take steps to 
require federal agencies to put procedures in place to ensure that 
annual reviews are conducted. 

Further, to assist federal agencies in requesting and obtaining 
discounts when establishing schedule BPAs, we recommend that the GSA 
Administrator include in the guidance on GSA's Web site specific 
language which agencies can use in their requests for quotation to 
clearly request discounted pricing when establishing schedule BPAs. 

Agency Comments and Our Evaluation: 

We requested comments on a draft of this report from the Office of 
Federal Procurement Policy; the departments of Agriculture, Defense, 
Health and Human Services, Homeland Security, and Justice; GSA; and the 
Social Security Administration. In oral comments, the Office of Federal 
Procurement Policy concurred with our recommendations. In written 
comments, included in appendix II, GSA concurred with our 
recommendation, noting that it will include in the guidance on its Web 
site specific language that agencies can use in their requests for 
quotation to clearly request discounted pricing when establishing 
schedule BPAs. The departments of Health and Human Services and 
Homeland Security generally agreed with our report and provided written 
comments, included in appendixes III and IV, respectively. The 
Department of Health and Human Services stated that it plans to take 
steps to reinforce compliance with BPA requirements. Health and Human 
Services also commented that while we found no evidence of competition 
for NIH's BPAs included in our sample, NIH's policy is to ensure that 
prices are competitive before awarding BPAs. Nonetheless, our review of 
the contract files for the 18 BPAs selected showed no evidence of 
competition. The Department of Homeland Security discussed several 
actions it plans to take to improve management and use of BPAs. 

The Social Security Administration provided written comments, contained 
in appendix V, and provided new information regarding an example we had 
identified as a potential CICA violation that was discussed in our 
draft report. An annual review had not been conducted for the BPA, and 
the underlying GSA schedule contract had been canceled one year into a 
7-year period of performance. The agency had continued to place orders, 
totaling $3.4 million, under this BPA. In its comments, the Social 
Security Administration stated that there was no CICA violation because 
of changes made to the vendor's underlying schedule contract. Several 
of the vendor's schedule contracts had been consolidated into one 
single schedule contract, which was assigned a new contract number by 
GSA. The agency stated that the contracting officer had failed to 
reference the correct schedule contract number when placing orders 
under the BPA, but that this action did not violate CICA because the 
BPA was competed. We independently verified this new information, which 
was not contained in the BPA file, and therefore removed the example 
from our report. The Administration further noted that it has issued a 
reminder to its contracting officers to review BPAs annually to ensure, 
in part, that the underlying GSA schedule contracts are still in 
effect. 

In oral comments, the Department of Agriculture generally agreed with 
our report and did not provide additional comments. The departments of 
Defense and Justice did not provide comments. 

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution of it until 30 
days from the date of this report. We will then send copies of this 
report to interested congressional committees; the Secretaries of 
Agriculture, Defense, Health and Human Services, Homeland Security, and 
Justice; the Administrators of the General Services Administration and 
the Office of Federal Procurement Policy; and the Commissioner of the 
Social Security Administration. The report also is available at no 
charge on the GAO Web site at [hyperlink, http://www.gao.gov]. If you 
or your staff have any questions about this report, please contact me 
at (202) 512-4841 or huttonj@gao.gov. Contact points for our offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. GAO staff who made major contributions to this 
report are listed in appendix VI. 

Signed by: 

John P. Hutton: 
Director: 
Acquisition and Sourcing Management: 

[End of section] 

Appendix I: Scope and Methodology: 

The overall focus of this review was agencies' use of blanket purchase 
agreements (BPA) established under the General Administration Service's 
(GSA) schedules program. Our objectives were to determine: (1) the 
extent to which agencies use schedule BPAs, what they buy with them, 
and why agencies use them; (2) whether agencies are competing BPAs and 
the orders under them; (3) whether agencies are taking advantage of 
opportunities for savings by seeking discounts when using these BPAs; 
and (4) whether agencies are conducting the required annual reviews. 

To conduct our work for each objective, we used an electronic data 
collection instrument to review 336 schedule BPAs and the largest 
associated order under each during fiscal year 2007, the most recent 
data available at the time we began our work. Our scope included five 
civilian agencies and three defense agency locations. We reviewed 263 
BPAs from the following civilian agencies: the Departments of 
Agriculture, Health and Human Services, Homeland Security (DHS), and 
Justice and the Social Security Administration; and 73 BPAs from the 
following Department of Defense (DOD) components: Air Force, Marine 
Corps, and Navy. 

