United States General Accounting Office

GAO Report to Congressional Requesters

September 1998 ACQUISITION

REFORM

Multiple-award

Contracting at Six

Federal Organizations

GAO/NSIAD-98-215

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-277893 

September 30, 1998

The Honorable John Glenn

Ranking Minority Member

Committee on Governmental Affairs

United States Senate

The Honorable Carl Levin

Ranking Minority Member

Committee on Armed Services

United States Senate

Concerned that federal agencies were avoiding competitive requirements

when ordering under task- or delivery-order contracts,1

 Congress, through

the Federal Acquisition Streamlining Act (FASA),2

 directed agencies to

consider awarding multiple contracts—rather than a single

contract—when a task- or delivery-order contract format was planned.

You asked us to determine (1) whether federal agencies were providing a

fair opportunity for contractors to receive orders under multiple-award

contracts, (2) how service fees assessed on interagency orders compared

with agencies’ costs to process such orders, and (3) if multiple-award

contracts affected federal contracting opportunities for small businesses.

As agreed, we reviewed a selected group of multiple-award contracts

awarded by six federal organizations to acquire, among other things,

information technology services, desktop and portable personal computer

systems and related equipment and software, and general repairs and

alterations for federal offices. We examined multiple-award contracts

administered by six organizations—the Defense Information Systems

Agency (DISA), the Department of Transportation (DOT), the General

Services Administration (GSA), the National Institutes of Health (NIH), and

the U.S. Air Force (USAF) Electronic Systems Center’s Hanscom Air Force

Base operations (ESC/HAFB) and Standard Systems Group (SSG). More

information on the contracts we reviewed, as well as the scope and

methodology of our work, is found in appendix I.

1

A task- or delivery-order contract provides for an indefinite quantity, within stated limits, of supplies

or services to be furnished during a fixed period, with deliveries or performance to be scheduled by

placing orders with the contractor.

2

Public Law 103-355, October 13, 1994.

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Background Agencies have long awarded contracts to a single company for services or

supplies before knowing specific delivery times or required quantities and

then issued orders under the contracts as their needs became clear. These

contracts have been simpler to administer than separate individual

contracts. This simplicity, however, has brought with it a potential for

abuse. There have been complaints that sometimes orders have been

issued that greatly exceed the planned contract value or call for work

beyond what the contractor competed to provide.3

 Congress has

expressed concern that indiscriminate use of such contracts with a single

company for broad categories of ill-defined services can diminish

competition and waste taxpayer dollars.

With FASA, Congress established a preference for awarding contracts for

indefinite requirements to multiple firms rather than to a single company.

FASA requires orders under multiple-award contracts to contain a clear

description of the services or supplies ordered and—except under

specified circumstances—requires that each of the multiple vendors be

provided a fair opportunity to be considered for specific orders.4

 In 1996,

the Office of Federal Procurement Policy (OFPP) established performance

guidelines to obtain competition on 90 percent of orders over $2,500 at

three of the six organizations we reviewed (DOT, NIH, and DISA). The

regulations implementing FASA do not establish specific procedures for

awarding orders but encourage agencies to consider using oral proposals

and other streamlined procedures. Furthermore, under the regulations,

agencies need not contact all contractors if sufficient information to

ensure fair opportunity for consideration is on hand.

Agencies often place orders on other agencies’ contracts. Interagency

orders can be advantageous and cost-effective when agencies have

requirements that can be met by ordering under other agencies’ existing

contracts. In other cases, an agency may have unique expertise to award

and administer contracts to fill other agencies’ requirements. However,

interagency orders have been associated with abuses. For example,

concerns were expressed at a 1993 congressional hearing that some

agencies incurred increased costs when using interagency orders to avoid

3

Streamlining Defense Acquisition Laws, Report of the DOD Acquisition Law Advisory Panel, Jan. 1993.

4

FASA gives agencies authority to issue sole-source orders in cases where (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) the order is a logical follow-on to a previous order

issued competitively, or (4) the order must be placed with a particular contractor to satisfy a required

minimum guarantee amount.

