http://www.defense.gov/contracts/It's a day-by-day list of Defense contracts let. I didn't have time to "play" with it, but two things popped out at me. First, it also seems to be a handy portal and search facility to other sources of contracting news and information.
Second, the number of "One bid was solicited with one bid received" contracts let seems predominant, at least on June 15, 2011.
On that last point, I had a post last year about the dilemma of one bid received. The "one bid solicited one bid received contract" is not the same thing; this latter appellation is otherwise known as "sole source". The dilemma of one bid received comes about in a competitive solicitation, and sole source is obviously not a competitive bid.
Congress.org reported earlier this year on the magnitude of single bid contracts:
Pentagon contracts: No bid required
The lack of competitive bidding in Pentagon contracts is notorious. But the problem extends well beyond the highly publicized cases that stem from a cozy or even possibly corrupt relationship between Pentagon officials and contractors. It includes cases, such as the roller deal, where the Pentagon gets locked into a single supplier because of the terms of the contract. It includes one-bid deals, in which a competition is structured in a way that draws only a single company. And it is exacerbated by a consolidation in the industry, meaning fewer big players available to go after Pentagon business.Indeed they have. Just a couple of months ago, the Director of Defense Procurement and Acquisition Policy in the Office of the Under Secretary of Defense issued this directive and reiterated a slightly earlier one:
The result, according to newly available Defense Department data, is that more than half the Pentagon’s total budget obligations for contracting last year were spent without effective competition or with no competition at all. That comes to about $188 billion, according to numbers provided by the Pentagon.
But the lack of competition is simply how the Pentagon normally does business. As a result, it gets locked into inflexible contracts, guaranteeing lucrative long-term deals for favored contractors and probably costing the government billions of extra dollars each year.
No-bid, or sole-source, contracts accounted for $140 billion of the overall $366 billion defense contracting budget in fiscal 2010, the Defense Department said in response to a query. The one-bid contracts totaled $48 billion.
As lawmakers begin to comb through the federal budget looking for ways to slash government spending without harming the military’s combat capabilities, these contracting practices are likely to receive new scrutiny.
SUBJECT: Improving Competition in Defense Procurements - Amplifying Guidance
The focus of my [prior] memorandum was on maximizing competition in situations where only one offer is received in a procurement utilizing competitive procedures. The purpose of this memorandum is to amplify that guidance in response to questions that have been raised.
[T]he use of [referenced] exceptions does not mitigate the need for competition nor the requirement for a determination that the price is fair and reasonable.
Unless an exception applies or a waiver is granted, the following procedures apply:
• If the solicitation was advertised for fewer than 30 days and only one offer is received, then the contracting officer shall cancel and resolicit for an additional period of at least 30 days; or
• If a solicitation allowed at least 30 days for receipt of offers and only one offer was received, then the contracting officer shall not depend on the standard at FAR 15.403-1(c)(ii) in determining the price to be fair and reasonable. Rather, the contracting officer shall use price or cost analysis in accordance with FAR 15.404-1 to make that determination. If the contracting officer believes that it is necessary to enter into negotiations with an offeror, the basis for these negotiations shall be either certified cost or pricing data or data other than certified cost or pricing data, as appropriate, in accordance with FAR 15.403-l(c), DFARS 215-403-l(c) and FAR 15.403-3(b). The negotiated price should not exceed the offered price.
I recognize that implementation of this policy may have the unintended consequence of increasing the contracting community's workload, but given today's scarcity of resources we need to ensure effective competition to the maximum extent possible. Every dollar saved through effective competition benefits the warfighter and the taxpayers.
In this context, a GAO report to Congress in 2010 is also instructive:
Scratching around in the web, I also found this forum which discussed one other economic aspect of the double-edged sword that comes from maximizing low price in search of competition. The forum consists of contractors and players in the school bus industry, and this particular thread was kicked off by this article:Opportunities Exist to Increase Competition and Assess Reasons When Only One Offer Is Received
Schools try to attract more bus contract bidders
According to school district officials, one is indeed a lonely number.Comments from the forum include these:
That’s how many vendors bid on the department’s bus contract during the past few bidding periods, eliminating any chance for the district to find any cost savings through market competition.
Part of the problem is the higher cost for vendors to do business. Rising fuel prices and more government-mandated safety features in school buses have limited the field of candidates equipped to provide services to a large district like Framingham.
In addition, many towns have had to cut back on busing to save money in their school budgets. Framingham reduced its fleet by 10 buses last year.