The five civilian agencies in our review represented roughly 80 percent 
of civilian agency obligations using orders under schedule BPAs during 
fiscal year 2007, based on data provided by GSA from the Federal 
Procurement Data System-Next Generation (FPDS-NG) on the dollar value 
of orders at the time the orders were placed. We selected a random 
sample of 30 schedule BPAs per agency from the Departments of 
Agriculture,Health and Human Services, Justice, and the Social Security 
Administration, taken from the universe of all BPAs that the agencies 
ordered under during fiscal year 2007. Our findings for those agencies 
are projectable to those agencies. Because DHS had obligated the 
largest dollar amount to orders under schedule BPAs, we selected all 
155 BPAs under which orders were placed during fiscal year 2007. 
[Footnote 32] Our findings reflect the full universe of DHS's schedule 
BPAs used in fiscal year 2007. 

In some instances, agency officials could not locate or provide the 
files associated with a given BPA. For example, Department of 
Agriculture officials could not locate the file for one of the BPAs in 
our sample, so we reviewed only 29 of Agriculture's schedule BPAs. 
Likewise, because DHS officials could not locate and provide files for 
11 of the BPAs, we reviewed 144 BPA files. Table 2 shows the number of 
BPAs selected and reviewed at each civilian agency. 

Table 2: Number of Schedule BPAs Reviewed from Five Civilian Agencies: 

Civilian agencies/components: Department of Agriculture; 
Number of BPAs selected/reviewed: 30/29. 

Civilian agencies/components: Department of Health and Human Services; 
Number of BPAs selected/reviewed: 30/30. 

Civilian agencies/components: Department of Justice; 
Number of BPAs selected/reviewed: 30/30. 

Civilian agencies/components: Social Security Administration; 
Number of BPAs selected/reviewed: 30/30. 

Civilian agencies/components: Department of Homeland Security; 
Number of BPAs selected/reviewed: 155/144. 

Civilian agencies/components: Total BPAs selected/reviewed; 
Number of BPAs selected/reviewed: 275/263. 

Source: GAO. 

[End of table] 

We attempted to identify the agencies at DOD that represented roughly 
80 percent of DOD obligations to orders under schedule BPAs during 
fiscal year 2007, based on the dollar value of orders at the time the 
orders were placed, but were unable to do so because DOD was not using 
the fields in FPDS-NG that distinguish between BPAs and indefinite- 
delivery/indefinite-quantity contracts. We attempted to use the DD350 
data (DOD's former procurement database) to identify DOD obligations to 
orders under possible schedule BPAs during fiscal year 2007 but found 
inconsistencies in the coding. Based on FPDS-NG data on all DOD BPAs-- 
schedule and traditional--the Army, Defense Logistics Agency, Marine 
Corps, and Navy represented about 80 percent of defense obligations 
under all BPAs, based on the dollar value of orders at the time the 
orders were placed. Because of DOD's size and geographic dispersion, we 
selected the contracting activity/location with the most dollars 
obligated to orders under possible schedule BPAs in fiscal year 2007 
within the selected services and agencies, based on the preliminary 
data. We then selected a random sample of possible schedule BPAs from 
the selected contracting activities/locations. Our findings are 
projectable only to the DOD locations selected. 

We sought to determine whether the DOD BPAs in our sample were schedule 
BPAs by reviewing the documentation available in DOD's Electronic 
Document Access System (EDA).[Footnote 33] For the Marine Corps, all of 
the BPAs we selected were schedule BPAs. For the Navy contracting 
activity we had selected, only one of the original 30 BPAs we selected 
was not a schedule BPA (and therefore out of the scope of this review). 
We selected another BPA as a replacement. For the Defense Logistics 
Agency (DLA), the location that had the greatest obligations under BPAs 
was the Defense Supply Center-Philadelphia, Systems & Procedures 
Division. Because none of that location's BPAs were listed in EDA, we 
asked officials at the Systems & Procedures Division to tell us whether 
the 30 BPAs in our sample were schedule BPAs; they stated that none of 
them were schedule BPAs. We then contacted officials at another DLA 
location, the Defense Supply Center, Pacific Region, who stated that 
none of their BPAs were schedule BPAs. As a result, DLA dropped from 
our sample and we replaced it with the Air Force. 

We provided the Air Force contracting activity (the Air Force District 
of Washington) with a list of 25 possible schedule BPAs-the total 
number that had orders placed under them during fiscal year 2007-and 
asked officials to identify which ones were in fact schedule BPAs. An 
official at the Air Force District of Washington indicated that all 25 
were schedule BPAs; however, when we reviewed the BPA files, we 
discovered that 6 of them were not schedule BPAs and dropped them from 
our sample. In addition, the Air Force contracting activity could not 
locate one BPA file, and the 754th Electronic Systems Group, Maxwell 
Air Force Base-Gunter Annex failed to provide information for four of 
the BPAs under which the Air Force District of Washington placed 
orders. 

