GAO

United States General Accounting Office

Report to Congressional Requesters

March 2000 CONTRACT 

MANAGEMENT

Few Competing 

Proposals for Large 

DOD Information 

Technology Orders

GAO/NSIAD-00-56

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Contents

Letter 3

Appendixes Appendix I: Information on Selected Orders 18

Appendix II: Comments From the Office of Federal Procurement

Policy 21

Appendix III: Comments From the Department of Defense 24

Appendix IV: Comments From the General Services Administration 28

Appendix V: Comments From the National Institutes of Health 33

Appendix VI: GAO Contacts and Staff Acknowledgments 35

Tables Table 1: Competing Proposals Received 8

Abbreviations

DOD Department of Defense

FASA Federal Acquisition Streamlining Act

OFPP Office of Federal Procurement Policy
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United States General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-281493 Letr

March 20, 2000

The Honorable James M. Inhofe

Chairman

The Honorable Charles S. Robb

Ranking Minority Member

Subcommittee on Readiness and

 Management Support

Committee on Armed Services

United States Senate

The government acquires billions of dollars’ worth of information 

technology products and services each year, with the Department of 

Defense (DOD) acquiring a significant amount of its information 

technology needs using task- and delivery-order contracts.1

 After concerns 

were raised that federal agencies had avoided competition when ordering 

under such contracts,2

 Congress, through the Federal Acquisition 

Streamlining Act, imposed statutory requirements on the use of these 

contracts.3

 Agencies must now consider awarding multiple contracts rather 

than a single contract when planning a task- or delivery-order contract.

Our prior review of the implementation of multiple-award contracting 

showed that agencies did not consistently promote competition for orders.4

On the basis of this work, you asked us to expand our review and to 

examine DOD’s use of large orders under multiple-award contracts to 

acquire information technology products and services and assess

(1) whether contractors were provided a fair opportunity to be considered 

and the extent of competition realized and (2) how ordering offices met 

requirements to clearly specify the tasks to be performed or property to be 

1

 A task- or delivery-order contract provides for an indefinite quantity of supplies or services 

(within specific limits) to be furnished during a fixed period, with deliveries scheduled 

through orders with the contractor.

2 Streamlining Defense Acquisition Laws, Report of the DOD Acquisition Law Advisory 

Panel (Jan. 1993).

3

 P.L. 103-355 (Oct. 13, 1994).

4 Acquisition Reform: Multiple-award Contracting at Six Federal Organizations

(GAO/NSIAD-98-215, Sept. 30, 1998).
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delivered under the orders. We selected contracts managed by the Defense 

Information Systems Agency, the Department of Transportation, the 

General Services Administration, and the National Institutes of Health. We 

reviewed all orders with a value of over $5 million awarded for DOD 

requirements between October 1, 1997, and December 31, 1998. Most of the 

orders involved information technology services for ongoing defense 

programs. Appendix I includes information on the orders we reviewed. We 

briefed your staff on the results of our ongoing work. Subsequently, the 

National Defense Authorization Act for Fiscal Year 20005

 required that 

procurement regulations be revised to identify steps agencies should take 

to ensure that contractors are afforded a fair opportunity to be considered 

for orders and that orders clearly specify all the services or supplies to be 

delivered. This report contains information that can be used in developing 

these new regulations.

Results in Brief Most of the 22 large orders we reviewed were awarded without competing 

proposals having been received. Agencies made frequent use of the 

statutory exceptions to the fair opportunity requirement. Further, 

contractors frequently did not submit proposals when provided an 

opportunity to do so. Only one proposal was received in 16 of the 22 

cases—the 16 cases all involved incumbent contractors and represented 

about $444 million of the total $553 million awarded. Contractor 

representatives told us that if program officials were interested in receiving 

competing proposals, then more outreach activ’ities—such as meetings 

with potential contractors to explain program requirements—should be 

conducted.

Work descriptions for most orders we reviewed defined tasks broadly. Most 

of these orders were for information technology services and frequently 

covered several years of effort. Because the work was broadly defined, the 

orders did not establish fixed prices for the work but provided for 

reimbursement of contractors’ costs. Further, several broadly defined 

orders were later defined by sole-source work orders. According to 

program officials, specifying the information technology services that will 

be required in future years involves considerable uncertainty.

5

 P.L. 106-65 (Oct. 5, 1999).
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This report contains recommendations that can be used in implementing 

the National Defense Authorization Act requirement to revise the 

procurement regulations and to initiate other appropriate changes to help 

agencies ensure that contractors are afforded a fair opportunity to be 

considered for orders and that orders clearly specify all the services or 

supplies to be delivered.

Background Task- and delivery-order contracts have historically provided an 

expeditious way to fill certain government needs. These indefinite 

contracts are awarded when agencies can forecast a general need for a 

category of supplies or services. Once agencies determine the specific 

times and places where services or supplies are needed and the quantities 

required, they issue orders under these contracts. Placing orders in this 

manner is less burdensome administratively than awarding a series of 

individual contracts.

