GAO

United States General Accounting Office

Report to Congressional Requesters 

January 2001 SMALL BUSINESS

Trends in Federal 

Procurement in the 

1990s

GAO-01-119

Page 1 GAO-01-119 Federal Procurement

Contents

Letter 3

Appendixes Appendix I: Descriptions Of Contract Vehicles 26

Appendix II: Objectives, Scope, and Methodology 28

Appendix III: Comments From SBA 30

Appendix IV: GAO Contacts and Staff Acknowledgements 32

Figures Figure 1: Key Changes in Federal Procurement 

Legislation, 1994-1997 9

Figure 2: Total Federal Procurement Expenditures, 

Fiscal Years 1993-1999 10

Figure 3: Percentage of Federal Contract Expenditures 

Going to Small Businesses, Fiscal Years 1993-1999 14

Figure 4: Federal Expenditures for New Contracts Over $25,000 

Going to Small Businesses, Fiscal Years 1993-1999 16

Figure 5: Federal Expenditures for New Contracts over $25,000 

by Product and Service Category, Fiscal Years 1993-1999 18

Figure 6: Federal Purchase Card Expenditures as a Percentage of 

Total Federal Procurement, Fiscal Years 1993-1999 22

Abbreviations

BPA blanket purchase agreement

DOD Department of Defense

FAR Federal Acquisition Regulation

FASA Federal Acquisition Streamlining Act

FPDC Federal Procurement Data Center

FPDS Federal Procurement Data System

GAO General Accounting Office

GSA General Services Administration

GWAC governmentwide agency contract

IDIQ indefinite-delivery, indefinite-quantity contract

MAC multiple award contract

OFPP Office of Federal Procurement Policy

OMB Office of Management and Budget

SBA Small Business Administration
Page 2 GAO-01-119 Federal Procurement
Page 3 GAO-01-119 Federal Procurement

United States General Accounting Office

Washington, D.C. 20548 Letr

January 18, 2001

The Honorable Stephen Horn

The Honorable Tom Davis

House of Representatives

The federal government spends about $200 billion annually on the 

acquisition of goods and services and has established a legislative goal to 

provide at least a 23 percent share of these expenditures to small 

businesses. Some organizations that represent small businesses and others 

have expressed concerns that acquisition reforms in the mid-1990s may 

have reduced the opportunities for small businesses to compete for federal 

government contracts. These reforms focused on streamlining acquisition 

processes to improve the government's capacity to acquire goods and 

services in a more efficient manner. The reforms included provisions to 

facilitate the increased use of certain types of contracts.

Concerned about the potential effect of these reforms on small businesses, 

you asked us in your capacities as Chairman of the Subcommittee on 

Government Management, Information, and Technology and as a Member 

of the Subcommittee, to determine if there were any changes in the ability 

of small businesses to obtain government contracts following the 

implementation of the reforms and other changes in the acquisition 

environment during the 1990s. Specifically, we agreed to address (1) 

provisions in acquisition reform legislation enacted in the 1990s and other 

changes in procurement that took place during this time that could affect 

small business contractors and (2) trends that might indicate possible 

shifts in the ability of small businesses to obtain federal contracts in the 

1990s. To identify the provisions of acquisition reform legislation and 

possible shifts in procurement from small businesses, we analyzed key 

legislative reforms and other changes and obtained the views of 

representatives of several associations representing small businesses. To 

determine the trends in federal procurement from small businesses, we 

analyzed data from the General Services Administration's Federal 

Procurement Data Center (FPDC), which collects procurement 

information from federal agencies.

Results in Brief Legislation and other acquisition reforms in the 1990s resulted in several 

changes to governmentwide procurement practices that could be viewed as 

having the potential to both positively and negatively affect small 

businesses' ability to receive federal contracts. For those changes that 
Page 4 GAO-01-119 Federal Procurement

could adversely affect them, some organizations that represent small 

businesses point to certain contract types, or vehicles, that were authorized 

or developed through acquisition reform. Specifically, the Federal 

Acquisition Streamlining Act of 1994 (FASA)1

 codified the authority of 

agencies to enter into task- or delivery-order contracts2

 with multiple firms 

for the same or similar products, known as multiple award contracts 

(MAC). 

The information technology acquisition reforms of the Clinger-Cohen Act 

of 1996 provided for the use of multiagency contracts and what have 

become known as governmentwide agency contracts (GWAC) for federal 

agencies to access each other's information technology contracts.3 Some 

organizations that represent small businesses have expressed concern that 

these contract vehicles can diminish their ability to compete for federal 

contracts because they could potentially consolidate multiple agencies' 

requirements or call for performance over a wide geographic area. 

