How Selected DOD Consolidation Efforts Affected Small Business Opportunities

NSIAD-83-30: Published: Aug 12, 1983. Publicly Released: Aug 17, 1983.

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GAO was asked to review recent Department of Defense (DOD) procurement practices that may be running contrary to longstanding procurement principles.

GAO believes that consolidated procurements have the potential for limiting prime contract awards to small business firms and may not always result in the lowest cost to the Government. GAO concerns are that: (1) decisions to consolidate procurements are made without performing adequate economic analyses; (2) when major commands decide on consolidation or a regional approach during the procurement planning stage, a local procurement activity's small disadvantaged business utilization specialist will find it difficult to carry out his function of identifying requirements for a small business to perform; and (3) procurement activities may be placing an overreliance on subcontracting opportunities for small businesses to compensate for loss of opportunity on prime awards. GAO also believes that an any-or-all procurement approach, which would allow firms to submit proposals to perform the total requirement or individual components of the total requirement, offers more opportunity for small business participation and yet still allows the contracting officer to obtain the lowest cost to the Government.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should task the Director of the DOD Small and Disadvantaged Business Utilization Office to review policies and practices related to consolidated procurement and determine if the factors GAO identified as inhibiting small business opportunities in these two cases are systemic within DOD.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: When economy is the critical factor in determining the most desirable procurement approach, DOD should consider adopting the following approach: unless cost analysis demonstrates that the all-or-none approach can be expected to be less costly, the contracting officer should use the any-or-all approach because it allows the contracting officer to rely on the marketplace to determine the most cost-effective award or combination of awards and provides maximum opportunity for small firms to participate a prime contractors.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: When economy is the critical factor in determining the most desirable procurement approach, DOD should consider adopting the following approach: the small and disadvantaged business utilization specialist at an activity should participate during the requirements determination process to ensure that, when proposed, the all-or-none approach is justified by the expected cost savings or, lacking such a basis, that the any-or-all approach is followed instead.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: When economy is the critical factor in determining the most desirable procurement approach, DOD should consider adopting the following approach: the Director of the DOD Small and Disadvantaged Business Utilization Office should develop a methodology, which should be followed when the contracting officer determines that it is cost effective to award an entire package to a large firm, for encouraging prime contractors to subcontract work to small firms.

    Agency Affected: Department of Defense

 

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