In 1993, a DOD-sponsored study panel reported that this process brought 

the potential for abuse. The panel’s report indicated that some orders 

called for work beyond what contractors had competed to provide. In 1994, 

members of Congress expressed concern that indiscriminate use of taskand delivery-order contracts to acquire broad categories of ill-defined 

advisory services could diminish competition for contracts and waste 

taxpayer dollars.6

To promote competition under task- and delivery-order contracts, 

Congress, through the Federal Acquisition Streamlining Act (FASA), 

established a preference for awarding these contracts to multiple firms 

rather than to a single company. Orders placed under such contracts must 

clearly specify all the tasks to be performed or property to be delivered. In 

addition, agencies placing orders must ensure that—except under specified 

circumstances—each contractor is afforded a fair opportunity to be 

considered. FASA authorizes exceptions to the fair opportunity process 

when (1) the agency’s need for supplies or services is unusually urgent, 

(2) the agency’s needs are so unique or specialized that only one contractor 

can provide the required quality, (3) placing the order on a sole-source 

basis will promote economy and efficiency because the order is a logical 

follow-on to a previous order issued competitively, or (4) the order must be 

6

 Senate Report 103-258 (May 11, 1994).
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placed with a particular contractor to satisfy a required minimum 

guaranteed amount. To preserve the simplicity and flexibility of task- and 

delivery-order contracts, Congress provided contracting officers broad 

discretion to define the procedures used to evaluate offers and select 

contractors when placing orders. Consistent with congressional intent, the 

regulations implementing FASA did not mandate procedures for providing 

contractors a fair opportunity or for specifying the services or supplies 

ordered. The Office of Federal Procurement Policy (OFPP), however, has 

issued a guidebook that presents the Office’s views on best practices in the 

use of task- and delivery-order contracts.7

 For example, the guidebook 

suggests that agencies (1) avoid awarding logical follow-on orders whose 

scope or costs substantially exceed those of previous orders for which 

contractors were provided an opportunity to be considered and (2) use 

fixed-price orders where appropriate.

Our prior review of the implementation of multiple-award contracting 

showed that agency efforts to provide fair opportunity—and thereby 

promote competition—varied among the six organizations we reviewed. 

Two organizations achieved consistent competition for orders, while four 

had more difficulty obtaining competition to fill information technology 

requirements. For example, one organization did not provide contractors 

an opportunity to be considered for most orders issued, while another 

identified a preferred contractor when announcing opportunities. The 

procurement regulations have since been revised to prohibit designation of 

preferred contractors. A further revision has been proposed to reinforce 

key principles regarding the administration of multiple-award contracts. 

These revisions would, for example, require contracting officers to 

document the rationale for selecting the contractor receiving an order and 

encourage agencies to use performance-based work statements—which 

describe work in terms of desired outcomes instead of how the work is to 

be performed—to the maximum extent practicable.

Few Competing 

Proposals Received for 

Large Orders

Few competing proposals were received for the large orders we reviewed. 

Competing proposals can help contracting officers ensure they receive the 

best value on federal contracts. In many cases, agency officials used the 

statutory exceptions to the fair opportunity requirement and did not 

request competing proposals. When agency officials afforded contractors 

7 Best Practices for Multiple Award Task and Delivery Order Contracting, Office of Federal 

Procurement Policy (July 1997).
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an opportunity to be considered, they often received proposals from only 

one contractor. In most cases, the submitted proposals involved incumbent 

contractors.8

 Contractor representatives suggested that program officials 

and contracting officers could promote broader competition by conducting 

more outreach activities, such as meetings with potential contractors to 

explain program requirements, and obtaining feedback on contractors’ 

capabilities.

According to agency officials, multiple-award contracting has produced 

substantial benefits. Officials stated that multiple-award contracts allow 

them to acquire services and supplies more quickly and simply, alleviating 

past concerns that awarding traditional contracts took too long. Expedited 

ordering procedures under multiple-award contracts have also alleviated 

concerns that DOD may not always be able to acquire the most current 

information technology. Agency officials also commented that issuing 

multiple-award contract orders was less burdensome administratively than 

awarding traditional contracts. Moreover, they expressed satisfaction with 

the suppliers selected through multiple-award contracts. Several 

commented that the skills and capabilities of their contractors were critical 

to their program’s success.

Despite these benefits, table 1 shows that 16 of the 22 orders were awarded 

without competing proposals. These orders represented $443.7 million of 

the total $553.1 million awarded.

8

 In some of these cases, the firm submitting the proposal was the incumbent contractor or a 

subcontractor to the incumbent. In other cases, the firm submitting the proposal indicated 

that it planned to award a subcontract to the incumbent contractor or to one of the 

incumbent’s key subcontractors.
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Table 1: Competing Proposals Received

Note: Dollar amounts are the values of orders at the time of award, including any options.

Officials Used 

Exceptions to Fair 

Opportunity 

Requirement

For 10 orders, agency officials used statutory exceptions to the fair 

opportunity requirement allowed by FASA, and did not request competing 

proposals. For 7 of these 10 orders, officials used the exception for logical 

follow-on orders. For three other orders, officials used exceptions for 

requirements that are unique and highly specialized or unusually urgent. 