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competition requirements and paid other agencies inflated fees for use of

their contracts.5

Small businesses have raised concerns about whether multiple-award

contracts would reduce their opportunity to receive federal contracts.

Consolidating requirements (awarding large umbrella contracts and

eliminating numerous smaller contracts) creates a situation commonly

known as contract bundling. Multiple-award contracts have been one way

of consolidating requirements, which federal officials say reduces

administrative costs. Small business advocates, however, fear that when

consolidation results in very large contracts or contracts that call for

performance over a wide geographic area, smaller firms will be unable to

compete effectively.

Results in Brief Efforts to provide a fair opportunity and therefore promote competition

for orders placed under multiple-award contracts varied among the six

organizations we reviewed. One organization issued 64 percent of orders

(accounting for 20 percent of dollars awarded) on a sole-source basis

through the end of fiscal year 1997. Another organization named preferred

contractors in announcements of opportunities. This practice resulted in

only one proposal being received on most orders. After we disclosed these

practices in a March 1998 hearing before the Senate Armed Services

Subcommittee on Acquisition and Technology, the Office of Management

and Budget (OMB) requested federal agencies to eliminate the practice of

naming preferred contractors in announcements of opportunities for

orders. OMB also recommended that federal procurement regulations be

revised to prohibit the practice.

All but one of the organizations we reviewed allowed other agencies to

place orders on their multiple-award contracts. The organizations charged

varying service fees intended to recover the costs of awarding and

administering the orders. According to analyses performed by two

organizations, fees exceeded costs in one case and did not recover costs in

another. However, management information was insufficient for the other

three organizations to compare fees and costs. One organization, for

example, charged fees that ranged from $125 for administering an order

placed by a component of its agency to as much as $99,000 for an order

placed by another agency. While the organization’s management system

5

Off-loading: The Multimillion Dollar Loophole in Government Contracting, hearing before the

Subcommittee on Oversight of Government Management, Committee on Governmental Affairs, U.S.

Senate, July 1993.

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for its multiple-award contract did not develop analyses to justify this

disparity, officials are working to improve management systems.

Both OFPP and the Small Business Administration (SBA) have taken steps to

ensure that small businesses continue to participate in the federal

marketplace. Our analysis of aggregate governmentwide contracting data

did not measure the specific impact of multiple-award contracting on

small business opportunities but shows that the small business share of

federal contracts has increased since FASA. However, awards to small

businesses at three contracting activities we visited have declined. The

organizations we reviewed are taking steps to ensure that small businesses

are not excluded from receiving orders placed under their multiple-award

contracts.

Fair Opportunity for

Orders Varied at Six

Organizations

Efforts to provide a fair opportunity, and thereby promote competition, for

orders placed under multiple-award contracts varied among the six

organizations we reviewed. Two organizations achieved consistent

competition for orders, while the other four experienced more difficulty

obtaining competition to fill sophisticated information technology

requirements.

Our review of Air Force ESC/HAFB and GSA contracts showed that

contractors generally were provided a fair opportunity for orders placed

on the organizations’ multiple-award contracts. For example, ESC/HAFB

issued relatively few sole-source orders (5 out of 37) under its contracts.

In the few cases in which sole-source orders were placed, they were

generally logical follow-ons to orders previously competed. Orders placed

through the end of fiscal year 1997 on GSA’s multiple-award contracts for

remodeling and alteration of federal offices were all competed. In each

case, GSA requested proposals from all contractors for each order. Because

successful offers on projects were generally in line with—and occasionally

substantially less than—government estimates, GSA officials administering

the contracts believe they are competing orders effectively.