With regard to the Army, based on FPDS-NG data, we identified the 
Army's Communications and Electronics Command (CECOM) in Ft. Monmouth, 
New Jersey, as having the greatest amount obligated to orders under 
schedule BPAs. By reviewing the BPAs available in EDA, we discovered 
that only 2 of the 17 BPAs identified were schedule BPAs. We next 
looked at the Army's Tank-Automotive and Armaments Command (TACOM) in 
Warren, Michigan. Because many of the BPAs used by TACOM were not 
available in EDA, we asked TACOM officials to identify which of the 
BPAs were schedule BPAs. They identified only 7 out of 63 BPAs as 
schedule BPAs. We next looked to the Army Contracting Command in 
Kuwait; an Army contracting official told us that all 76 of their BPAs 
were not schedule BPAs. Finally, we contacted the Army's Contracting 
Center of Excellence in Washington, D.C. to ask officials there to 
identify the schedule BPAs from a list of 50 candidates. An associate 
director from the Center of Excellence told us that the center was 
unable to identify the schedule BPAs. We did not replace the Army with 
another defense agency. Table 3 shows the number of reviewed at the 
selected defense agencies. 

Table 3: Number of Schedule BPAs Reviewed from Defense Agencies: 

DOD agencies/components: Air Force: Air Force District of Washington; 
Number of BPAs reviewed: 14. 

DOD agencies/components: U.S. Marine Corps: Systems Command; 
Number of BPAs reviewed: 29[A]. 

DOD agencies/components: U.S. Navy: Naval Air Systems Command; 
Number of BPAs reviewed: 30. 

DOD agencies/components: Total; 
Number of BPAs reviewed: 73. 

Source: GAO. 

[A] We initially selected 30 schedule BPAs used by the Marine Corps; we 
subsequently determined that one had also been included in our review 
of the Air Force's BPAs. 

[End of table] 

For all agencies, both civilian and defense, we selected the BPAs based 
on the agency and location where the orders were placed. For example, 
the Navy location selected for our review, the Naval Air Systems 
Command, had placed orders under four schedule BPAs established by the 
Naval Inventory Control Point - Mechanicsburg. We included these four 
BPAs in our sample for the Naval Air Systems Command. In another 
instance, the Naval Air Systems Command ordered under a schedule BPA 
established by the Defense Information Systems Agency; again, the BPA 
was included in our sample. 

We reviewed 352 orders under the BPAs in our sample. We selected the 
order placed during fiscal year 2007 that obligated the largest dollar 
value at the time of award. In some instances, more than one order was 
selected under a single BPA, resulting in a greater number of orders 
than BPAs selected. For example, at DHS, both Citizenship and 
Immigration Services and Immigration and Customs Enforcement placed 
orders under the same BPA; we selected the highest dollar value order 
placed under the BPA from each component for review. In addition, in 
some cases, where an agency could not provide the file for the BPA, the 
agency was able to provide the file for the order. 

We used an electronic data collection instrument and verified the 
information on-site to conduct our review of the BPA and order files 
and to facilitate our analysis. We supplemented our file reviews with 
follow-up questions when documentation in the file was not available, 
insufficient, or unclear. In some instances, we received additional 
documentation from agency officials, which we analyzed and incorporated 
in our final results when appropriate. When agency officials did not 
provide documentation that supported their response, we reported the 
response to our question as "not documented" or "no evidence." In some 
cases, we interviewed the contracting officer or contract specialist to 
obtain clarification. 

To assess the extent to which agencies use schedule BPAs, what they buy 
with them, and why agencies use them, we used data from FPDS-NG, data 
from our file review, and information provided by contracting 
officials. More specifically, we analyzed data from FPDS-NG on civilian 
agency procurements for fiscal years 2004 to 2008 to determine the 5-
year trend in BPA use among civilian agencies and to compare the use of 
schedule BPAs to obtain services with the overall growth in contracting 
for services. To do so, we converted the data into fiscal year 2008 
constant dollars using the Bureau of Economic Analysis price index for 
services in the federal consumption expenditures category. To determine 
why agency officials chose to establish and use schedule BPAs rather 
than other contracting vehicles, we interviewed contracting officials 
across the agencies included in our review about their use of schedule 
BPAs. To determine what products and services agencies intended to 
purchase using the schedule BPAs in our sample, we analyzed data from 
our file review. 