We found that when deciding whether to award noncompetitive orders, 

contracting officers relied on a statement by program officials indicating 

that the exception was applicable. Contracting office files did not include 

an analysis of the exception’s applicability.

The logical follow-on exception may be used only when an original order 

has been awarded through the fair opportunity process. We examined the 

awards of these original orders and found that although six of the seven 

had been awarded using the fair opportunity process, competing proposals 

were received for only two of the original orders. Each of the seven original 

orders was issued to a team that included incumbent contractors.

In one of these seven cases, contrary to FASA requirements, the agency had 

not provided other contractors an opportunity to be considered for the 

original order. In April 1997, the Defense Information Systems Agency 

awarded a multiple-award contractor an order covering about $300,000 of 

Dollars in millions

Orders

Exception

to fair

opportunity

Fair

opportunity

provided Total

Orders awarded on the basis of one proposal

 Number of orders 10 6 16

 Value of orders $172.5 $271.2 $443.7

Orders awarded on the basis of competing proposals

 Number of orders - 6 6

 Value of orders - $109.4 $109.4

Total

 Number of orders 10 12 22

 Value of orders $172.5 $380.6 $553.1
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work over a 2-month period to develop a system used in material 

management. The agency did not provide other contractors an opportunity 

to be considered for this order because the program manager stated that 

the services were unique and highly specialized. Shortly thereafter, the 

agency awarded a second order covering another 10 months of work at an 

estimated cost of $6.7 million as a logical follow-on to the initial $300,000 

order. Finally, the agency awarded the order included in our review—

a $7-million order covering another 11 months of work—as a logical 

follow-on to the two previous orders. Thus, contrary to FASA, other 

contractors were not provided an opportunity to be considered for the 

work.

OFPP’s best practice guidebook suggests that follow-on orders should not 

be substantially broader in scope and dollar value than the original 

competitive order. Contrary to this guidance, three of the seven logical 

follow-on orders were substantially broader in scope or dollar value than 

the original orders for which the agency had provided an opportunity for 

competition. For example, one order, awarded under a National Institutes 

of Health contract, called for $1.6 million in support for Army 

communications systems over 1 year. Although the National Institutes of 

Health provided its contractors an opportunity to be considered for this 

order, only one contractor chose to submit a proposal. The order we 

reviewed, awarded noncompetitively as a logical follow-on to the 

$1.6 million order, provided for $32.1 million in effort over 45 months, or 

about $8.5 million annually. The work description for this follow-on order 

includes two task areas the original order’s work description does not 

mention. To accomplish the work under the follow-on order, the contractor 

proposed to increase staffing to a level almost three times that proposed 

for the original order. Further, the contractor proposed to increase 

expenditures for other direct costs—such as supplies and equipment—to 

about $2.6 million annually compared with about $37,000 under the original 

order. Thus, this logical follow-on order was inconsistent with OFPP’s best 

practice guidance.

Few Competing Proposals 

Were Received When 

Contractors Were Provided 

Opportunities

For 12 of the 22 orders, agencies provided contractors a fair opportunity to 

be considered, but they received few competing proposals. In six cases, a 

single proposal was received. While many factors can influence the extent 

of competition for orders, the presence of an incumbent contractor 

appears to have been an important factor for the orders we reviewed. Ten 

of these 12 orders were awarded to fill an ongoing requirement for services. 

In all but 1 of these 10 cases, all proposals received involved incumbent 
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contractors. There were no incumbent contractors for the other two 

orders, which were to fill new requirements for services. Three proposals 

were received for one of these orders, and four were received for the other.

In some cases, it was apparent that incumbent contractors had an inherent 

advantage in competing for an order. For example, the Department of 

Transportation awarded a $23.7-million order to support a Navy 

intelligence command over 5 years (including options) and asked 

contractors to submit proposals in late August to begin work in early 

October. To provide the required support, contractors would have needed 

to station about 40 staff at the Navy installation within days after the order 

was awarded. Staff would have required security clearances and 

knowledge of the command’s information technology system. While 

command representatives had been considering options for renewing their 

existing support contract for about 6 months, they had not initiated any 

contacts to explain their requirements to other contractors. The 

representatives indicated that the incumbent contractor had been 

performing satisfactorily. Only one proposal was received: from the 

incumbent, who already had staff in place providing similar services. 

Further, the incumbent had been supporting the Navy program office for 

over 20 years and had developed, integrated, and maintained the 

information system. The contracting officer indicated that it would have 

been difficult for a competing firm to put together a winning proposal.

Another order, awarded by the General Services Administration, further 

illustrates the natural advantages incumbent contractors can have in 

competing for work. This order provided for the contractor to support 

Army communications systems over 4 years (including options) at an 

estimated cost of $149.2 million. The solicitation indicated that contractors 

would be required to provide a hardware and software laboratory and 

testing facility equipped for work on specific makes and models of 

equipment. Army officials had not held meetings with other contractors to 

explain their requirements or obtain feedback on other contractors’ 

capabilities. The one contractor that submitted a proposal for this order, 

the incumbent, already had a laboratory and testing facility in place.