As the district bears down for another difficult budget season this year, officials are pulling out all the stops to attract more bids, and possibly find a better deal than the five-year contract they have with their current vendor, First Student, which expires in June.
Unlike in past bidding years, this year’s RFP will give more options to potential bidders, officials said. Vendors can either submit a bid to provide buses only or a full busing service with drivers included. New this year, there is also an option for bids for buses of varying sizes.
“We’re certainly willing to do anything that makes sense,” said school business director Edward Gotgart. “We wanted to see if there was anything we could do to … entice more vendors to participate in our bid.”
The problem with only having one bid is that the district has no way to know if it’s being overcharged.
~~ One is the only number when districts wipeout the competition through low-balling. This story seems to me more a propaganda release than reality. The competition has been wiped out by years of low-ball bidding that districts attached to like investment parasites. Now that the competition is gone some of these districts are whining about no competitive bids?
~~ Although others have the capability to fulfill a busing contract for school district, they don't have the capability to secure bids, whether on price or on the ability to get on the school district's radar, so to speak.
~~ States like Mass have laws that basically discourage and prohibit certain contractors from bidding. Having three year contracts when the cost of equipment and providing good operations is rising is just foolish. We look to bid in states and areas where customers want good service, good equipment and long term partnerships to work through the issues we all face today. Longer term agreements with good specifications and tough requirements are whats needed.
~~ Bottom line is this industry needs an enema. This industry has nothing to do with children anymore!
Aston Carter, undersecretary of defense for acquisition, technology and logistics, ran a short opinion piece in the Wall Street Journal not long ago addressing some of these issues and others facing an economically challenged federal defense department:
The Pentagon Is Serious About Saving Money
Last year, we identified savings in the defense budget by cancelling unnecessary programs. Now we must find savings within programs and activities we do need.
Last year, the Pentagon awarded $55 billion in contracts that were supposed to be competitive but for which only one bid was received, usually from an incumbent contractor. Yet simple changes in how we structure evaluations and work with industry have been shown to reduce by 50% the incidence of single bids by incumbents. Competition is not always available, but the evidence is clear that the government is not availing itself of all possible competitive situations.
My plan covers five major areas.
First, ... we will establish affordability requirements that have the same force as high-priority performance requirements. We will also insist that our acquisition professionals and suppliers plan according to what programs should cost, not according to self-fulfilling historical estimates of what they will cost, as if nothing can be changed in how we do business.
Second, to incentivize productivity and innovation in industry, we must strengthen the connection between profit and performance in our business practices. Among other things, we are exploring ways... to reward contractors who control their costs and demonstrate exemplary performance.
Third, we must remove obstacles to effective competition. That means we should stop deluding ourselves with the idea that "directed buys" from two designated suppliers represent real competition.
Fourth, we will more aggressively manage the more than $200 billion we spend annually on services such as information technology services, weapons-systems maintenance and transportation. When most people think of the defense budget, they think of ships and planes. But more than 50% of our contract spending is for services. Believe it or not, our practices for buying such services are even less effective than for buying weapons systems.
Fifth, to reduce unproductive processes and bureaucracy, we are sifting through the mass of reports that we produce year after year and eliminating those that add no value. Even more worthy of scrutiny are the reports that the Pentagon requires from contractors, who dutifully write them and then bill the taxpayer for their busy-work.
UPDATE ALERT July 2019 FAR Council Introduces Limits on the Single-Offer Adequate Price Competition Exception (The firm Crowell & Moring LLP have issued the article cited and linked.)
On June 12, 2019, the FAR Council issued a final rule amending the FAR to address an exception from certified cost or purchasing data requirements when price is based on adequate competition. In particular, the final rule amends the definition of “adequate price competition” in FAR 15.403-1(c) for submission of certified cost or pricing data to DoD, NASA, and the Coast Guard so that the adequate price competition exception now applies only when “two or more responsible offerors, competing independently, submit priced offers that satisfy the Government’s expressed requirement.”
This means that if only one offer is received, even if submitted with the expectation of competition, the exception no longer applies. For all other agencies, the exception still applies even when only one offer is received, provided there is a reasonable expectation that two or more responsible offerors would submit offers, or price analysis demonstrates that the proposed price is reasonable.
Though this rule represents a change to the FAR, we note that a similar rule has existed in the Defense Federal Acquisition Regulation Supplement at 215.371-3 for a number of years.
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