Under DOT’s contracts for information technology services, sole-source

orders represented 64 percent of orders placed and 20 percent of dollars

awarded through the end of fiscal year 1997. DOT requires program officials

to submit a form identifying the exception to fair opportunity

requirements being claimed and a justification for the exception. Program

officials, however, took varying approaches to preparing these

justifications. In some cases, officials succinctly laid out a convincing

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rationale, but the rationales were less convincing in other cases. In

discussing this situation with DOT officials, they advised us that they plan

to require legal review of justifications for larger sole-source orders under

future multiple-award contracts. During the first half of fiscal year 1998,

DOT reduced the proportion of sole-source orders to 38 percent, with

25 percent of dollars being awarded under sole-source orders. While

reducing its sole-source orders, DOT has not yet met OFPP’s guideline of

obtaining competition on 90 percent of orders.

In reviewing orders for desktop and portable personal computer

equipment and software placed on the Air Force SSG’s multiple-award

contracts, we found the organization did not have procedures requiring

that all contractors be provided a fair opportunity. In addition, SSG’s

procedures did not require ordering officials to report to the contracting

officer whether all contractors had been considered for an order.

Consequently, the contracting officer could not identify what proportion

of orders had been awarded on a sole-source basis. After discussing this

with SSG officials, they told us that officials placing an order on SSG’s

multiple-award contracts will be advised to perform a comparative

analysis of all the multiple-award contractors’ products before placing

orders.

Until October 1997, NIH normally identified a preferred contractor when

announcing plans to place orders for information technology services on

its multiple-award contracts. The preferred contractor was requested to

submit a proposal and others had the option of doing so. We found that

only one proposal was received on most orders for which data was

available. After we began our review, NIH changed its procedures and

required that at least two contractors be identified when a

“Suggested/Recommended” contractor was designated. We reviewed the

10 orders competed under the revised procedures in December 1997 and

January 1998 and found that only one contractor submitted a proposal on

each of the orders.

In April 1998, OMB, responding to information we presented at a hearing

before the Senate Armed Services Subcommittee on Acquisition and

Technology, concluded that naming a preferred contractor discourages

competition and requested federal agencies to eliminate the practice of

naming preferred contractors. OMB also recommended that federal

procurement regulations be revised to prohibit the practice. A proposed

federal rule prohibiting this practice was published in the Federal Register

on September 9, 1998. NIH has modified its ordering procedures to

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eliminate references to preferred contractors and is considering a range of

other initiatives to promote broader competition for orders.

Through fiscal year 1997, DISA received only one proposal for about

44 percent of the orders placed on its multiple-award contracts for

information technology services. Despite this situation, DISA does not plan

to require notice to all multiple-award contractors on future acquisitions.

Instead, the organization has decided that program officials may rely

exclusively on an analytical tool to select a contractor.6

 We recognize that

agencies need not contact all contractors if sufficient information is

readily available to ensure fair consideration for the order. The best value

can sometimes be achieved by reviewing price lists for well-defined

products or services. However, the DISA contracts provide for a broad

range of services that must be tailored to the requirements of each order

and priced accordingly, and comparing contractor technical approaches to

a task can help identify the best-value contractor. In such circumstances,

contacts with contractors may be more appropriate to take advantage of

competition.

Comparison of Fees

and Costs Incurred

Five of the six organizations we reviewed allowed other agencies to place

orders under their contracts. Organizations charged varying fees intended

to recover the costs of awarding and administering the orders. Based on

analyses performed by two organizations, fees exceeded costs in one case

and were below costs in another. In three organizations, management

information was not sufficient to determine how fees compared to costs.

Table 1 provides information on interagency orders and fees assessed on

multiple-award contracts.

6

The web-based system maintains databases of past performance, cost, and technical capability

information.

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Table 1: Interagency Orders and Fees

Assessed on Multiple-award Contracts

(as of Sept. 30, 1997)

Contracting officea

Interagency orders

(percent of total contract

value)

Service fees assessed on

interagency orders

(percent)

DISA 3 2

DOT 74 1-3.25b

GSA 67 0.5-10c

NIH 75d 1

USAF-SSG 7 2

aUSAF ESC/HAFB is excluded because ordering under its contracts is limited to Air Force

Materiel Command sites. Accordingly, ESC/HAFB does not assess service fees on orders.

bFee varies with level of services provided in processing an order and is assessed only against

the first $10 million of order value.

cFees based on a graduated fee schedule with low-dollar-value orders being assessed

proportionately higher fees than high-dollar-value orders.

dData reflects only cases where the NIH task order tracking system indicates the agency for

which an order was placed. Data also reflects cases where the order was approved for award as

of September 30, 1997, as the NIH system does not show the order award date.