Agencies sometimes used practices not designed to elicit competing 

proposals. For example, one $11.1-million order announced under the 

National Institutes of Health contracts covered over 3 years of support 

(including options) for an Air Force intelligence command. The agency 

asked contractors to submit proposals within 2 days. Command 

representatives told us that they were satisfied with the incumbent 
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contractor’s performance and that they had not held meetings to explain 

their requirements to other contractors. One proposal was received for the 

order, again from the incumbent contractor. According to command 

representatives, the main purpose of the order was to obtain the services of 

a specific employee of the incumbent contractor who had special 

expertise. Documents in the contract files indicate that the command 

planned to award the order to the incumbent contractor before the 

opportunity was announced. We also noted short time frames for 

submitting proposals for other National Institutes of Health orders. The 

agency’s guidelines now provide that contractors will generally be provided 

a minimum of 5 days to submit proposals.

In our discussions with contractor representatives, we gained some insight 

into the factors firms consider when deciding whether to submit a proposal 

for an order. Contractor representatives emphasized that the decision 

entails a business judgment about their prospects of winning the bid 

because preparing a proposal is costly. Contractor representatives cited 

several factors that can contribute to a decision not to submit a proposal. 

For example, a company may be reluctant to pursue an opportunity if an 

incumbent contractor exists, is perceived as having strong qualifications, 

and is performing well. If the company does not excel in that particular 

type of work, it may be inclined not to submit a proposal. Other factors that 

can discourage a company from submitting a proposal are unreasonably 

short time frames for preparing proposals and starting work and selection 

criteria that appear to favor incumbent contractors. By contrast, if the 

company perceives that its skills and qualifications are superior to the 

incumbent’s or that the incumbent is a weak performer, it would be more 

inclined to pursue an opportunity.

Contractor representatives indicated that lack of agency outreach or 

market research activities is another factor that can discourage a company 

from submitting a proposal. One outreach activity, for example, is to hold 

formal conferences or individual meetings with contractors to explain the 

program’s requirements and obtain feedback on contractors’ capabilities. 

Contractor representatives considered this type of exchange a key step to 

fostering competition. In cases where the incumbent contractor has strong 

qualifications and is performing well, the prospects of encouraging other 

contractors to compete would be limited. Nonetheless, armed with a good 

understanding of the program’s requirements, a contractor can make a 

better informed decision on whether to pursue the bid. Further, if the 

contractor decides to pursue the bid, it can more quickly prepare a 

responsive, quality proposal and is thus in a better competitive position.
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Work Descriptions for 

Large Orders Defined 

Tasks Broadly

Work descriptions for the large orders we reviewed generally defined tasks 

broadly. Twenty of the orders were for information technology services. 

These orders frequently covered several years of effort and, because they 

defined the work broadly, they did not establish a fixed price for the work 

but provided for reimbursing contractors’ costs. According to program 

officials, identifying the information technology services that will be 

required in future years involves considerable uncertainty.

FASA requires that orders include a work description that “clearly specifies 

all tasks to be performed.” OFPP, in its best practice guidebook for 

multiple-award contracts, stresses that orders must clearly define the 

services ordered. In particular, the guidebook indicates that agencies 

should not award large, undefined orders and subsequently issue solesource work orders for specific tasks. The guidebook also endorses the use 

of fixed-price orders where appropriate. According to procurement 

regulations, establishing a fixed price for work can be appropriate when a 

reasonably definite description of the work can be developed. Fixed prices 

also provide an incentive for contractors to control costs and perform 

efficiently.

Most orders for services, however, described the work in broad categories, 

and in some cases, the agencies issued work orders to define specific tasks 

after the order was awarded. For example, the General Services 

Administration awarded one order to provide information technology 

support services for a Navy detachment over 3 years (including options). 

The order stated that the contractor would provide various types of 

support—technical, project management, systems engineering, 

procurement, training, and testing—in connection with the detachment’s 

review of communications equipment or subsystems for use on Navy ships. 

The order did not specify the types of equipment or subsystems that would 

be reviewed. The details of the tasks to be performed were to be negotiated 

by program officials and the contractor after the order was awarded.

Another order that laid out broad categories of services was awarded under 

a National Institutes of Health contract. This $18.6-million order provided 

support for a Navy command’s electronic commerce and electronic data 

interchange activities over 5 years. The order provided for reimbursing the 

contractor’s costs. The work description identified numerous categories of 

services the contractor would provide. Among the required services, the 

work description listed helping to develop and implement interfaces 

between systems, analyzing security requirements and implementing 
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security solutions, analyzing and developing electronic commerce 

transaction sets, and operating an electronic commerce demonstration lab. 

