Defense Contracting: DOD's Use of Class Justifications for Sole-Source Contracts

GAO-14-427R Published: Apr 16, 2014. Publicly Released: Apr 16, 2014.
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What GAO Found

The Department of Defense (DOD) class justifications included in GAO's sample were used primarily for the acquisition of weapon systems or related subsystems and components. About 77 percent covered specific weapon system development, production, sustainment, or modernization efforts; about 14 percent covered logistics support of multiple weapon systems or training systems; and the remaining 9 percent covered other requirements. Because weapon systems are typically used for many years, DOD officials told GAO class justifications provided an administrative efficiency by allowing one justification for multiple contracts that would essentially require the same justification. Most of the class justifications in GAO's sample had a total value of over $85.5 million and required approval at the highest level--the senior procurement executive of the DOD component. About 90 percent of the class justifications in GAO's sample cited only one responsible source to meet the requirements, generally because the contractor's ownership of proprietary technical data or expertise prevented the ability to compete the contract. The class justifications GAO reviewed generally cited the publication of notices of proposed contract actions on the Federal Business Opportunities website or market research to identify other qualified sources, neither of which identified other contractors that could meet the requirements. About 17 percent of the class justifications identified plans to compete future requirements. For example, three cited plans to acquire technical data to enable future competition and two cited efforts to break out some portion of the requirement for competition.

Why GAO Did This Study  

Awarding contracts through full and open competition is key to ensuring that the federal government efficiently acquires goods and services to best meet its needs. However there are certain circumstances when competition may not be practical. According to the Federal Acquisition Regulation (FAR), noncompetitive contracts must generally be supported by written justifications that address the specific exception to full and open competition that is being applied to the procurement. Justifications may cover an individual contract or multiple contract actions under a single “class justification.” which generally include a dollar limit and time period for all actions taken under the authority. Additionally, according to the FAR, justifications must be approved at various levels within the organization based on the estimated dollar value of the contract or contracts, but there are no separate requirements for either the justification or approval of class justifications.

GAO was asked to review the characteristics of sole-source contracts where multiple contracts actions are justified on a class-basis. This report covers for identified DOD class justifications (1) products and services included, (2) the rationale cited, and (3) efforts to obtain competition. GAO selected DOD for this review because it accounted for the highest percentage of noncompetitive obligations across all federal agencies in fiscal year 2012. The universe of contracts justified and approved on a class basis is unknown because the information is not tracked in the Federal Procurement Data System-Next Generation—the government’s procurement database. Beginning in 2009, the FAR generally required federal agencies to publish their justifications on the Federal Business Opportunities website—federal agencies’ primary tool for soliciting potential offers. GAO identified a nonprojectable sample of 65 class justifications from fiscal years 2009 through 2013 from prior and current GAO work that reviewed various aspects of DOD noncompetitive contracting, and by searching the Federal Business Opportunities website. GAO reviewed and summarized the information within each class justification but did not independently verify the information contained in the justification documents. GAO reviewed the Federal Acquisition Regulation and DOD policy to determine requirements, if any, related to class justifications and interviewed DOD and component officials to obtain their perspective on the use of class justifications.

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