Some organizations that represent small businesses are also concerned 

that FASA exempted purchases of $2,500 or less from the range of 

contracts previously reserved for small businesses. Federal agencies are 

encouraged to use purchase cards, which are similar to corporate credit 

cards, for purchases in this range. Some firms believe that this exemption 

and the use of purchase cards to buy goods at companies other than small 

businesses have eroded their market share of these purchases. Although 

contract bundling is an acquisition practice that received additional 

attention during this time, it did not result from acquisition reform 

legislation. Some organizations that represent small businesses are 

concerned that bundled contracts impede the ability of small businesses to 

compete for federal contracts. 

While some organizations that represent small businesses believe that 

certain reforms may have the potential to negatively affect them, other 

legislative changes potentially benefit small businesses. For example, FASA 

1

 P.L. 103-355, October 13, 1994.

2

 Task- or delivery-order contracts provide for the purchase of an indefinite quantity, within 

stated limits, of supplies or services during a fixed period. Deliveries or performance of 

tasks are scheduled by placing orders with the contractor.

3

 The Clinger-Cohen Act was enacted as Divisions D and E of the National Defense 

Authorization Act for Fiscal Year 1996 (P.L. 104-106, Feb. 10, 1996).
Page 5 GAO-01-119 Federal Procurement

increased the threshold of federal contracts exclusively reserved for small 

businesses from contracts worth $25,000 or less to contracts over $2,500 up 

to $100,000, although contracts can still be exempt from this exclusive 

reservation if certain criteria are met. In addition, the Small Business 

Reauthorization Act of 19974

 increased the previous legislative goal that at 

least 20 percent of federal contract expenditures be awarded to small 

businesses to 23 percent, effective fiscal year 1998. 

Other changes during the 1990s also have the potential to affect small 

businesses. These changes include the reduction in overall federal 

procurement expenditures and, less directly, the downsizing of the 

acquisition workforce, which may have contributed to the use of 

streamlined procurement practices. 

Small Business Administration data indicate that although federal agencies 

met the legislative goal for procurement from small businesses from fiscal 

years 1993 to 1999, there was a slight decrease in the percentage of total 

contract expenditures, which include new contracts and contract 

modifications, going to small businesses from fiscal years 1997 to 1999. 

Between fiscal years 1993 and 1997, when the legislative goal was 20 

percent, small businesses received between 24 and 25 percent of total 

federal contract expenditures. In fiscal years 1998 and 1999, when the goal 

increased to 23 percent, small businesses received 23 percent of total 

federal contract expenditures. 

Focusing on new contracts, where some organizations that represent small 

businesses have expressed concern about the ability of small businesses to 

compete, small businesses received between 25 and 28 percent of the value 

of expenditures on new contract awards worth more than $25,000 from 

fiscal years 1993 to 1999.5

 In calculating the share of total expenditures on 

new contracts going to small businesses, we used FPDC data on 

expenditures for new contracts worth $25,000 or more and did not exclude 

certain types of expenditures that SBA excludes to calculate the 

achievement of the small business procurement goal.6

4

 P.L. 105-135, December 2, 1997.

5

 Federal agencies report procurement data to Federal Procurement Data System in two 

categories (1) contract awards of $25,000 or less and (2) contract awards over $25,000. 

Each agency reports summary data on contracts worth $25,000 or less to FPDS. Agencies 

report greater detail on each individual contract over $25,000. Federal agencies do not 

report detailed data on purchase-card expenditures to FPDS.
Page 6 GAO-01-119 Federal Procurement

In addition, despite the overall decline in total federal procurement in the 

1990s, small businesses received a higher share in fiscal year 1999 of 

expenditures on new contracts over $25,000 for most categories of goods 

and services than they did in fiscal year 1993, including automatic data 

processing services as well as research and development. Several contract 

vehicles, such as MACs, aggregately accounted for about one quarter of all 

governmentwide expenditures for contracts over $25,000 in fiscal year 

1999, up from approximately 16 percent in fiscal year 1994. For several 

types of these contract vehicles, small businesses received between 26 and 

55 percent of expenditures for new contracts worth over $25,000 in fiscal 

year 1999. The limited data on the extent of contract bundling as well as for 

contracts over $2,500 up to $100,000, which are generally reserved 

exclusively for small businesses, preclude assessment of any related shifts 

in trends of procurement from small businesses. In addition, while 

available information indicates that the use of purchase cards increased to 

about 5 percent of federal procurement from fiscal years 1993 to 1999, data 

were not available to determine the share of these purchases going to small 

businesses or the impact of their increased use on small businesses. 