In addition to these required services, the order included optional work 

that the contractor might provide. These optional services included 

evaluating proposed changes to system configurations and implementing 

approved configuration changes, preparing briefings and papers in support 

of the program, and providing support to program-related task groups and 

action teams. When the program notifies the contractor that specific work 

is needed, the contractor is to develop a management plan for the task that 

describes the planned technical approach and includes time frame and 

resource estimates. According to the program manager, the work 

description was designed to encompass all the work that might be required 

during the 5-year period.

The orders we reviewed frequently covered multiple years of effort. 

Program officials cited the rapid evolution of information technology and 

the need to accommodate changes in DOD’s program requirements as 

reasons why forecasting long-term needs was difficult. Therefore, they 

said, work descriptions must be sufficiently flexible to accommodate the 

evolution of requirements. We were told that flexibility is particularly 

important when orders cover work required several years into the future.

Conclusions Congress has expressed concerns that agencies could waste taxpayer 

dollars in the absence of competition. The National Defense Authorization 

Act for Fiscal Year 2000 requires that the procurement regulations be 

revised to identify steps agencies should take to ensure that contractors are 

afforded a fair opportunity to be considered for orders and that orders 

clearly specify all the services or supplies to be delivered.

Competition helps federal agencies ensure the best value is obtained in 

awarding contracts. We found that few competing proposals were received 

for millions of dollars’ worth of orders we reviewed. Lack of agency 

outreach can discourage companies from competing for orders. We also 

found that broad work descriptions for task and delivery orders did not 

promote the use of fixed-price orders.
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Recommendations We recommend that the Administrator of OFPP, as chair of the Federal 

Acquisition Regulatory Council, seek to develop and incorporate guidance 

to

• make it clear that agencies should not (1) award follow-on orders whose 

scope or costs significantly exceed those of orders for which 

contractors were provided an opportunity to be considered or (2) award 

large undefined orders and subsequently issue sole-source work orders 

for specific tasks and

• encourage contracting officers to use fixed-price orders to the 

maximum extent practicable.

Further, we recommend that the guidance encourage agencies to conduct 

more outreach activities when providing contractors an opportunity to be 

considered for orders.

Agency Comments OFPP, the National Institutes of Health, the Department of Transportation, 

DOD, and the General Services Administration reviewed a draft of this 

report. OFPP stated that it shares the general concerns underlying the 

recommendations but is not prepared to endorse specific changes at this 

time. OFPP fully agreed that further review of current practices and polices 

surrounding the issues raised in the report is warranted to ensure that 

customers are enjoying the benefits of multiple-award contracts. OFPP is 

looking at current guidance to determine what additional changes might 

help agencies in their planning to avoid situations where initial orders of 

limited scope lead to noncompetitive awards of orders of a much larger 

magnitude. OFPP is looking at how modular-contracting principles can be 

better applied by customers to avoid issuing unnecessarily large orders and 

inadequately defined orders. A proposed regulatory change would 

emphasize the preference for performance-based statements of work, 

which OFPP expects would result in greater use of fixed-price orders. 

OFPP shares our concern that effective communications between 

customers and multiple-award contract holders is critical if agencies are to 

take full advantage of the highly competitive environment that multipleaward contracts offer to meet agencies’ needs. OFPP stated that it 

appreciates that dialogue is necessary to improve communications and to 

ensure that requirements and risks are well understood in order to help 

contract holders and customers prepare well-defined solutions and achieve 

the benefits of competition. OFPP’s comments are in appendix II.
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The National Institutes of Health concurred with our recommendations and 

provided written comments (see app. V). The Department of 

Transportation reviewed a draft of this report but provided no comments. 

DOD reviewed a draft of this report and stated that it concurred with two of 

our three recommendations. DOD’s written comments are in appendix III. 

DOD and the General Services Administration expressed concern with one 

of our recommendations, as discussed below. The General Services 

Administration’s written comments are in appendix IV.

DOD and the General Services Administration questioned our 

recommendation that guidance be developed to encourage agencies to 

conduct more outreach activities when providing contractors an 

opportunity to be considered for orders. DOD observed that in view of the 

numerous reasons we cite in our report for contractors’ decisions not to 

submit proposals, government outreach might be of limited effectiveness. 

The General Services Administration expressed doubt that exchanges of 

information before a solicitation would be a major factor in contractors’ 

decisions. While we believe it would be unrealistic to expect any one 

initiative to ensure multiple proposals are received for all orders, the 

contractors we met with told us that outreach would be helpful in fostering 

more competition. Therefore, we believe agencies should conduct more 

outreach activities if they want to encourage contractors to submit 

competing proposals. As a result, we still believe our recommendation for 

greater outreach is appropriate.

The General Services Administration also objected to our draft report title 

that characterized competition for orders as limited. In particular, the 

General Services Administration does not believe that competitive offers 

can be achieved only through multiple proposals. We acknowledge that the 

fact that an agency receives only one proposal does not demonstrate that 

the proposal is not a competitive offer. We revised the report title to 

address the General Services Administration’s concern.

Scope and 

Methodology

To examine DOD’s placement of large orders under multiple-award, taskand delivery-order contracts, we reviewed the legislative history of 

provisions relating to multiple-award contracts and the procurement 

regulations implementing these provisions and held discussions with OFPP 

officials responsible for monitoring implementation of the provisions. 

