When a contract is set to expire and there is a continuing need for services, but the follow-on contract is not ready to be awarded, the government can extend the existing contract or award a short-term sole-source contract to an incumbent contractor. These types of contracting arrangements have been referred to as “bridge contracts,” and they are used to ensure there is no gap in services. Bridge contracts are almost always noncompetitive, which may put the government at risk of paying more than it should for goods and services. While bridge contracts can be a necessary and appropriate tool, their use has also been associated with negative effects, such as higher contract prices due to a lack of competition and the inefficient use of staff and resources. No formal definition of bridge contracts exists, nor is there a requirement for agencies to track them in the Federal Acquisition Regulation (FAR), which provides uniform acquisition policies and procedures for executive agencies. In addition, bridge contracts are not identified in the Federal Procurement Data System-Next Generation (FPDS-NG) or any other federal database.
In an October 2015 report, GAO found that, although bridge contracts are typically envisioned as short-term, 17 of 29 bridge contracts it reviewed in-depth spanned longer than a year, with six lasting more than 3 years, potentially undetected by approving officials. The value of the 29 bridge contracts included in our review was over $225 million. Of the 26 cases in GAO’s review where follow-on contracts were later awarded—even after a lengthy bridge contract period—23 were awarded competitively. Some of these competitively awarded contracts lead to savings for the government, highlighting the importance of better management controls over the use of bridge contracts. For example, GAO found that when the Air Force awarded a competitive follow-on contract to provide logistics support services, it resulted in a monthly rate reduction of approximately $22,400 (34 percent).
For its October 2015 report, GAO also found that the three agencies it reviewed—the Departments of Defense (DOD), Health and Human Services (HHS), and Justice (DOJ)—had limited or no insight into their use of bridge contracts. None of the agencies have agency-level policies to manage and track their use of bridge contracts, nor do their acquisition regulations define bridge contracts. HHS officials told GAO that their agency has no overarching policy because the agency does not have a standard definition for bridge contracts. Officials at DOD said that, at the department level, the agency did not have any policies because bridge contracts had not previously been raised as a specific concern at the department. DOJ officials indicated they see defining bridge contracts as a government-wide issue, and officials from one of their components told GAO that the concept of defining bridge contracts was new to them. However, GAO found that two DOD components, the Navy and Defense Logistics Agency, have established policies that provide definitions and procedures to manage and track their use. The components took these steps due to concerns that bridge contracts were being used too frequently and can be an impediment to competition.
Federal internal control standards state that agencies should identify, analyze, and monitor risks associated with achieving objectives, and that information needs to be recorded and communicated to management so as to achieve agency objectives. One common procurement objective at federal agencies is to maximize competition. However, without a definition for bridge contracts and strategies for tracking and managing their use, agencies are not able to fully identify and monitor the risks related to these contracts, and therefore may be missing opportunities to increase competition. The Federal Acquisition Regulation (FAR) does not define bridge contracts. Staff from the Office of Management and Budget’s (OMB) Office of Federal Procurement Policy (OFPP), one of the entities responsible for initiating revisions to the FAR, acknowledged that the use of bridge contracts may introduce risks related to a lack of competition, such as the risk of higher contract prices. Similarly, contracting, program, and policy officials GAO spoke with also stated that while bridge contracts are an important “tool in their toolbox” for ensuring continuity of services, their prolonged use poses a risk to competition and that use of bridge contracts should be avoided when possible.
By defining bridge contracts and implementing a policy related to their use, the Navy and DLA have taken important steps to enhance these components’ management of bridge contracts. However, bridge contracts have been identified not only across the three agencies and eight components included in GAO’s review, but at other agencies as well, as evidenced by GAO’s past work and that of others (see, for example, GAO’s March 2012 and March 2014 reports). Therefore, the importance of defining and tracking bridge contracts is not limited to those agencies included in GAO’s review.