To estimate DOD's usage of schedule BPAs for fiscal year 2008, we used 
DOD's contract coding system to identify the BPAs in FPDS-NG under 
which DOD agencies placed orders during fiscal year 2008. From that 
universe, we selected a random sample of BPAs. We used the EDA, DOD's 
online contract retrieval system, to review the BPAs. In the event that 
a BPA was not available in EDA, we replaced it with the next BPA on our 
list until we had 100 BPAs. In the three instances in which the 
documentation in EDA was insufficient to make a determination as to 
whether the BPA was a schedule BPA, we contacted the agency for 
clarification. In two of these instances, the contacting officer did 
not respond, and we replaced the BPAs with the next on our list. Next, 
we obtained data from FPDS-NG on the amount obligated using orders 
under these BPAs during fiscal year 2008. We found that 25 of the BPAs 
in our sample of 100 were schedule BPAs; orders under the 25 schedule 
BPAs obligated $106,011,561 of the $143,711,789 obligated to orders 
under the 100 BPAs in our sample. Based on this information, we 
estimate that 852 of the 5,178 DOD BPAs in FPDS-NG are schedule BPAs, 
with the 95 percent confidence interval between 589 and 1200 BPAs. We 
estimate their value as $3.3 billion, about 65 percent of the $5.1 
billion value of all BPAs, with the 95 percent confidence interval 
between $0.5 and $4.7 billion. 

To determine whether agencies are competing BPAs and the orders under 
them and whether agencies are taking advantage of opportunities for 
savings by seeking discounts when using these BPAs, we analyzed the 
data we obtained during reviews of the BPA and order files concerning 
competition and discounts, following up when necessary with additional 
questions and interviews of contracting officials. We reviewed BPA 
files to determine whether the requirement was competed when the BPA 
was established and when an order was placed by determining whether 
more than one vendor had been contacted. We also identified the 
ordering procedures in the Federal Acquisition Regulation (FAR) and the 
Defense Federal Acquisition Regulation Supplement (DFARS) and the level 
of competition required under them. We discussed with contracting 
officials what factors were considered when deciding to establish 
single vs. multiple award BPAs. To determine whether contracting 
officials sought discounts and whether the contractor provided 
discounts either when the BPA was established or when orders were 
placed, we reviewed files for the BPA and the order. We then followed 
up with contracting officers or contract specialists as needed. 

To determine whether the agencies in our sample are conducting the 
required annual reviews, we examined the files for the schedule BPAs in 
our sample for documentary evidence of each element of the annual 
review as listed in FAR 8.405-3(d). Where there was no documentation of 
annual reviews in the contract file, we asked agency officials to 
provide us with the appropriate documentation. We conducted interviews 
with agency contracting officials, to determine how they interpreted 
the relevant FAR provision and clarify information in the BPA files. We 
reviewed the contract files to determine whether the GSA schedule 
contracts had expired. If there was no GSA schedule data in the BPA 
file or the file suggested that the schedule contract had expired, we 
searched the GSA website (GSA e-Library) to determine whether the GSA 
schedule contracts were still in effect. For those schedule contracts 
that were no longer listed on GSA e-Library, we contacted GSA to obtain 
documentation of either the date the schedule contract expired or the 
current expiration date. We reviewed the BPA files to determine if the 
contracting officer or contract specialist checked to see if estimated 
amounts had been exceeded. 

We visited or contacted the following offices for our review: 

Department of Agriculture: 

* Agricultural Research Service, Beltsville, Maryland: 

* Food and Nutrition Service, Alexandria, Virginia: 

* Food Safety and Inspection Service, Beltsville, Maryland: 

* U.S. Forest Service:
- Arlington, Virginia:
- Atlanta, Georgia: 

* Northwest Oregon Contracting Area, Sandy, Oregon: 

* National Finance Center, New Orleans, Louisiana: 

* Office of Procurement and Property Management:
- Washington, D.C.
- Fort Collins, Colorado: 

General Services Administration, Washington, D.C. 

Department of Health and Human Services: 

* Health Resources and Services Administration, Rockville, Maryland: 

* National Institutes of Health, Rockville, Maryland: 

* Office of the Assistant Secretary for Administration and Management, 
Washington, D.C. 

Department of Homeland Security: 

* Citizenship and Immigration Services, Williston, Vermont: 

* Customs and Border Protection:
- Washington, D.C.
- Indianapolis, Indiana: 

* Federal Emergency Management Agency:
- Atlanta, Georgia:
- Chicago, Illinois:
- Austin, Texas:
- Mt. Weather, Virginia:
- New Orleans, Louisiana:
- Washington, D.C. 

* Immigration and Customs Enforcement:
- Dallas, Texas:
- Denver, Colorado:
- Grand Prairie, Texas:
- Philadelphia, Pennsylvania:
- Washington, D.C. 