GSA’s analysis of fees and costs indicated that the organization was

recovering less than half its projected expenses. GSA plans to reassess its

fee structure in light of audited expense data and updated volume

projections. In contrast, the Air Force SSG’s analysis indicated that its fees

exceeded costs. To offset these gains, SSG reduced its fees.

Management systems at DOT, DISA, and NIH did not provide sufficient

information to determine how fees compared to costs for the

multiple-award contracts we reviewed. For example, DOT’s management

system did not provide sufficient detail to isolate the costs incurred and

revenue received to administer the contracts. However, DOT officials stated

that the organization began tracking costs for these contracts separately in

fiscal year 1998. NIH, on the other hand, charged other agencies a uniform

fee rate of 1 percent of order value but charged NIH offices a flat fee of

$125 per order. Fees assessed on other agencies’ orders ranged as high as

$99,000 for an individual order. NIH had not performed an analysis to

support the validity of the variation between fees charged NIH offices and

other agencies. This system would appear to benefit NIH offices using the

contracts, as they were charged $9,875 to process the 79 orders placed in

fiscal year 1997 rather than the $157,942 that other agencies would have

been charged based on order value.

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In addition, NIH relies on a special-purpose data system (not integrated

with its accounting system) to monitor fee collections. Because NIH relies

on its contractors to collect and remit fees on interagency orders, it often

lacked information on the status of fees it was owed. Consequently, NIH’s

information on fees was incomplete. We identified a number of orders that

were not in NIH’s special-purpose monitoring system. After bringing this

matter to their attention, NIH contracting officials found that about

$149,000 in fees were owed for 43 orders valued at $14 million that had not

been posted on the monitoring system. Officials noted that agencies

placing orders on NIH multiple-award contracts sometimes did not provide

the documentation needed to update the fee monitoring system in a timely

manner. NIH said that to address this problem, it is developing an

integrated system that, once fully implemented, will provide complete and

consistent data on orders.

Small Business Has

Been Able to Compete

for Contracts

While concerns have been raised about small businesses not being able to

compete for multiple-award contracts, our analysis of aggregate

federal-wide contract data—although not a specific measure of

multiple-award contracting’s impact—shows that small businesses’ share

of federal contracts has increased since FASA. In addition, the organizations

we reviewed had taken steps to ensure small businesses were receiving

orders on multiple-award contracts.

Our analysis of Federal Procurement Data System information shows that

the value of contract awards to small businesses and the small business

market share increased in all categories examined (see table 2). Of

particular interest is the increase in small business awards and market

share in the automatic data processing (ADP) services and equipment

category, where federal purchasing is increasing significantly and

numerous large multiple-award contracts have been awarded.

Table 2: Federal Contract Awards to

Small Businesses in Fiscal Years 1994

and 1997 Dollars awarded to small

businesses (billions)

Small business share of

total dollars awarded

(percent)

Category of items

purchased

Fiscal year

1994

Fiscal year

1997

Fiscal year

1994

Fiscal year

1997

Research and development $2.8 $3.4 10.0 13.3

Services and construction $17.5 $19.0 20.8 22.4

Supplies $8.3 $9.7 13.2 15.5

ADP services and equipment $3.0 $4.2 29.3 32.2

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Awards to small businesses at three organizations we visited declined.

However, officials at two of these organizations attributed the declines to

factors other than multiple-award contracts. Table 3 provides information

on contracts awarded to small businesses at the organizations we visited.

