Should Small Purchases Be Exempt From Complying With Social and Economic Program Requirements?
PSAD-80-77: Published: Sep 26, 1980. Publicly Released: Sep 26, 1980.
- Full Report:
A GAO study involved an evaluation of an Office of Federal Procurement Policy (OFPP) recommendation which advocated raising to $10,000 the minimum level at which social and economic programs are applied to the procurement process. Inflation has depreciated dollar threshold levels to insignificance. As a result, fewer and fewer purchases are exempt from social and economic provisions, and the relative costs and paperwork requirements of small contracts are pushed higher with the increasing number of provisions to administer. As a result, the full benefit and cost savings potential of small purchase procedures have not been realized.
The agency procurement officials interviewed felt that the small dollar value Government contracts should be exempt from social and economic requirements, that the small purchase threshold should be selected as the minimum threshold for application of these requirements, and would favor a raise in the small purchase threshold and an escalator clause to keep the thresholds current. They would endorse any effort to make simplified small purchase procedures truly simplified. GAO agreed. Higher and more uniform threshold levels would help streamline administration, and the attention now devoted to lower dollar value contracts could be used to provide better enforcement on contracts above the small purchase threshold. A raise in the Davis-Bacon threshold to $10,000 would still mean protection for the same group of workers to whom Congress originally afforded protection; that is, workers on other than small, relatively insignificant contracts. Programs such as Davis-Bacon impose administrative requirements that are particularly onerous and disproportionately great for contracts under $10,000. GAO does not feel that the very large number of small contracts should be encumbered by procedures and provisions designed to afford protection for workers on large dollar value contracts.
Recommendation for Executive Action
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Recommendation: The Office of Federal Procurement Policy should submit legislation to Congress to establish the small purchase threshold, currently $10,000, as the minimum threshold for all, not just selected, social and economic programs applied to the procurement process. The legislation should be submitted independent of the proposal for the Uniform Procurement System. The legislation should include provisions to raise the small purchase threshold to a level consistent with the inflationary trend that has occurred since it was established at $10,000 in 1974. An escalator clause should be included to permit administrative adjustments to prevent the time lag that now occurs between reductions in the value of money and legislative adjustments in thresholds affecting contracts. The legislation should include a procedure for monitoring future legislation to assure that no conflicts exist with the small purchase threshold.