* Office of Procurement Operations, Washington, D.C. 

* U.S. Coast Guard:
- Baltimore, Maryland:
- Washington, D.C. 

Department of Justice: 

* Bureau of Alcohol, Tobacco, Firearms and Explosives, Washington, D.C. 

* Federal Bureau of Prisons, Washington, D.C. 

* Drug Enforcement Administration, Arlington, Virginia: 

* Justice Management Division, Washington, D.C. 

* Office of the Federal Detention Trustee, Arlington, Virginia: 

Office of Federal Procurement Policy, Washington, D.C. 

Social Security Administration, Baltimore, Maryland: 

Department of Defense: 

* Defense Procurement and Acquisition Policy, Arlington, Virginia: 

* Department of the Air Force:
- Air Force District of Washington, Washington, D.C. 

* Department of the Army:
- Office of the Deputy Assistant Secretary of the Army, Arlington, 
Virginia:
- Army Contracting Agency, Contracting Center of Excellence, 
Alexandria, Virginia:
- Tank-Automotive and Armaments Command, Warren, Michigan: 

* U.S. Marine Corps, Quantico, Virginia: 

* Department of the Navy:
- Naval Air Warfare Center - Aircraft Division, Patuxent River, 
Maryland:
- Naval Inventory Control Point, Mechanicsburg, Pennsylvania:
- Space and Naval Warfare Systems Command Systems Center, San Diego, 
California: 

* Defense Information Systems Agency, Defense Information Technology 
Contracting Organization, Scott Air Force Base, Illinois: 

* Defense Logistics Agency:
- Defense Supply Center Philadelphia, Pacific Region, Pearl Harbor, 
Hawaii:
- Defense Supply Center Philadelphia, Philadelphia, Pennsylvania:
- Enterprise Support Base Contracting Office, Fort Belvoir, Virginia: 

As we describe in our methodology, we performed extensive tests to 
assess the reliability of the automated information we used to select 
our collection of BPAs. For example, we confirmed that the information 
contained in the automated records reflected the information contained 
in the contract files. We based our estimate of DOD's use of schedule 
BPAs on information we verified using automated images of the contract 
records. Accordingly, we believe that the data we used to support our 
findings are reliable for our intended purposes. 

We conducted this performance audit from June 2008 to August 2009, in 
accordance with generally accepted government auditing standards. Those 
standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

[End of section] 

Appendix II: Comments from the General Services Administration: 

GSA: 
U.S. General Services Administration: 
GSA Administrator: 
1800 F Street, NW: 
Washington, DC 20405-0002: 
Telephone: (202) 501-0800: 
Fax: (202) 219-1243: 
[hyperlink, http://www.gsa.gov] 

September 1, 2009: 

The Honorable Gene L. Dodaro: 
Acting Comptroller General of the United States: 
U.S. Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Dodaro: 

Thank you for the opportunity to comment on the U.S. Government 
Accountability Office (GAO) draft report, "Contract Management: 
Agencies Are Not Maximizing Opportunities for Competition or Savings 
under Blanket Purchase Agreements despite Significant Increase in 
Usage" (GAO-09-792). 

We agree with the GAO findings and recommendations pertaining to the 
U.S. General Services Administration and agree to include in the 
guidance on our website specific language that agencies can use in 
their requests for quotation to clearly request discounted pricing when 
establishing Schedule Blanket Purchase Agreements. 

Should you have any questions, please contact me. Staff inquiries may 
be directed to Mr. Steven Kempf, Assistant Commissioner, Office of 
Acquisition Management. He can be reached at (703) 605-5527. 

Sincerely, 

Signed by: 

Paul F. Prouty: 
Acting Administrator 

cc: Mr. John P. Hutton, Director, Acquisition Sourcing Management, GAO. 

[End of section] 

Appendix III: Comments from the Department of Health and Human 
Services: 

Department Of Health & Human Services: 
Office Of The Secretary: 
Assistant Secretary for Legislation: 
Washington, DC 20201: 

August 28, 2009: 

John P. Hutton: 
Director, Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G Street NW: 
Washington, DC 20548: 

Dear Mr. Hutton: 

Enclosed are the Department's comments on the U.S. Government 
Accountability Office's (GAO) draft report entitled: Contract 
Management: Agencies Are Not Maximizing Opportunities for Competition 
or Savings under Blanket Purchase Agreements Despite Significant 
Increase in Usage (GAO-09-792). 

The Department appreciates the opportunity to review and comment on 
this draft report before its publication. 