Because no governmentwide listing of multiple-award contracts for 

information technology was maintained, we judgmentally selected 

multiple-award contracts for review. The four contract programs selected 
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are administered by the charter members of the Governmentwide Agency 

Contracts Program Managers Council—a group formed to establish 

standards for and promote more effective management of governmentwide 

contracts. The contract programs selected were the Defense Information 

Systems Agency’s Defense Enterprise Integration Services II contracts; the 

Department of Transportation’s Information Technology Omnibus 

Procurement contracts; the General Services Administration’s ‘9600’ 

contracts; and the National Institutes of Health’s Chief Information 

Officer—Solutions and Partners contracts. We examined orders placed 

under these contracts to support DOD’s activities and awarded between 

October 1, 1997, and December 31, 1998, and reviewed all orders valued at 

$5 million or more.

To assess agency ordering procedures and determine the extent of 

competition, we discussed award procedures for orders with agency 

officials and reviewed agency guidance relating to the ordering process. In 

addition, for each order reviewed, we examined documentation in the 

contracting files to ascertain the extent of competition evident for the 

order. We reviewed statements of work to assess whether the work 

descriptions clearly specified the tasks to be performed or supplies to be 

delivered. We also held discussions with contracting officials to obtain 

information about any barriers to or limitations on competition and about 

any impediments to clearly specifying the tasks or supplies ordered. We 

held discussions with representatives from program offices acquiring 

services and equipment through the orders we reviewed to understand 

their role in the award process and obtain their perspective on the issues 

being examined. Finally, we held discussions with officials of selected 

contractors to obtain their perspectives on barriers to competition and on 

how orders specified tasks.

We conducted our review from February 1999 through February 2000 in 

accordance with generally accepted government auditing standards.

We are sending copies of this report to Senator John Warner, Chairman, and 

Senator Carl Levin, Ranking Minority Member, Senate Armed Services 

Committee, and other interested congressional committees. We are also 

sending copies of this report to the Honorable William S. Cohen, Secretary 

of Defense; the Honorable Donna E. Shalala, Secretary of Health and 

Human Services; the Honorable Rodney E. Slater, Secretary of 

Transportation; the Honorable David J. Barram, Administrator of General 
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Services; and the Honorable Jacob J. Lew, Director, Office of Management 

and Budget. We will make copies available to others on request. 

Please contact me at (202) 512-4841 if you have any questions concerning 

this report. Key contributors to this assignment are listed in appendix VI.

Louis J. Rodrigues

Director

Defense Acquisitions Issues
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Appendix I

Information on Selected Orders ApApenednxidexiIs

Dollars in millions

Agency and contract/order Order pricea

Cost or

fixed price

Work duration

(months)a

Incumbent

involved in

winning teamb

(yes or no)

Defense Information Systems Agency—Defense Enterprise Integration Services contracts

Defense Megacenter Operations $5.3 Fixed price 12 Yes

This order provided for services that encompass all aspects of technical and operational support for the Department of Defense (DOD) 

computer center located in Montgomery, Alabama. Services included computer system operations and management, help desk support,

specialized training, and special studies and analyses.

DOD Electronic Commerce Program $5.2 Cost 8 Yes

This order provided for services to support development and fielding of improved electronic commerce and electronic data interchange 

systems within DOD. Key efforts included integrating the Defense Travel System and Defense Finance and Accounting Service systems 

into DOD’s electronic commerce network.

Distribution Standard System $8.1 Cost 18 Yes

This order provided for services to support development of a standard management system for DOD supply depots. These services 

included designing and testing essential software changes, providing expertise for software enhancement, and implementing changes at 

operational sites.

Global Air Transportation Execution System $14.0 Cost 14 Yes

This order provided for services to continue development of an improved air transportation management information system. The effort 

included systems engineering, software coding, integrating components, system installation, testing, and training.

Global Decision Support System $6.4 Cost 12 Yes

This order provided for services to continue modernization of an air transportation command and control system. These services 

included defining hardware and software requirements, developing and integrating software applications, providing training, and

providing system and software maintenance.

Maintenance Planning and Execution System $7.0 Cost 11 Yes

This order provided for services to support development and fielding of a standard management system for DOD maintenance depots. 

These services included completing design and development of an updated version of the system, installing the system at selected 

locations, and providing ongoing support for installed systems.

Department of Transportation—Information Technology Omnibus Procurement contracts

Defense Computer Forensic Lab Support $6.4 Cost 41 No

This order provided for services to support operation of a laboratory that analyzes computer-based information gathered during criminal 

investigations. The scope included services to support the functions of computer systems administrators, forensic examiners, evidence 

custodians, database analysts, and office managers.

Army Defense Message System $30.5 Cost 59 Yes

This order provided for technical support services for all aspects of design, testing, and implementation of the Defense Message System 

at Army installations. Efforts included conducting site surveys, developing site implementation plans, installing and integrating 

components, and conducting training.