A uniform, government-wide definition and strategies for tracking and managing the use of bridge contracts would help ensure all agencies have better insights into their use of these contracts and provide agencies with the information necessary to manage their use. Otherwise, agencies are left without a complete picture or understanding of how long a bridge contract has been in place. Without such information, it is difficult for agencies to take steps to reduce their reliance on noncompetitive bridge contracts or remediate internal deficiencies—such as issues related to acquisition planning or challenges with the acquisition workforce—that may lead to delays in the award of follow-on contracts.
 The $225 million includes stand-alone bridge contracts for 20 of the 29 contracts we reviewed in-depth. The other 9 contracts used only contract extensions to bridge the gap in services. Fourteen of the 29 contracts used a combination of stand-alone bridge contracts and contract extensions. We were unable to calculate the value of contract extensions, as these values are reported as part of the predecessor contract in FPDS-NG.
 For its October 2015 report, GAO reviewed available policies and procedures for bridge contracts at DOD, HHS, and DOJ and several components within each agency. The eight components GAO reviewed were Air Force, Army, Navy, and Defense Logistics Agency within DOD; the National Institutes of Health and the Indian Health Service within HHS; and the Drug Enforcement Administration and Federal Bureau of Prisons within DOJ.
GAO recommended in October 2015 that to gain visibility and enable efficient management of the use of bridge contracts in federal agencies, the Administrator of OFPP take the following two actions:
The financial benefits of implementing these recommendations cannot be quantified because the universe of bridge contracts is currently unknown. However, implementing GAO’s recommendations would enable agencies to obtain the information necessary to help them determine the extent to which they can achieve cost savings through better management of these contracts.
The information contained in this analysis is based on findings from GAO’s October 2015 report. Because bridge contracts are not defined in the FAR or tracked in the federal procurement data system, GAO developed a definition based on its prior work and that of other federal agencies and developed a customized search of the federal procurement data system to identify potential bridge contracts. For the purposes of the October 2015 report, GAO defined the term “bridge contract” as (1) an extension to an existing contract beyond the period of performance (including base and option years), or (2) a new, short-term contract awarded on a sole-source basis to an incumbent contractor to avoid a lapse in service caused by a delay in awarding a follow-on contract. GAO focused its review on DOD, HHS, and DOJ and selected components because they were among those agencies with the highest number of potential bridge contracts. GAO reviewed policies and procedures at these three agencies and conducted an in-depth review of 29 contracts, which included interviews with program and contracting officials, contract file reviews of the bridge contract, the contract preceding the bridge contract, and, if awarded at the time of GAO's review, the follow-on contract.
In commenting on the October 2015 report on which this analysis is based, OFPP concurred with GAO's recommendation to provide guidance to agencies on bridge contracts. With regard to GAO's recommendation to develop a definition of bridge contracts and incorporate it in the FAR, OFPP stated its intention to work with members of the FAR Council to explore the value of doing so. GAO maintains that a uniform, government-wide definition for bridge contracts is imperative to providing agencies with the information necessary to monitor these contracts and to ensure they are being used as intended.
GAO provided a draft of this report section to DOD, DOJ, HHS, and OMB for review and comment. DOD, DOJ and HHS did not provide comments. In an email response, OMB staff stated that OFPP is developing guidance to address the use of bridge contracts in the context of agencies’ responsibility to manage risks associated with noncompetitive contracts. The response also stated that while a decision has not yet been made regarding changes to the FAR, OFPP is discussing the issue with the FAR Council and believes that the development of guidance will help clarify where regulatory coverage may be needed.
For additional information about this area, contact Michele Mackin at (202) 512-4841 or email@example.com.
The agencies included in GAO's review—the Departments of Defense (DOD), Health and Human Services, and Justice—had limited or no insight into their use of bridge contracts, as bridge contracts were not defined or addressed in department-level guidance or in the Federal Acquisition Regulation (FAR). However, GAO found that two DOD components, the Navy and Defense Logistics Agency, have institut...
The Departments of Defense (DOD) and State and the U.S. Agency for International Development (USAID) used the urgency exception to a limited extent, but the reliability of some federal procurement data elements is questionable. For fiscal years 2010 through 2012, obligations reported under urgent noncompetitive contracts ranged from less than 1 percent to about 12 percent of all noncompetitive con...