FedSpending Spotlight: Skyrocketing Contracts, Less Competition

Lurita Doan, the new head of the General Services Administration (GSA), recently complained about the growth of Government-wide Acquisition Contracts (GWACs) and the loss of contracting efficiency. Data from FedSpending.org reinforces these efficiency concerns by revealing the fast growth in federal contracts and, specifically, the remarkable growth of contracts for which there was little to no competition.

Given that hundreds of billions of taxpayer dollars are spent each year on federal contracts, maximizing efficiency should be a primary concern among federal agencies. Unfortunately, it appears this is often not the case. According to Doan, companies spend millions to get GWACs with agencies and then pass the costs onto government. GWACs are contracts established by individual agencies that give companies the potential to supply any agency with products and services. Companies listed on GWACs are supposed to be the most competent and reliable providers but not necessarily the cheapest. Even after narrowing the list of approved companies, competition among companies for individual task-order awards is supposed to exist.

However, too frequently only company bids on task orders under GWACs are taken into consideration. GSA wants to eliminate unnecessary GWACs and consolidate purchasing of technology and services under the GSA so the government can maximize competition and volume discounts. GSA believes that limited competition and reduced mass-purchasing power means that the government and American taxpayers are not getting the best price.

Research conducted through FedSpending, OMB Watch's new website that tracks more than $12 trillion in federal spending over the last six years, demonstrates the validity of Doan's concerns. The data reveals that from FY 2000 to FY 2005 the amount spent by the federal government on contracts has grown an astonishing 83 percent, rising from $208.8 billion to $381.9 billion.

In addition, the data indicates that a major portion of this growth is driven by contracts in which agencies permit limited or no competition for the contract. The amount of money spent on federal contracts awarded with no competition was $48.7 billion in FY 2000 and grew to $97.1 billion in FY 2005, an increase of 99.4 percent. Moreover, during the same time, the federal government went from spending $17.8 billion on contracts with only one bid to spending $40.1 billion, an increase of 125.3 percent over six years.

Competition is a fundamental tool to drive down prices, avoid wasteful spending and ensure that tax dollars are spent fairly and wisely. However, data indicates that federal agencies are abandoning this contracting principle. Previously, the lack of access to usable data made evaluating the level of competition in federal contracting extremely difficult, if not impossible, to perform. FedSpending is a new window into the world of federal government expenditures that enables citizens, journalists, and researchers to hold government more accountable for how it spends national resources.

 

While raising serious concerns about the lack of competition to keep federal contract costs under control, the data does not provide us with a clear picture of why this is the case. Perhaps the shift away from competition is an effort to achieve greater speed or is a by-product of fewer procurement staff available to oversee contract competitions. Whatever the reason, with hundreds of billions of tax dollars on the line, these streamlined agency contract decisions and their results deserve greater scrutiny from Congress, the media and the public.

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