Acquisition Reform:

The Government's Market Research Efforts

NSIAD-97-3: Published: Oct 11, 1996. Publicly Released: Oct 11, 1996.

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Louis J. Rodrigues
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Pursuant to a legislative requirement, GAO reviewed the government's use of market research, focusing on: (1) existing federal government market research efforts, both before and after implementation of the Federal Acquisition Streamlining Act of 1994 (FASA), regarding commercial items and nondevelopmental items (NDI); and (2) the feasibility of creating a governmentwide database for storing, retrieving, and analyzing market data.

GAO found that: (1) GAO's review of 21 selected contracts and discussions with the Department of Defense (DOD) and civilian agency officials showed that the government's market research efforts varied widely, but the variances appeared to be appropriate; (2) the type and extent of market research varied for the 21 contracts reviewed; (3) overall, the agencies: (a) obtained commercial items or NDI in 16 of the 21 contracts, although for 3 of the 16, market research was, for legitimate reasons, not performed; and (b) used market research to obtain government unique items or services in 5 of the 21 contracts; (4) at the time of GAO's review, implementation of FASA's market research requirements was underway, but government and industry officials said it would take well over a year after the December 1, 1995, implementation date before the impact of the changes could be realized; (5) for example, in GAO's review of Commerce Business Daily notices published from October 1995 to May 1996, GAO found that the final check on the government's market research, which the federal acquisition regulation (FAR) required, generally was not being used; (6) although officials at most of the activities GAO contacted said they were not aware of the requirement and would send out policy letters to increase compliance, the Director of Defense Procurement and the General Services Administration's Associate Administrator for Acquisition Policy took issue with an across-the-board application of the requirement, stating that they would take actions to amend the FAR to exempt certain contracts from this requirement; (7) there is strong opposition to creating a governmentwide, government-maintained database for storing, analyzing, and retrieving market data; (8) most government and industry officials said that: (a) such a database would be too costly to maintain, be hard to keep current, and provide few benefits; and (b) using the tools available on the Internet appears to be a more practical alternative; (9) for example, some officials stated that powerful search engines are becoming available on the Internet that will likely facilitate market research of private sector and government electronic catalogs; (10) in addition, interactive forums have been placed on the Internet, such as DOD's newly developed Commercial Advocates Forum, that provide useful market research tools and information; and (11) based on GAO's discussions with government and industry officials, and in light of new developments on the Internet, GAO does not believe that federal agencies should be required, at this time, to create a government-maintained database to store, retrieve, and analyze market data.

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