Table 3: Contract Awards to Small

Businesses by Selected Contracting

Offices in Fiscal Years 1994 and 1997 Dollars awarded to small

businesses (millions)

Small business share of

total dollars awarded

(percent)

Contracting officea

Fiscal year

1994

Fiscal year

1997

Fiscal year

1994

Fiscal year

1997

DISA $308.4 $231.5 19.4 12.9

DOT $20.0 $27.7 50.8 54.7

GSA $18.9 $29.2 33.2 57.2

NIH $502.6 $454.0 30.2 27.6

USAF-ESC/HAFB $263.9 $327.6 9.0 12.7

USAF-SSG $20.5 $17.0 11.6 4.2

aData reflect activity for the following contracting offices: DISA-Defense Information Technology

Contracting Organization; DOT-Transportation Administrative Services Center; GSA-Public

Buildings Service, Region 1; NIH-Office of Procurement Management; ESC/HAFB-U.S. Air Force

Electronics Systems Center, Hanscom AFB; and SSG-U.S. Air Force Electronics Systems Center,

Standard Systems Group, Maxwell AFB-Gunter Annex.

DISA officials said the decline at their organization was due to several

factors. One was SBA’s disqualification of several important suppliers from

receiving small business awards because the suppliers had been

subcontracting virtually all work to a large business. Air Force SSG officials

explained that the multiple-award contracts we examined were follow-ons

to prior contracts, one of which was awarded to a small business.

However, according to the officials, a series of protests were filed against

the award of a contract to the small business firm selected in the follow-on

competition and small business awards declined during the year when

these protests were pending.

Both OFPP and SBA have taken steps to ensure that small businesses

participate in the federal marketplace. OFPP, for example, issued guidance

to encourage communication between contracting personnel and agency

staff responsible for monitoring use of small businesses to identify work

that small businesses can perform. Contracting personnel are also

expected to consider structuring multiple-award acquisitions in a way that

helps small businesses participate as prime contractors.

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SBA has been monitoring agencies’ use of multiple-award contracts and in

several cases has intervened with contracting officials to help restructure

an acquisition to provide greater opportunities for small businesses. SBA

has also begun to monitor contract bundling. SBA representatives stationed

at selected contracting activities—usually larger ones—are allowed to

recommend that contracting activity management restructure acquisitions

where contract bundling has taken place. Since April 1996, SBA

representatives have been reporting cases of possible contract bundling

and the resolution of each case to SBA headquarters. According to an SBA

official, the typical reported case of contract bundling involves smaller

contracts, in the $10 to $20 million range, rather than large multiple-award

contracts. Of the 43 cases of contract bundling reported to SBA

headquarters during 1997 and resolved by the end of the year, 38 had been

resolved either by contracting officials agreeing to reserve some work for

small businesses or by an SBA determination that no contract bundling had

taken place.

The contracting activities we visited had generally taken some action to

provide opportunities for small businesses under the contracts we

reviewed. To ensure that small businesses would have an opportunity to

compete for orders, the Air Force SSG set aside one of its multiple-award

contracts for award to a small disadvantaged business participating in the

8(a) program. Similarly, the NIH contracting officer proposed awarding at

least one contract to a small business. While the Air Force ESC/HAFB did not

set aside a multiple-award contract for award to small businesses, it

limited its multiple-award contracts to $125 million less than the estimated

total requirement of about $800 million. This $125 million of work was to

be awarded through separate contracts reserved for small businesses. DISA

concluded that the requirements under its multiple-award contracts were

too large and diverse for small businesses to fill effectively but directed its

multiple-award contractors to establish small business subcontracting

goals that were higher than the levels of small business subcontracting

achieved under an earlier similar program. While GSA took no special steps

to promote small business participation under its multiple-award

contracts, officials said that small businesses dominate the relevant

industry and that no special measures were needed. In fact, GSA awarded

12 of the 13 contracts and about 90 percent of the value of orders placed

by the end of fiscal year 1997 to small businesses.

DOT’s initiative to promote small business participation in its contracts was

perhaps the most comprehensive. Officials were concerned that small

businesses would not be able to fill the large, complex requirements under

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DOT’s multiple-award contracts, which encompassed a wide range of

information technology services and whose potential value totaled

$1.1 billion. Consequently, they divided the overall requirement into three

functional areas and, within each functional area, stated that it was the

government’s intention to make at least one competitive award to a small

business and at least one competitive award to a small disadvantaged

business participating in the 8(a) program. These steps were intended to

reduce the complexity and potential scope of each contract to a level that

small businesses could fill. This approach appears to have been successful.