We provided the Small Business Administration (SBA), General Services 

Administration (GSA) and the Office of Management and Budget (OMB) 

with a draft of this report for review and comment. In her written 

comments, SBA's Chief Operating Officer agreed with the report's findings 

and suggested minor technical changes that we have incorporated where 

appropriate. Also, she pointed out that preliminary data from fiscal year 

2000 show that federal agencies are finding it more difficult to meet the 

legislative goal that 23 percent of the value of federal prime contracts be 

awarded to small businesses. Officials from GSA's Office of Enterprise 

Development and Office of Governmentwide Policy provided technical 

comments that have been incorporated into the report, as appropriate. 

OMB had no comments on our draft report. The written comments we 

received from SBA are in appendix III.

Background The federal government buys a myriad of goods and services from 

contractors. Federal agency acquisitions must be conducted in accordance 

with a set of statutes and regulations designed to accomplish several 

objectives, including full and open competition and various social and 

6

 We asked FPDC for data on new contracts over $25,000 because FPDC does not collect 

information on new contracts worth $25,000 or less going to small businesses.
Page 7 GAO-01-119 Federal Procurement

economic goals, such as encouraging small business participation. In the 

late 1980s and early 1990s, some became convinced that the federal 

procurement system had become complex, unwieldy, and overwrought 

with tension between the basic goals of efficiency and fairness because of a 

proliferation of requirements governing almost every aspect of the 

acquisition process. In this environment, there were concerns about the 

government's ability to take full advantage of the opportunities offered by 

the commercial marketplace. In response to these concerns, Congress 

enacted two major pieces of reform legislation, FASA and Clinger-Cohen, 

aimed at creating a more efficient and responsive federal acquisition 

system. Concerns remain about whether the changes brought about by 

acquisition reform during the 1990s have come at the expense of placing 

small business at a disadvantage. 

Legislative and Other 

Changes That Could 

Affect the Ability of 

Small Businesses to 

Obtain Federal 

Contracts

The federal procurement process underwent many legislative and 

administrative changes during the 1990s, some of which have the potential 

to affect the ability of small businesses to obtain federal contracts. Other 

changes occurred during this time, such as reductions in the amount the 

government spent on goods and services and the size of its acquisition 

workforce, which agency officials believe have also encouraged 

procurement streamlining. These changes included the use of certain 

contract vehicles, such as MACs. In addition, reforms have modified the 

dollar range of contracts that are reserved for small businesses and 

encouraged the use of purchase cards, which are similar to corporate 

credit cards, for the use of certain purchases. Some organizations that 

represent small businesses are concerned that these changes could 

potentially erode the ability of small businesses to receive federal 

contracts. 

Legislation Modifies Federal 

Procurement Process

Three major laws enacted in the 1990s contain provisions that may affect 

small business contractors: (1) FASA (2) Clinger-Cohen and (3) the Small 

Business Reauthorization Act of 1997. 

Among its many reform provisions, FASA codified the authority of agencies 

to enter into multiple award, task- and delivery-order contracts for goods 

and services. According to agency officials, these MACs are designed to 

provide agencies with a great deal of flexibility in buying goods or services 

while minimizing the burden on government contracting personnel to 

administer contracts. Clinger-Cohen contained additional reform 

provisions, particularly for purchases of information technology. The 
Page 8 GAO-01-119 Federal Procurement

legislation repealed the central authority of GSA for information 

technology acquisitions, authorized the use of multiagency contracts for 

such acquisitions, and authorized OMB to designate agency executive 

agents for GWACs. Clinger-Cohen authorized federal agencies to make their 

information technology contracts available for use by other agencies. Some 

organizations that represent small businesses have expressed concern that 

these types of contract vehicles can diminish the ability of small businesses 

to compete for federal contracts since they potentially can consolidate 

requirements, which small businesses may not have the capacity to meet 

and may require a larger geographic coverage than they can accommodate.

