The ABA Model refers to this as a "sole source" procurement, but federal and other regimes might call it a no-bid solicitation. In either case, the requirement of competition is obviated by the complete lack of competitors. And by that is meant, NO other competitors, not simply other competitors with whom you'd rather not deal.
Abuse of this concept, which strikes at the very core of the competition principle, is legendary at every time and in every place, it seems. Some very recent examples:
Texas district paid $360K for simple math charts
A West Texas school district paid $360,000 for simple math instructional materials touted as "specialized data" under a no-bid contract that led to federal charges of fraud and embezzlement against the superintendent, documents show.
Prosecutors allege El Paso Independent School District Superintendent Lorenzo Garcia lied when he claimed in the 2006 proposal that Infinity Resources & Associates was the sole provider of the materials designed to prepare students for high-stakes standardized testing.
Authorities say Garcia also failed to disclose his financial stake in the company and a personal relationship with the owner, who has not been charged in the case.
Garcia has pleaded not guilty to a pair of conspiracy counts, one mail fraud count and one count of theft of federal funds. Garcia faces up to 20 years in prison on three counts and 10 on the other in the latest allegations brought against the 63,000-student district.
Two school board members have pleaded guilty to corruption charges since Garcia became superintendent in 2006. One admitted he sold his vote for money, while the other trustee confessed to taking part in a scheme to fraudulently award contracts.
Officials say they have centralized transactions through the district's purchasing department and now scrutinize goods and services through interviews with "sole source providers." Previously, a letter from the provider was enough to approve a contract.
Subsidiary of News Corp. Loses Deal With State
Thomas P. DiNapoli, the New York State Comptroller, had given the green light to state education officials in May to pursue a no-bid contract with Wireless Generation, an education technology company based in Brooklyn in which News Corporation had acquired a 90 percent stake last November for more than $360 million.
The comptroller’s office also said it now believed other companies could do the work, making a competitive bid necessary.
The concerns that killed the state contract follow other questions raised about Wireless Generation’s work in New York City.
The company was acquired by News Corporation just weeks after Joel I. Klein, a former New York schools chancellor, left city employment to work for News Corporation as vice president of educational technology. Wireless Generation helped to develop and run the city’s $80 million student data system, known as ARIS, as well as the technology behind one of Mr. Klein’s favorite projects, a computer-based learning model known as School of One.
Personal money judgement against local businessman for $3 million
Convicted [New Orleans] businessman Mark St. Pierre received a personal money judgment against him for $3,204,766.57, according to the U.S. District Attorney’s Office. St. Pierre was found guilty on 53 counts of conspiracy, bribery, wire fraud and money-laundering in May 2011. He was accused of bribing former city technology chief Greg Meffert with hundreds of thousands of dollars in order to land a multi-million dollar no-bid contract with the City of New Orleans.
Yearly Bill for Pentagon’s No-Bid Contracts: $140 Billion
Tucson-based Applied Energetics was awarded tens of millions in military contracts for its lightning weapon, all without full and open competition, and despite numerous problems in testing.
In the meantime, a competitor, called Xtreme Alternative Defense Systems, an Indiana-based firm with its own lightning-based counter-bomb technology, says it’s had good results with only a small fraction of the federal funding that Applied Energetics has received.
While Pentagon statistics say the overall level of competition has remained steady during the past decade, publicly available data show that Defense Department dollars flowing into non-competitive contracts have almost tripled since the terrorist attacks of 9/11. According to analysis by the Center for Public Integrity’s iWatch News, the value of Pentagon contracts awarded without competition topped $140 billion in 2010, up from $50 billion in 2001. That’s almost 40 percent of all Pentagon contract dollars.
There are a number of legal loopholes that allow the Defense Department, like other federal agencies, to avoid competition and to select a single company to provide the desired goods and services. In some cases, there may be only one legitimate supplier of needed goods. Or the government can argue that is has “an unusual and compelling urgency” meriting a restriction on who can bid. Or it can judge that holding a competition would have a detrimental impact on government operations or national security.
But those exceptions have become increasingly abused, [such as:]The use of large umbrella contracts to purchase goods and services that could be competed individually, thus resulting in lower price;
Justifying sole source contracts by citing an “urgent and compelling need” — when, in fact, the “urgency” stemmed from an agency’s lack of planning for requirements that have been known for years.
Extending large contracts as a “bridge,” rather than holding a new competition that would allow for multiple bids.
An overall failure to utilize competition in cases that could result in cost savings and better performance.
The Federal bipartisan Commission on Wartime Contracting will soon report that "the Pentagon has wasted more than $30 billion on contracts in Iraq and Afghanistan due to shoddy management and a lack of competition", according to this AFP news item.
The "Danger Zone" blog on Wired says,
We’ll have more at Danger Room about the growth of no-bid contracting over the coming days, and you can also read more at the Center for Public Integrity’s iWatch News. Check back here all week, as we’ll feature some of the most outlandish sole source and noncompetitive contracts, from billions spent on cafeteria services to a massive sole-source contract given to Russia’s number one arms dealer.
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