Ten of the 20 contracts awarded under DOT’s program went to small

businesses, and about 39 percent of the value of orders awarded through

the end of fiscal year 1997 had gone to small-business prime contractors.

Conclusions Congress authorized multiple-award contracts to promote competition

while providing agencies the flexibility to determine how competitions

would be conducted. Two of the six organizations we reviewed

consistently obtained competition for orders under multiple-award

contracts, but the remaining four did not. While the organizations where

we noted weaknesses are considering steps to increase competitiveness,

OMB has seen the need for regulations to prohibit the practice of

designating preferred contractors when announcing orders for

competition.

Interagency use of multiple-award contracts was common. Where

interagency orders were permitted, organizations assessed varying service

fees intended to recover the cost of processing orders. According to

analyses performed by two organizations, fees exceeded costs at one

organization and did not recover costs at the other. Management

information was insufficient for the other three organizations to compare

fees and costs.

Despite concerns that use of the multiple-award contracting mechanism

would tend to exclude small businesses from the federal marketplace, the

experience with the contracts we reviewed indicates that small businesses

can compete successfully, given the right circumstances. OFPP, SBA, and the

organizations we visited were aware of concerns about the impact of

multiple-award contracting on small businesses, and had taken steps to

preserve small business opportunities.

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Agency Comments In commenting on our draft report, OMB, the Department of Defense (DOD),

and NIH generally concurred with our results. DOT did not provide written

comments but in oral comments generally concurred. GSA and SBA had no

comments.

OMB is encouraged that agencies are taking steps to improve their

processes for administering multiple-award contracts, including increasing

attention to the amount of competition for orders. It views agency

efforts—including those noted in our report—as first steps toward

improving the use of multiple-award contracts. OMB’s written comments

are included in appendix II.

DOD also agreed that continual review was important to ensure that

multiple-award contracts promote competition and avoid adverse impacts

on small business opportunities. The DOD activities we visited are

reviewing their current practices to ensure that each multiple-award

contractor has a fair opportunity to compete for orders. DOD also

expressed concern that more data and analysis would be needed to assess

multiple-award contracting’s overall impact on opportunities for small

businesses. We agree and have modified the report to make it clear that we

were not able to draw a conclusion about whether multiple-award

contracting had been generally beneficial to small businesses. DOD’s

written comments are included in appendix III.

NIH stated that the report presents a fair evaluation of its multiple-award

contracts. NIH’s comments also provide details on recently implemented

program improvements noted in our report, and include several technical

comments that have been incorporated where appropriate. NIH’s written

comments are included in appendix IV.

We are sending copies of this report to the Chairmen of the Senate

Committees on Governmental Affairs and Armed Services; the House

Committees on Government Reform and Oversight and National Security;

the Secretaries of Defense, Health and Human Services, and

Transportation; the Administrators of the General Services Administration

and the Small Business Administration; and the Director, Office of

Management and Budget. We will also provide copies to others upon

request.

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Please contact me at (202) 512-4587 if you or your staff have any questions

concerning this report. Major contributors to this report are listed in

appendix V.