Sincerely, 

Signed by: 

Andrea Palm: 
Acting Assistant Secretary for Legislation: 

Enclosure: 

[End of letter] 

General Comments Of The Department Of U.S. Health And Human Services 
(HHS) On The Government Accountability Office's (GAO) Draft Report 
Entitled, Contract Management: Agencies Are Not Maximizing 
Opportunities For Competition Or Savings Under Blanket Purchase 
Agreements Despite Significant Increase In Usage (GAO-09-792): 

While GAO made no specific recommendations to the Department, HHS 
continues to reinforce the need for our contracting officers to comply 
with requirements for Blanket Purchase Agreements (BPAs) established 
against the U.S. General Services Administration schedule contracts. As 
such, this will be accomplished through: (a) conducting additional 
training; (b) discussing GAO's findings and sharing successful 
practices at our quarterly Executive Committee for Acquisition (ECA) 
meetings; and (c) incorporating compliance with the requirements of the 
Federal Acquisition Regulation Part 8.405-3 for Blanket Purchase 
Agreements in our Procurement Management Review protocols. 

More specifically, GAO concluded that no evidence of competition was 
found in 18 BPAs sampled from HHS' National Institutes of Health (NIH). 
We note that it is NIH's policy to ensure the prices are competitive 
before the award is made. To this end, NIH pre-screens vendors by 
reviewing their proposed prices and discounts while comparing the 
vendor's prices with market prices and other vendor prices. Once this 
is accomplished the vendor's marketing strategies are discussed to 
ascertain the value of having a BPA with the specific vendor. Each 
subsequent order is competed amongst at least three vendors and a best 
value determination is made prior to order placement. 

[End of section] 

Appendix IV: Comments from the Department of Homeland Security: 

U.S. Department of Homeland Security: 
Washington, DC 20528: 

September 4, 2009: 

John P. Hutton: 
Director: 
Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G St, NW: 
Washington, DC 20548: 

Dear Mr. Hutton: 

Thank you for the opportunity to review and comment on the Government 
Accountability Office's (GAO's) Draft Report GAO-09-792 entitled 
Contract Management: Agencies Are Not Maximizing Opportunities for 
Competition or Savings Under Blanket Purchase Agreements Despite 
Significant Increase in Usage. 

The Office of the Chief Procurement Officer (OCPO) concurs with the 
recommendations included within the draft GAO report. While many of 
these recommendations are targeted at other agencies (e.g., Federal 
Acquisition Regulation (FAR) Council for FAR revisions, GSA for the GSA 
website), DHS' OCPO will take the following actions: 

The draft GAO report makes the following 3 recommendations to the 
Administrator of the Office of Federal Procurement Policy: 

Recommendation 1: To ensure that federal agencies take greater 
advantage of the opportunities that competition provides under schedule 
BPAs: 

* take steps to amend the FAR to clarify when establishing a schedule 
BPA using the limited source justifications of the FAR, including to 
only one vendor, is or is not appropriate; and; 

* consider including in the pending proposed FAR rule implementing the 
provisions of section 863 of the National Defense Authorization Act of 
2009, an amendment to FAR 8.4 specifying that the requirement to place 
on a competitive basis any order above the simplified acquisition 
threshold (generally $100,000) under multiple award contracts also 
applies to orders under single and multiple award BPAs. 

Response: The OCPO will issue guidance to the Department's Head of 
Contracting Activities (HCA's) regarding the usage of Blanket Purchase 
Agreements (BPA's), with an emphasis on (a) the FAR requirement for 
annual reviews of all BPAs, to include all mandatory elements; (b) 
awarding BPA's on the basis of competition (and if not, the 
justification requirements); (c) the use of sole source versus multiple 
award BPA's, and (d) pricing of both BPAs and orders; 

Recommendation 2: To improve compliance with the FAR requirement to 
conduct annual reviews of schedule BPAs, increasing opportunities for 
additional savings and avoiding violations of competition rules, take 
steps to require federal agencies to put procedures in place to ensure 
that annual reviews are conducted. 

Response: Upon issuance of the final FAR rule, OCPO will review the 
Homeland Security Acquisition Manual (HSAM) to determine if additional 
guidance is needed with respect to the usage of BPAs within the 
Department. 

Recommendation 3: Further, to assist federal agencies in requesting and 
obtaining discounts when establishing schedule BPAs, we recommend that 
the GSA Administrator include in the guidance on its Website specific 
language that agencies can use in their requests for quotation to 
clearly request discounted pricing when establishing schedule BPAs. 

Response: OCPO will revise the curriculum of the existing pricing 
course currently offered to all DHS Components to include additional 
training with respect to BPAs and OCPO will conduct a special oversight 
review regarding the DHS Components' usage of BPAs during fiscal year 
2010. 

