Summary: Both Congress and the Department of Defense (DOD) are concerned about the continuing trend toward noncompetitive DOD procurements. GAO studied opportunities for introducing competition in DOD procurements by analyzing a random sample of goods and services purchased by DOD agencies for the first time in fiscal year 1979 and studied the decision process which led to noncompetitive buying.
GAO concluded that 25 of the 109 contracts in its sample had been inappropriately awarded noncompetitively. About $289 million of the noncompetitive procurements could have been competitive. Because of a lack of adequate statistical information, GAO could not determine how much could have been saved through additional competition. However, studies have shown that as much as 25 percent could be saved through increased competition. The primary reasons for the fiscal years' 1972 to 1978 decline in price competitive spending as a percentage of the DOD procurement budget were: (1) increased spending on and a concurrent loss of competition for petroleum and nuclear submarines; (2) increased use of design and technical competition for major weapon systems; and (3) greater emphasis on set-asides for businesses owned and controlled by socially or economically disadvantaged persons. Contracting officers failed to follow sound contracting procedures to ensure that only one company could satisfy the procurement requirements. Major processing deficiencies included improper use of the public exigency exception, inadequate performance of market research, insufficient development of a data package, and specifications which did not represent the Government's minimum needs. GAO also found that the Defense Nuclear Agency's use of early starts and unsolicited proposals inhibited competition. DOD recently required the services to develop plans to improve their competitive performances. These plans, however, do not specifically address the contracting problems identified in this report.