David E. Cooper

Associate Director, Defense Acquisitions Issues

Page 13 GAO/NSIAD-98-215 Acquisition Reform
Contents

Letter 1

Appendix I 

Scope and

Methodology

16

Appendix II 

Comments From the

Office of Management

and Budget

19

Appendix III 

Comments From the

Department of

Defense

21

Appendix IV 

Comments From the

National Institutes of

Health

24

Appendix V 

Major Contributors to

This Report

29

Tables Table 1: Interagency Orders and Fees Assessed on

Multiple-award Contracts

7

Table 2: Federal Contract Awards to Small Businesses in Fiscal

Years 1994 and 1997

8

Table 3: Contract Awards to Small Businesses by Selected

Contracting Offices in Fiscal Years 1994 and 1997

9

Table I.1: Selected Data on Contracts Reviewed 17

Page 14 GAO/NSIAD-98-215 Acquisition Reform
Contents

Abbreviations

ADP automatic data processing

FASA Federal Acquisition Streamlining Act

DISA Defense Information Systems Agency

DOD Department of Defense

DOT Department of Transportation

ESC/HAFB Electronic Systems Center, Hanscom Air Force Base

GSA General Services Administration

NIH National Institutes of Health

OFPP Office of Federal Procurement Policy

OMB Office of Management and Budget

SBA Small Business Administration

SSG Standards Systems Group

USAF U.S. Air Force

USAF/SSG U.S. Air Force, Standard Systems Group

Page 15 GAO/NSIAD-98-215 Acquisition Reform
Appendix I 

Scope and Methodology

To examine implementation of the Federal Acquisition Streamlining Act’s

(FASA) multiple-award contract authority, we reviewed the legislative

history of FASA provisions relating to multiple-award contracts and the

governmentwide procurement regulations implementing these provisions

and held discussions with the Office of Federal Procurement Policy (OFPP)

official responsible for monitoring implementation of the provisions. Since

no governmentwide listing of multiple-award contracts was maintained,

we consulted with OFPP officials and examined published information to

judgmentally select multiple-award contract programs and contracts for

review. The selected contract programs reviewed were: Defense

Enterprise Integration Services, Defense Information Systems Agency

(DISA); Information Technology Omnibus Procurement, Department of

Transportation (DOT); “Can’t Beat GSA Leasing and Renovations”, General

Services Administration (GSA); Chief Information Officer-Solutions and

Partners, National Institutes of Health (NIH); Management Information

Systems Technical Support, U.S. Air Force Electronics Systems Center,

Hanscom Air Force Base (ESC/HAFB); and Desktop V, U.S. Air Force,

Standard Systems Group (USAF/SSG).

The contracts awarded by DISA, DOT, NIH, and ESC/HAFB provide for

acquisition of information technology services, while the SSG contracts

provide for desktop and portable personal computer systems and related

equipment and software. The contracts awarded by GSA provide for general

repairs and alterations of federal offices. Table I.1 identifies the number of

contracts awarded under each program, the maximum value of orders that

can be placed under the program, and the value of orders placed as of the

end of fiscal year 1997.

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Appendix I 

Scope and Methodology

Table I.1: Selected Data on Contracts

Reviewed

Awarding organization

and program name

Number

of contracts

Maximum

program value

(in millions)

Value of orders as of

September 30, 1997

(in millions)

DISA: DEIS-II 6 $3,000 $334.3

DOT: ITOP 20 $1,134 $433.2

GSA: CBGLR 13 $204 $1.6

NIH: CIO-SP 20 $11,000a N/Ab

ESC/HAFB: MISTS-II 2 $675 $46.9

SSG: DT-V 4c $1,675 $310.2

Note: Defense Enterprise Integration Services [DEIS-II], Information Technology Omnibus

Procurement [ITOP], “Can’t Beat GSA Leasing and Renovations [CBGLR]”, Chief Information

Officer-Solutions and Partners [CIO-SP], Management Information Systems Technical Support

[MISTS-II], and Desktop V [DT-V].

aWhen initially awarded, the NIH contracts provided for a maximum of 5,000 tasks under the

program but did not establish a dollar limit on the value of these tasks. By contract modifications

dated July 8, 1998, NIH established a dollar limit of $11 billion.

bIncomplete data precludes determining the total value of orders placed.

cA total of four contracts have been awarded. For one of these, SSG decided not to exercise its

option to extend the contract beyond the first year of performance, so three contracts are

currently in effect.

To assess whether implementation of the FASA provisions was promoting

competition under multiple-award contracts, we gathered statistical

information on sole-source orders. We also interviewed officials

responsible for the contracts and representatives of selected firms who

had been awarded contracts, reviewed policies and procedures

established to govern administration of the contracts, and reviewed

documentation relating to the award of the contracts. In addition, we

reviewed documentation relating to a judgmental sampling of orders

placed under the contracts. These orders were selected to provide insight

into the processing of both sole-source and competitive orders.

