Information Technology: Agencies Need Better Information on the Use of Noncompetitive and Bridge Contracts
Fast Facts
Competition among companies for federal information technology contracts is critical to achieving the best return on investment for taxpayers. However, noncompetitive contracts—including bridge contracts—are also allowed under certain circumstances.
Federal data estimates 30% of IT spending is noncompetitive—or about $15 billion annually. However, this estimate may not be accurate. We found some agencies misreported whether certain orders were competitive or noncompetitive. This calls the federal estimate into question.
We recommended that selected agencies identify the reason for these errors and correct the problem.
Highlights
What GAO Found
From fiscal years 2013 through 2017, federal agencies reported obligating more than $15 billion per year, or about 30 percent, of information technology (IT) contract spending on a noncompetitive basis (see figure).
Reported Competition on Information Technology Contract Obligations, Fiscal Years 2013-2017 (fiscal year 2017 dollars)
GAO found, however, that Departments of Defense (DOD), Homeland Security (DHS), and Health and Human Services (HHS) contracting officials misreported competition data in the Federal Procurement Data System-Next Generation (FPDS-NG) for 22 of the 41 orders GAO reviewed. GAO's findings call into question competition data associated with nearly $3 billion in annual obligations for IT-related orders. DHS identified underlying issues resulting in the errors for its orders and took corrective action. DOD and HHS, however, had limited insight into why the errors occurred. Without identifying the issues contributing to the errors, DOD and HHS are unable to take action to ensure that competition data are accurately recorded in the future, and are at risk of using inaccurate information to assess whether they are achieving their competition objectives.
GAO found that DOD, DHS, and HHS primarily cited two reasons for awarding a noncompetitive contract or order: (1) only one source could meet the need (for example, the contractor owned proprietary technical or data rights) or (2) the agency awarded the contract to a small business to help meet agency goals.
GAO estimates that about 8 percent of 2016 noncompetitive IT contracts and orders at DOD, DHS, and HHS were bridge contracts, awarded in part because of acquisition planning challenges. GAO previously recommended that the Office of Federal Procurement Policy define bridge contracts and provide guidance on their use, but it has not yet done so. GAO believes that addressing this recommendation will help agencies better manage their use of bridge contracts.
Additionally, GAO estimates that about 7 percent of noncompetitive IT contracts and orders were used to support outdated or obsolete legacy IT systems. Officials from the agencies GAO reviewed stated these systems are needed for their mission or that they are in the process of modernizing the legacy systems or buying new systems.
Why GAO Did This Study
The federal government spends tens of billions of dollars each year on IT products and services. Competition is a key component to achieving the best return on investment for taxpayers. Federal acquisition regulations allow for noncompetitive contracts in certain circumstances. Some noncompetitive contracts act as “bridge contracts”—which can be a useful tool to avoid a lapse in service but can also increase the risk of the government overpaying. There is currently no government-wide definition of bridge contracts.
GAO was asked to review the federal government's use of noncompetitive contracts for IT. This report examines (1) the extent that agencies used noncompetitive contracts for IT, (2) the reasons for using noncompetitive contracts for selected IT procurements, (3) the extent to which IT procurements at selected agencies were bridge contracts, and (4) the extent to which IT procurements were in support of legacy systems. GAO analyzed FPDS-NG data from fiscal years 2013 through 2017 (the most recent and complete data available). GAO developed a generalizable sample of 171 fiscal year 2016 noncompetitive IT contracts and orders awarded by DOD, DHS, and HHS—the agencies with the most spending on IT, to determine the reasons for using noncompetitive contracts and orders, and the extent to which these were bridge contracts or supported legacy systems.
Recommendations
GAO recommended DOD and HHS identify the reasons why competition data for certain orders in FPDS-NG were misreported and take corrective action. DOD and HHS concurred.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should direct the Under Secretary of Defense for Acquisition and Sustainment to identify the reasons behind the high rate of miscoding for orders awarded under multiple award contracts and use this information to identify and take action to improve the reliability of the competition data entered into FPDS-NG. (Recommendation 1) |
Closed – Implemented
DOD agreed with the recommendation. In November 2021, in response to the findings from GAO's report, DOD issued a memorandum reminding the DOD contracting community of how to appropriately code competition information for single-award and multiple award indefinite-delivery contracts and orders in FPDS-NG. The memorandum included relevant sections of the Defense Federal Acquisition Regulation Supplement's Procedures, Guidance, and Information. When asked, in relation to the memorandum, the extent to which DOD had identified the reasons associated with the miscoding errors, in August 2022 DOD officials told us that DOD's Office of Defense Pricing and Contracting reviewed and analyzed FPDS-NG data and found user input errors were the source of miscodings related to multiple award contracts. Issuing the memorandum should help address user input errors and thus improve the reliability of FPDS-NG competition data related to single and multiple award contracts and orders.
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| Department of Health and Human Services | The Secretary of Health and Human Services should direct the Associate Deputy Assistant Secretary for Acquisition to identify the reasons behind the high rate of miscoding for orders awarded under multiple award contracts and use this information to identify and take action to improve the reliability of the competition data entered into FPDS-NG. (Recommendation 2) |
Closed – Implemented
HHS agreed with this recommendation. While HHS was unable to identify analyses conducted to determine the reasons behind the high rate of miscoding for orders awarded under multiple award contracts, as identified in the December 2018 report, the department has taken steps that meet the intent of the recommendation. In particular, in April 2022 the department provided training for the HHS acquisition community on FPDS data accuracy challenges. The training specifically flagged miscoding orders-in particular for exception to fair opportunity fields for orders awarded under single and multiple award contracts-as a focus area. The training included information on how miscodings occur and should be fixed, as well as links to relevant Federal Acquisition Regulation sections. HHS officials stated they plan to conduct similar trainings annually in the future. In addition, using a process HHS told us has been in place since fiscal year 2014, HHS reported an improvement in fiscal year 2021, as compared to fiscal year 2018, in coding competition information related to orders on multiple award contracts in FPDS. These steps meet the intent of the recommendation to identify and take action to improve the reliability of competition data entered into FPDS.
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