Atlantic Command On-line System $23.7 Cost 60 Yes

This order provided for systems management and information technology support services for the Navy Atlantic Command and Atlantic 

Intelligence Command. These services included systems engineering, architecture planning, information technology evaluation, and 

training support.

Continued
Appendix I

Information on Selected Orders

Page 19 GAO/NSIAD-00-56 Contract Management

Joint Strike Fighter Program Office Local Area 

Network Support $17.2 Cost 60 Yes

This order provided for services to support all aspects of design, acquisition, and implementation of program office information systems. 

Specific services included administering the local area network, providing a user help desk, supporting Internet and e-mail services, and 

providing infrastructure support.

Transportation Coordinators’ Automated Information 

for Movements System $35.9 Cost 60 Yes

This order provided for services to continue developing a standard transportation management system for DOD fighting units. The

services included software engineering, application development, integrated logistics support, and testing.

General Services Administration—9600 contracts

Air Mobility Command—Command and Control 

Systems $26.1 Cost 60 Yes

This order provided for services and related hardware and software to support a range of command and control systems. The services 

included strategic program management, software development and maintenance, database administration, testing, training, and 

customer support.

Joint Professional Military Education Program $5.5 Fixed price/cost 24 No

This order provided for services to design and implement upgraded training tools for the Armed Forces Staff College. These services 

included planning for curriculum enrichment, analyzing requirements and developing designs for training tools, and implementing a final 

system design.

Naval In-service Engineering Detachment $51.3 Cost 36 Yes

This order provided for services to support the design and integration of communications systems aboard the Navy fleet. These services 

included support for project management, technical reviews, training, system engineering, system integration, test and evaluation, and 

procurement.

Reserve Component Automation System $18.2 Cost 60 Yes

This order provided for services to help manage development of an automated system to support operational and administrative tasks for 

the Army National Guard and Reserves. These services included support for functions such as independent evaluation, strategic 

planning, systems engineering, and project management.

Worldwide Technical Control Improvement Program $149.2 Cost 48 Yes

This order provided for services to help the Army Communications-Electronics Command upgrade control facilities for the Army’s longhaul communications systems. These services included support for functions such as procurement and production, equipment 

installation, and training.

National Institutes of Health—Chief Information Officer-Solutions and Partners contracts

Air Intelligence Command Support $11.1 Cost 44 Yes

This order provided for services to help maintain and upgrade computer network infrastructure for the Command’s 480th Air Intelligence 

Group. These services included engineering support for the enhancement of several systems, hardware installation, network operations 

support, and year 2000 remediation support.

Defense Megacenter Central Processing Units $65.2 Fixed price 8 Yes

This order provided for central processing units to upgrade data processing capabilities at various DOD computer centers.

Dollars in millions

Agency and contract/order Order pricea

Cost or

fixed price

Work duration

(months)a

Incumbent

involved in

winning teamb

(yes or no)

Continued from Previous Page
Appendix I

Information on Selected Orders

Page 20 GAO/NSIAD-00-56 Contract Management

a

 Order price and work duration include effort under options the government may or may not exercise.

b

 In some cases, the winning contractor was the incumbent contractor or a subcontractor of the 

incumbent. In other cases, the winning contractor indicated that it planned to award a subcontract to 

the incumbent contractor or to one of the incumbent’s key subcontractors.

Defense Megacenter Disk Drives $10.7 Fixed price 6 Yes

This order provided for disk drive units to upgrade data processing capabilities at various DOD computer centers.

Digital Communications Satellite Subsystem $32.1 Cost 45 Yes

This order provided services to support equipment that provides signal processing and jamming protection for the Defense Satellite 

Communications System. These services included analyzing and determining requirements, conducting research and evaluations, and

developing site engineering plans.

Military Sealift Command Electronic Commerce $18.6 Cost 60 Yes

This order provided services to support the Command’s electronic commerce initiatives. These services included helping develop and 

implement interfaces between systems, analyzing security requirements, operating an electronic commerce demonstration lab, and 

preparing briefing papers in support of the program.

Portal Shield System Support $5.3 Cost 23 Yes

This order provided services to support development of an automated system to detect biological warfare agents. These services 

included production engineering and evaluation; systems engineering support; and assembly, integration, and test of initial production 

units of the system.

Dollars in millions

Agency and contract/order Order pricea

Cost or

fixed price

Work duration

(months)a

Incumbent

involved in

winning teamb

(yes or no)

Continued from Previous Page
Page 21 GAO/NSIAD-00-56 Contract Management

Appendix II

Comments From the Office of Federal 

Procurement Policy ApendxiI
Appendix II

Comments From the Office of Federal 

Procurement Policy

Page 22 GAO/NSIAD-00-56 Contract Management
Appendix II

Comments From the Office of Federal 

Procurement Policy

Page 23 GAO/NSIAD-00-56 Contract Management
Page 24 GAO/NSIAD-00-56 Contract Management

Appendix III

Comments From the Department of Defense ApendxiI
Appendix III

Comments From the Department of Defense

Page 25 GAO/NSIAD-00-56 Contract Management

ap3p1
Appendix III

Comments From the Department of Defense

Page 26 GAO/NSIAD-00-56 Contract Management

See comment 1.