Thank you again for the opportunity to comment on this Draft Report and 
we look forward to working with you on future homeland security issues. 

Sincerely, 

Signed by: 

Jacqueline L. Lacasse, for: 

Jerald E. Levine: 
Director: 
Departmental Audit Liaison Office: 

[End of section] 

Appendix V: Comments from the Social Security Administration: 

Social Security: 
Social Security Administration: 
Baltimore, MD 21235-0001: 

August 31, 2009: 

Mr. John P. Hutton: 
Director, Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, D.C. 20548: 

Dear Mr. Hutton: 

Thank you for the opportunity to review and comment on the draft 
report, "Contract Management: Agencies are not Maximizing Opportunities 
for Competition or Savings under Blanket Purchase Agreements despite 
Significant Increase in Usage" (GAO-09-792). 

We have one comment. On page 24, the report states, "For instance, at 
the Social Security Administration, an annual review had not been 
conducted for the BPA, and the underlying GSA schedule contract had 
been canceled one year into a 7-year period of performance. The agency 
had continued to place orders, totaling $3.4 million, under this BPA, a 
potential violation of the CICA." We do not believe this statement is 
accurate, because we do not believe there was a Competition in 
Contracting Act (CICA) violation. 

Consistent with CICA, we conducted a competition among General Services 
Administration (GSA) schedule vendors for a blanket purchase agreement 
(BPA) for services. The competition resulted in us awarding a BPA to 
General Physics Corporation (GPC) against one of its existing schedule 
contracts. Subsequent to our award of the BPA to GPC, GSA requested 
that GPC consolidate several of its existing schedule contracts into 
one single schedule contract. GPC complied with GSA's request, and 
GPC's schedule contracts, including the one referenced in our BPA, were 
consolidated into one contract. GSA gave this consolidated contract a 
new contract number and issued the following guidance: 

"You will continue performance of any existing orders/BPAs under the 
terms and conditions which existed at the time of award for the 
duration f the order's/BPA's period of performance. Agencies will Not 
be required to modify existing orders/BPAs." 

The orders we placed against the BPA did not violate CICA. We properly 
competed the BPA, and GPC had a schedule contract in place when we 
placed the orders. Ho ever, we recognize that our contracting officer 
failed to reference the correct GSA schedule contract number when 
placing orders against the BPA. The contracting officer's reference to 
GP 's old schedule contract number on the orders was not a violation of 
CICA. 

In July 2009, we issued a reminder to contracting officers to review 
BPAs annually. We will issue another reminder by the end of September 
2009. Contracting officers will preform these reviews to ensure we are 
still obtaining the best value, and the underlying GSA schedule 
contracts are still in effect and are properly referenced in all of our 
orders. 

Given this explanation, if you believe a comment is still necessary, we 
suggest the following language: "For instance, at the Social Security 
Administration, an annual review had not been conducted for the BPA, 
and the underlying GSA schedule contract had been a new number by GSA 
one year into a 7-year period of performance. The agency placed orders, 
totaling $3.4 million under this BPA, without referencing the new 
contract number." 

If you have any questions, please contact Candace Skurnik, Director, 
Audit Management and Liaison Staff, at (410) 965-4636. 

Sincerely, 

Signed by: 

Mary Glenn Croft: 
Deputy Commissioner for Budget, Finance and Management: 

[End of section] 

Appendix VI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

John P. Hutton, (202) 512-4841 or huttonj@gao.gov: 

Acknowledgments: 

In addition to the contact named above, Michele Mackin, Assistant 
Director; Kathryn Edelman; Bridget Grimes; Paula J. Haurilesko; Art 
James, Jr.; Brandon Jones; Julia Kennon; Arthur Lord; Susan Neill; 
Kenneth Patton; Caitlin A. Tobin; and Alyssa Weir made key 
contributions to this report. 

[End of section] 

Footnotes: 

[1] Another type of BPA, known as a traditional BPA, does not rely on 
GSA schedule contract terms and conditions and is subject to different 
regulations than schedule BPAs. In the remainder of this report, we use 
the term "schedule BPAs" to refer to BPAs established under GSA 
schedule contracts. 

[2] We reviewed 352 orders because, in some cases, more than one agency 
or component had issued an order under the same BPA. 

[3] GSA does not maintain specific information on the schedule BPAs 
established by federal agencies. 

[4] Throughout this report, when we discuss obligations under BPAs, we 
are referring to obligations using BPA orders. 

[5] The procedures of FAR Part 13 still apply to traditional BPAs. 

[6] Pub. L. No. 107-107, § 803 (2001) (repealed by the Duncan Hunter 
National Defense Authorization Act for Fiscal Year 2009, Pub. L. No. 
110-417, § 863(f) (2008)). 