FASA also amended the Small Business Act to create an exclusive 

reservation for small businesses consisting of contracts valued at more 

than $2,500 but not more than $100,000. However, agency contracting 

officers are not bound to this exclusive reservation if they are unable to 

obtain offers from two or more small businesses that are competitive with 

market prices, quality and delivery of the goods or services being 

purchased. Prior to FASA, procurements valued at $25,000 or less were 

generally reserved for small businesses. FASA also took contracts of 

$2,500 or less outside the range of the exclusive reservation for small 

businesses with the creation of a micropurchase level of $2,500. 

Government buyers do not have to obtain competition and are not required 

to purchase goods or services from small businesses for micropurchases of 

$2,500 or less. Nevertheless, FASA requires that these micropurchases be 

distributed equitably among qualified contractors. In addition, ClingerCohen provided greater flexibility to agencies in determining who may 

make purchases of $2,500 or less without competition. Some organizations 

that represent small businesses are concerned that buyers making 

micropurchases may be less likely to seek small businesses for these 

purchases.

In addition, Congress acted to increase the goal of the share of federal 

contracts for small businesses. The Business Opportunity Development 

Reform Act of 1988 established an annual governmentwide goal that not 

less than 20 percent of the total value of prime contract awards for each 

fiscal year go to small businesses.7

 The Small Business Reauthorization Act 

of 1997 increased this goal to not less than 23 percent.8

 This increase was 

designed to encourage federal agencies to purchase more goods and 

7

 A prime contract is any direct contract between the government and a contractor.
Page 9 GAO-01-119 Federal Procurement

services from small businesses. Figure 1 highlights statutory changes 

relevant to small businesses.

Figure 1: Key Changes in Federal Procurement Legislation, 1994-1997

Source: GAO analysis of acquisition reform legislation.

Other Factors Have 

Affected Federal 

Procurement Practices

At the same time that acquisition reform legislation was enacted, other 

factors changed how much the federal government bought as well as the 

way it buys goods and services. During the 1990s, the federal government 

decreased the amount spent on goods and services and downsized the 

acquisition workforce. 

The total amount of goods and services that the government purchased, 

including those bought with purchase cards, declined by about 7 percent 

from an inflation-adjusted $224 billion in fiscal year 1993 to $209 billion in 

fiscal year 1999. Consequently, all businesses had to compete for a reduced 

total of federal contract expenditures. Figure 2 shows the trend in total 

federal procurement expenditures during this period. 

8

 Since the 23 percent goal is governmentwide, some agencies' goals for awarding prime 

contracts to small businesses may be below 23 percent while others may be above 23 

percent. SBA is responsible for coordinating goals with all executive agencies to ensure 

that the federal government as a whole meets the 23 percent goal.

1994 1996 1997

Federal Acquisition Streamlining

Act of 1994

Authorized federal agencies to enter into

multiple award contracts (MACs)

Small business exclusive reservation from

more than $2,500 up to $100,000

Introduction of micropurchase level up to

$2,500

Clinger-Cohen Act of 1996

Authorized the Office of Management and

Budget to designate executive agents for

governmentwide acquisitions of

information technology (GWACs)

Authorized the use of multi-agency

contracts for acquisitions of information

technology

Allowed agencies to authorize more

employees to make purchases up to

$2,500

Small Business Reauthorization

Act of 1997

Increased the small business

contracting goal from not less than

20% to 23%

A
Page 10 GAO-01-119 Federal Procurement

Figure 2: Total Federal Procurement Expenditures, Fiscal Years 1993-1999

Note: Amounts are shown in constant fiscal year 1999 dollars.

Source: GAO analysis of FPDS data.

Federal agencies also reduced their acquisition workforce personnel from 

165,739 in fiscal year 1990 to 128,649 in fiscal year 1998, or approximately 

22 percent, during this time, with many of these reductions taking place at 

the Department of Defense (DOD).9

 According to agency officials, 

contracting officials have sought ways to streamline procurement practices 

within the applicable statutes and regulations partly as a result of these 

workforce reductions; this includes the use of previously authorized 

contracting vehicles such as blanket purchase agreements (BPA), 

9

 The National Defense Authorization Acts for fiscal years 1996, 1997, 1998, and 1999 

(P.L. 104-106, P.L. 104-201, P.L. 105-85, and P.L. 105-261) directed the Secretary of Defense to 

reduce DOD's acquisition personnel.
Page 11 GAO-01-119 Federal Procurement

indefinite-delivery indefinite-quantity (IDIQ) contracts, and GSA federal 

supply schedule contracts. Appendix I provides a description of these 

contract vehicles. 

Contract bundling is an acquisition practice that received a lot of attention 

in the 1990s and is often associated with but, in fact, is not actually 

contained in acquisition reform legislation enacted during this period. 