To assess how organizations establish service fees on interagency

transactions, we interviewed officials responsible for establishing and

administering service fees for use of the contracts, reviewed policies and

procedures governing service fees, and examined financial and other

records relating to service fees.

To assess the impact of multiple-award contracting on opportunities for

small businesses to participate in federal procurements, we interviewed

the Small Business Administration (SBA) and OFPP officials, officials

Page 17 GAO/NSIAD-98-215 Acquisition Reform
Appendix I 

Scope and Methodology

responsible for the contracts we reviewed, and officials responsible for

monitoring utilization of small business at the locations where we did our

work. In addition, we analyzed governmentwide data on awards to small

businesses in the Federal Procurement Data System, data maintained at

the locations where we did our work, and data gathered by SBA officials.

We conducted our review from July 1997 to May 1998 in accordance with

generally accepted government auditing standards.

Page 18 GAO/NSIAD-98-215 Acquisition Reform
Appendix II 

Comments From the Office of Management

and Budget

Page 19 GAO/NSIAD-98-215 Acquisition Reform
Appendix II 

Comments From the Office of Management

and Budget

Page 20 GAO/NSIAD-98-215 Acquisition Reform
Appendix III 

Comments From the Department of Defense

Note: GAO’s comment

supplementing those in

the report text appear at

the end of this appendix.

See comment 1.

Page 21 GAO/NSIAD-98-215 Acquisition Reform
Appendix III 

Comments From the Department of Defense

Page 22 GAO/NSIAD-98-215 Acquisition Reform
Appendix III 

Comments From the Department of Defense

The following are GAO’s comments on the Department of Defense’s letter

dated September 17, 1998.

GAO Comment 1. Our report does not criticize the management system that the Air Force

SSG uses to determine fees for its contracting business area. DISA’s

contracting business area, on the other hand, includes certain contracts

where DISA provides users services in addition to contracting support as

well as the multiple-award contracts where DISA provides only contracting

support. Although DISA’s costs for administering contracts where it

provides additional services would be higher than costs for administering

multiple-award contracts, DISA assesses the same fee rate on all orders its

contracting business area administers.

Page 23 GAO/NSIAD-98-215 Acquisition Reform
Appendix IV 

Comments From the National Institutes of

Health

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 24 GAO/NSIAD-98-215 Acquisition Reform
Appendix IV 

Comments From the National Institutes of

Health

Page 25 GAO/NSIAD-98-215 Acquisition Reform
Appendix IV 

Comments From the National Institutes of

Health

Now on p. 7.

See comment 1.

Now on p. 8.

Now on p. 8.

See comment 2.

Page 26 GAO/NSIAD-98-215 Acquisition Reform
Appendix IV 

Comments From the National Institutes of

Health

Now on p. 9.

Now on p. 10.

Now on p. 17.

Page 27 GAO/NSIAD-98-215 Acquisition Reform
Appendix IV 

Comments From the National Institutes of

Health

The following are GAO’s comments on the National Institutes of Health’s

letter dated September 14, 1998.

GAO Comments 1. Planned improvements in NIH’s management systems are addressed in

the discussion following table 1 of this report.

2. At a May 1998 meeting, after we had completed our field work, NIH

officials gave us a demonstration of a new integrated order management

system they were developing. The implementation plan NIH describes is

generally consistent with the plan discussed in our May 1998 meeting. We

have not, however, determined the system’s current implementation

status.

Page 28 GAO/NSIAD-98-215 Acquisition Reform
Appendix V 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Ralph Dawn

Roy Karadbil

Charles Malphurs

Office of the General

Counsel, Washington,

D.C.

John A. Carter

William Woods

Boston Field Office Monty Peters

Ralph Roffo

(707272) Page 29 GAO/NSIAD-98-215 Acquisition Reform
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