[7] Defense Federal Acquisition Regulation Supplement (DFARS) 208.405- 
70. Current regulations also expand the application to the ordering of 
supplies. 

[8] Pub. L. No. 110-417, § 863. The legislation required that the FAR 
be amended no later than October 14, 2009. This legislation applies to 
all orders exceeding the simplified acquisition threshold (generally 
$100,000) and to the purchase of property or services. 

[9] Trend data are in constant fiscal year 2008 dollars. 

[10] Appendix I contains a detailed explanation of our methodology for 
arriving at this estimate. 

[11] DOD began feeding its procurement data directly into FPDS-NG in 
fiscal year 2007, a few years after civilian agencies. When DOD shifted 
from its DD 350 database to FPDS-NG, it carried with it some different 
coding conventions. We have previously reported on other coding 
differences. See GAO, Defense Contracting: Improved Oversight and 
Controls Needed Over DOD's Time-and-Materials Contracts, [hyperlink, 
http://www.gao.gov/products/GAO-07-273] (Washington, D.C.: June 29, 
2007). 

[12] The 8(a) program is one of the federal government's primary means 
for developing small businesses owned by socially and economically 
disadvantaged individuals. Firms approved as 8(a) participants can 
receive business development assistance from the Small Business 
Administration. 

[13] As noted earlier, prior to the amendments to the FAR in 1997, 
agencies were not required to consider more than one vendor when 
establishing a BPA. Eight of the 336 BPAs we reviewed were established 
prior to these changes and consequently were not required to be 
competed when established. 

[14] FAR 8.405-6. 

[15] Alaska Native Corporation-owned businesses, by statute, can 
participate in the Small Business Administration's 8(a) business 
development program. See GAO, Contract Management: Increased Use of 
Alaska Native Corporations' Special 8(a) Provisions Calls for Tailored 
Oversight, [hyperlink, http://www.gao.gov/products/GAO-06-399] 
(Washington, D.C.: Apr. 27, 2006). 

[16] The FAR cites GSA's determination of fair and reasonable pricing 
in the context of not requiring a separate determination of fair and 
reasonable pricing, not as justification for not following the 
processes in the FAR for considering multiple vendors when establishing 
a BPA. See FAR 8.404(d). 

[17] The Administrator of the Office of Federal Procurement Policy 
serves as chair of the Federal Acquisition Regulatory Council (FAR 
Council). The FAR Council--whose members include the DOD Director of 
Defense Procurement and Acquisition Policy, NASA's Associate 
Administrator for Procurement, and the GSA Chief Acquisition Officer-- 
oversees development and maintenance of the FAR. 

[18] Pub. L. No. 110-417, § 863 (2008). 

[19] Four of these single award BPAs were established prior to the 1997 
amendments to the FAR and consequently were not required to be competed 
when established. 

[20] FAR 8.405-3(c). 

[21] FAR 8.405-3(b)(2). 

[22] Prior to the 2004 amendments, the FAR did not always require 
agencies to consider more than one vendor when ordering from a BPA. 

[23] DFARS 208.405-70. 

[24] Duncan Hunter National Defense Authorization Act for Fiscal Year 
2009, Pub. L. No. 110-417, § 863 (2008). 

[25] Since 1997, seeking discounts when establishing schedule BPAs has 
been encouraged under FAR subpart 8.4, and in a 2004 amendment to the 
FAR this was explicitly required. Prior to 1997, the FAR did not always 
encourage or require seeking price reductions when establishing a 
schedule BPA. 

[26] FAR 8.405-3(d). 

[27] Sixteen of the BPAs in our sample had a period of performance of 
one year or less or had been in effect for less than a year and 
therefore would not have required an annual review. 

[28] Although a document in the file indicated that this contracting 
officer exercised an option year, we note that BPAs do not have 
options. In essence, this action extended the agreement by one year. 

[29] FAR 8.404(a); 41 U.S.C. § 259(b)(3). 

[30] Pub. L. No. 98-369, Div. B, Title VII, 98 Stat. 1175. 

[31] Canon USA, Inc., B-311254.2, June 10, 2008. In this bid protest, 
Canon USA objected to the Army's cancellation of an order under its 
schedule BPA. We denied the protest because the GSA schedule contract 
upon which the BPA was established had expired and therefore the BPA 
was no longer valid. 

[32] We excluded BPAs established or orders placed by the 
Transportation Security Administration (TSA) because TSA was not 
subject to the Federal Acquisition Regulation during fiscal year 2007. 

[33] EDA is an online document access system designed to provide 
acquisition related information for use by all of the Department of 
Defense. 

[End of section] 

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