Federal agencies combine existing contracts into fewer contracts as a 

means of streamlining as well as reducing procurement and contract 

administration costs, a practice generally referred to as “contract 

consolidation.” A subset of consolidated contracts is “bundled contracts” 

that the Small Business Reauthorization Act of 1997 defines as the 

consolidation of two or more procurement requirements for goods or 

services previously provided or performed under separate, smaller 

contracts into a solicitation of offers for a single contract that is likely to be 

unsuitable for award to a small business concern due to

• the diversity, size, or specialized nature of the elements of the 

performance specified;

• the aggregate dollar value of the anticipated award;

• the geographic dispersion of contract performance sites; or

• any combination of these three criteria.

This act requires each federal agency, to the maximum extent practicable, 

to (1) promote participation of small businesses by structuring its 

contracting requirements to facilitate competition by and among small 

businesses and (2) avoid the unnecessary and unjustified bundling of 

contracts that are likely to be unsuitable for small business participation as 

prime contractors.10

Federal policy has also encouraged the use of governmentwide commercial 

purchase cards for micropurchases. The purchase card, issued to a broad 

range of authorized agency personnel to acquire and pay for goods and 

services, is similar in nature to a corporate credit card and is the preferred 

method for purchases of $2,500 or less. Some organizations that represent 

small businesses believe that the purchase card makes it easier for 

10 To implement the act, SBA issued an interim rule in October 1999 and a final rule in July 

2000. In October 2000, the administration issued Executive Order 13170 to increase 

opportunities for small disadvantaged businesses in federal contracting. This order directs 

federal agencies to submit, to the extent permitted by law, any contracts proposed to be 

bundled to SBA for review. 
Page 12 GAO-01-119 Federal Procurement

government personnel to make purchases from sources other than small 

businesses because that may be more convenient for the purchaser.

Small Businesses 

Continued to Achieve 

the Federal 

Procurement Goal in 

The 1990s, Although 

Their Share Has 

Decreased Slightly

Small businesses, as a group, have received the legislatively mandated goal 

for federal contract expenditures each fiscal year from 1993 to 1999. 

Between fiscal years 1993 and 1997, when the legislative goal was at least 

20 percent, small businesses received between 24 and 25 percent of total 

federal contract expenditures. In both fiscal years 1998 and 1999, when the 

goal increased to 23 percent, small businesses received 23 percent of total 

federal contract expenditures. Focusing on expenditures for new contracts 

worth over $25,000, our analysis shows that small businesses have received 

between 25 and 28 percent of these expenditures during this period. In 

addition, focusing on the various categories of goods and services that the 

federal government purchases, small businesses received a higher share in 

fiscal year 1999 of expenditures in new contracts for most categories of 

goods and services than they did in fiscal year 1993. Several contract 

vehicles accounted for about one quarter of all governmentwide 

expenditures for contracts over $25,000 in fiscal year 1999, and small 

businesses received between 26 and 55 percent of expenditures for these 

contract vehicles in that year. We could not determine the amount or 

impact of contract bundling or the impact of the increased use of 

government purchase cards on small businesses. Although FASA requires 

that contracts over $2,500 up to $100,000 generally be reserved exclusively 

for small businesses, we could not determine the amount of expenditures 

for these contracts because, in some cases, information is reported to 

FPDC on contracts together with modifications. 

Federal Government Is 

Meeting Small Business 

Procurement Goal

SBA and FPDC data indicate that federal agencies, as a whole, have met 

their annual governmentwide small business procurement goal from fiscal 

years 1993 to 1999. This legislative goal increased from at least 20 percent 

of total federal contract expenditures to 23 percent effective fiscal year 

1998. Between fiscal years 1993 and 1997, when the legislative goal was at 

least 20 percent, small businesses received between 24 and 25 percent of
Page 13 GAO-01-119 Federal Procurement

total federal contract expenditures.11 In fiscal years 1998 and 1999, when 

the legislative goal increased to 23 percent, small businesses received

23 percent of total federal contract expenditures.12 Figure 3 shows the 

share of total federal contract expenditures going to small businesses for 

this period.

11 The Small Business Act, as amended, establishes a policy that federal agencies provide 

small businesses the maximum practicable opportunity to participate in federal contracts. 

