This audit was requested by Senator Carl Levin. The Senator requested a review of multiple award contracts to determine whether DoD was spending money in a manner consistent with the statutory requirement, and whether this contract mechanism was used in the best interest of the Department. We identified 636 contracts awarded from FY 1995 through FY 1998, each having a value of at least $5 million. Our review covered 12 multiple contract mechanisms, consisting of 50 contracts and 156 orders, valued at $143.7 million. The maximum value of the contracts is $2.6 billion.
The primary audit objective was to determine whether the use of multiple award task order contracts by DoD was consistent with statutory requirements and in the best interest of the Department. We also evaluated the management control programs as they applied to the objective.
Delivery orders for product contracts were awarded competitively and to the low bidder for 78 percent of the delivery orders. However, DoD use of multiple award task order contracting for services was not consistent with the statutory requirements. The statutory requirements call for each contractor to be given the opportunity to be considered for all orders over $2,500 awarded under the multiple award mechanism. DoD use of multiple award contracts did not take full advantage of the benefit of having multiple bidders. Specifically:
We recommend that the Under Secretary of Defense (Acquisition and Technology) direct that multiple award contracts be used only in situations in which all contractors are capable of performing all work under the proposed contract and that task order selection should include price as a primary and substantial factor in selection. We recommend that the Under Secretary of Defense (Acquisition and Technology) add language to the Federal Acquisition Regulation stating that orders should be awarded to meet the guaranteed minimum stated in the contract only after the "fair opportunity to be considered" process has been allowed to occur. We also recommend that the Under Secretary of Defense (Acquisition and Technology) establish goals and performance measures to monitor the number and dollar value of task orders for services contracts that are awarded sole source and resolve the material management control weakness for multiple award task order contracts.
The Director of Defense Procurement provided comments for the Under Secretary of Defense (Acquisition and Technology) and agreed that multiple award contracts should only be used in situations in which all contractors are capable of performing the work. The Director disagreed with the need to: focus on technical issues during the initial contract award and pricing issues during the task order award process, add language to the FAR regarding the award of guaranteed minimum values, and establish goals and procedures to monitor and reduce sole source task orders on services contracts. Also, the Director did not believe there was a management control weakness related to multiple award contracts. Although not required, the United States Special Operations Command provided comments that were similar to the Director of Defense Procurement comments. A discussion of management comments is in the Findings section of the report and the complete text is in the Management Comments section.
The comments were not fully responsive. We request the Under Secretary of Defense (Acquisition and Technology) reconsider our recommendations to use price as a substantial factor during the task order award process, establish a process to reduce and track the volume of sole source task orders on services contracts, and determine whether to report use of multiple award contracts as a material management control weakness. We request the Under Secretary provide comments on the final report by June 1, 1999.
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