See p. 11.

See comment 2.

See comment 3.

See comment 4.
Appendix III

Comments From the Department of Defense

Page 27 GAO/NSIAD-00-56 Contract Management

The following are GAO’s comments on DOD’s letter, dated February 15, 

2000.

GAO Comments 1. The Federal Acquisition Streamlining Act (FASA) requires that agencies 

placing orders under multiple-award contracts provide each contractor 

an opportunity to be considered unless one of the statutory exceptions 

applies. DOD stated that it might be appropriate for the ordering office 

to announce its intention to award to one of the multiple-award 

contract holders. Office of Management and Budget officials concluded 

that the practice of identifying a preferred source, as announcing 

intentions to award to a contractor would do, discourages competition 

and deprives the government of the benefits of efficiency and 

innovation that competition provides. Further, federal procurement 

regulations were revised to prohibit agencies from designating 

preferred sources. 

2. Although the governmentwide policies relating to multiple-award 

contracts have been in place for over 4 years, additional training in 

these policies would no doubt produce benefits. However, we believe 

that the additional guidance we recommend is needed to foster 

increased competition for orders.

3. It is not clear to us whether the Civilian Personnel Management Service 

intends to endorse expanded use of time and materials contracts 

despite the recognition that this contracting method is generally not 

advantageous to the government.

4. Our concern was that a contractor might be denied the opportunity to 

compete for a large follow-on order because the contractor had 

decided not to submit a proposal on an original order with a narrow 

scope or insignificant dollar value. The Navy’s suggestion represents 

one option for alleviating this concern. However, we believe the 

original orders would have to provide enough details of the scope and 

anticipated dollar value of future work to allow sound contractor 

decisions on whether to compete for the work. In view of program 

officials’ comments about the difficulty of forecasting long-term 

information technology needs, it is likely that few details of the scope 

and anticipated dollar value of future work could be provided.
Page 28 GAO/NSIAD-00-56 Contract Management

Appendix IV

Comments From the General Services 

Administration ApendxiIV
Appendix IV

Comments From the General Services 

Administration

Page 29 GAO/NSIAD-00-56 Contract Management

See p. 8.
Appendix IV

Comments From the General Services 

Administration

Page 30 GAO/NSIAD-00-56 Contract Management

See comment 1.

See p. 12.

See comment 2.

See comment 3.
Appendix IV

Comments From the General Services 

Administration

Page 31 GAO/NSIAD-00-56 Contract Management
Appendix IV

Comments From the General Services 

Administration

Page 32 GAO/NSIAD-00-56 Contract Management

The following are GAO’s comments on the General Services 

Administration’s letter, dated February 22, 2000.

GAO Comments 1. As the General Services Administration points out, agencies are not 

required to structure a solicitation so as to neutralize the incumbent’s 

advantage. We did not suggest that agencies should neutralize the 

incumbent’s advantage. We stated that agencies could encourage 

competition for some orders by helping prospective contractors 

understand the agency’s requirements. However, for the orders 

reviewed, the presence of an incumbent contractor appeared to be an 

important factor influencing the extent of competition. As we note in 

our report, 10 of the 12 orders where contractors were provided an 

opportunity to be considered were issued to fill ongoing requirements 

for services. In all but 1 of these 10 cases, all proposals received 

involved incumbent contractors. While incumbency presents 

significant advantages, a number of contractors told us that market 

outreach activities promote competition and allow firms to prepare 

better proposals. 

2. The guidance the General Services Administration cites discusses the 

relative importance of cost or price compared with other factors in 

selecting a source and does not address the desirability of establishing 

a fixed price. We recognize that it is sometimes not appropriate to 

establish a fixed price for work, and we recommend that guidance 

encourage the use of fixed prices where practicable.

3. According to the contract documents for this order, when Navy officials 

notify the contractor of a new requirement, the contractor is to prepare 

a Program Master Plan for the requirement. This Program Master Plan 

is to include the scope and technical requirements of the project, the 

place and period of performance, milestones and deliverables for the 

project, personnel and other direct costs, and any data or materials the 

government will provide. The contractor is to provide a draft Plan to 

Navy officials for review and concurrence before preparing a final 

version of the Plan. We believe the report accurately characterizes the 

procedures for defining new tasks under this order.
Page 33 GAO/NSIAD-00-56 Contract Management

Appendix V

Comments From the National Institutes of 

Health ApendxiV
Appendix V

Comments From the National Institutes of 

Health

Page 34 GAO/NSIAD-00-56 Contract Management
Page 35 GAO/NSIAD-00-56 Contract Management

Appendix VI

GAO Contacts and Staff Acknowledgments ApendxiVI

GAO Contacts David E. Cooper (202) 512-4841

Ralph Dawn (202) 512-4544

Acknowledgments In addition to those named above, Ken Graffam, Charles Malphurs, Monty 

Peters, John Van Schaik, and William T. Woods made key contributions to 

this report.

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