Federal Advertising Contracts:

Agencies Have Discretion in Setting Work Scope and Requirements

GGD-00-203: Published: Sep 8, 2000. Publicly Released: Oct 10, 2000.

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Pursuant to a congressional request, GAO reviewed federal advertising contracts awarded to advertising firms, focusing on: (1) the discretion that federal agencies have in determining a contract's scope of work and the contractor requirements for awarding advertising contracts; (2) whether contractor requirements in the solicitations for contracts were consistent with the scope of work described in the solicitations for the advertising contracts with first-time obligations in fiscal years 1998 and 1999 that were awarded to large advertising firms through full and open competition; and (3) whether there was required documentation for the sole-source justification and approval for the advertising contracts with first-time obligations in fiscal years 1998 and 1999 that were awarded through sole-source procedures.

GAO noted that: (1) while federal legislation and regulations prescribe various steps to be taken and factors to be considered in establishing contract requirements and selecting contractors, agencies have broad discretion in establishing the scope of work and requirements for prospective contractors; (2) this discretion may affect which contractors realistically can bid on a contract and win the award; (3) for example, if an agency determines that an advertising campaign must be conducted nationwide to effectively meet the agency's work needs or mission, then advertising firms without that capability would effectively be eliminated from competition; (4) acquisition reforms give contracting officers additional discretion in source selection; (5) for example, the Clinger-Cohen Act of 1996 gives contracting officers the authority to eliminate offerors by narrowing the range of offerors considered to be competitive if a contracting officer deems that there are too many offerors to evaluate efficiently; (6) in addition, contracting officers can consider factors beyond price in determining which offeror presents the best value; (7) legislation and regulations encourage contracting officers to use this discretion in order to satisfy agency requirements with regard to cost, quality, and timeliness of delivered product or service while continuing to conduct business with integrity, fairness, and openness; (8) the solicitations for the advertising contracts with first-time obligations in fiscal years 1998 and 1999 that were awarded to large advertising firms through full and open competition contained general evaluation criteria for prospective contractors, such as consideration of past performance; (9) in addition, every solicitation had more specific contractor requirements; (10) these included such requirements as that the contractor be a full-service advertising firm or have nationwide capability; (11) these specific contractor requirements seemed to be consistent with the scope of work requirements outlined in the solicitations; (12) for the 12 sole-source contracts that received first-time obligations during fiscal years 1998 or 1999, the justifications were prepared, as required, by the procuring agencies; and (13) also, all sole-source procurements had the required approval at the appropriate level within the agencies.

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