Federal agencies consult annually with SBA to set goals for the percentage of dollars to be 

awarded to small businesses. Although the legislative goal for fiscal years 1993 through 

1997 was 20 percent, the governmentwide goals established by federal agencies and SBA 

were 21.2 percent in fiscal year 1993, 22.9 percent in 1994, 22.6 percent in 1995, 23.5 in 1996, 

and 23 percent in 1997.

12 SBA used two different methodologies to calculate the achievement of the legislative goal 

during this time period. Prior to fiscal year 1998, federal agencies submitted information on 

small business procurement to SBA, which then calculated the percentage of federal 

contracts governmentwide going to small businesses. In fiscal years 1998 and 1999, this 

information was calculated based on FPDS data. A more detailed description of SBA's 

methodology is contained in Small Businesses: Limited Information Available on Contract 

Bundling's Extent and Effects (GAO/GGD-00-82).
Page 14 GAO-01-119 Federal Procurement

Figure 3: Percentage of Federal Contract Expenditures Going to Small Businesses, 

Fiscal Years 1993-1999

Source: SBA.

Under the Small Business Act, SBA has authority to prescribe a method to 

measure the participation of small businesses in federal procurement. In 

calculating the actual achievement of small business procurement goals for 

individual federal agencies, SBA excludes certain categories of 

procurements from the base, or denominator. SBA has identified several 

categories of procurements that are excluded from the base because SBA 

officials believe that small businesses do not have a reasonable opportunity 

to compete for them, including (1) foreign military sales; (2) procurement 

awarded and performed outside the United States; (3) purchases from 

mandatory sources of supplies as listed in the Federal Acquisition 

Regulation; and (4) purchases for specific programs from the Departments 

of State, Transportation, and the Treasury. 

SBA's Office of Advocacy disagrees with SBA's approach of excluding 

categories of procurements in establishing the base. Adding back the 
Page 15 GAO-01-119 Federal Procurement

categories of procurement that SBA excluded, the Office of Advocacy 

reported that small businesses received about 21 percent of total federal 

procurement in fiscal year 1998 (rather than the 23 percent that SBA 

reported) and that, therefore, the governmentwide goal for small business 

procurement was not met in fiscal year 1998.13

Some organizations that represent small businesses have expressed 

concerns that small businesses are at a disadvantage when competing for 

new federal contracts. Therefore, we analyzed the share of expenditures 

for new contracts going to small businesses. These data do not include 

modifications to existing contracts, which account for approximately half 

of all governmentwide procurement expenditures during this time. Our 

analysis of FPDS data of new contract expenditures shows that small 

businesses have received between 25 and 28 percent of such expenditures 

for contracts worth more than $25,000 between fiscal years 1993 and 1999. 

Figure 4 shows the results of our analysis. In calculating the share of total 

expenditures on new contracts going to small businesses from fiscal years 

1993 to 1999, we used FPDC data on expenditures for new contracts worth 

more than $25,000 and did not exclude the types of expenditures that SBA 

excludes to calculate the small business procurement goal. 

13 Federal Procurement from Small Firms: National and State-by-State Rankings of Federal 

Procurement Centers on Their Procurement From Small Firms in FY 1998, March 1999, 

SBA, Office of Advocacy.
Page 16 GAO-01-119 Federal Procurement

Figure 4: Federal Expenditures for New Contracts Over $25,000 Going to Small 

Businesses, Fiscal Years 1993-1999

Note: Expenditures are for new contracts over $25,000 only.

Source: GAO analysis of FPDS data.

Despite Decreased Overall 

Expenditures, Small Businesses 

Receive an Increased Share of 

Purchases on New Contracts for 

Most Goods and Services

As noted in figure 2, the federal government has been spending less money 

on goods and services since fiscal year 1993. The only categories of goods 

and services that experienced increases in governmentwide purchases on 

new contracts worth more than $25,000 between fiscal years 1993 and 1999 

were real property and other services. Despite this overall decline in 

contract purchases, small businesses received a higher share in fiscal year 

1999 than in fiscal year 1993 of expenditures on new contracts worth 

$25,000 or more than for 5 of the 8 categories of goods and services of
Page 17 GAO-01-119 Federal Procurement

government procurement:14 equipment, research and development, 

architect and engineering, automatic data processing services, and other 

services. Figure 5 shows governmentwide trends for purchases under new 

contracts of goods and services worth more than $25,000 and the share of 

these purchases going to small businesses.

14 FPDC categorizes all federal contract expenditures over $25,000 into eight categories of 

goods and services. The categories and their share of total federal procurement for new 

contracts and modifications in fiscal year 1999 are other services, 35 percent; supplies and 

equipment, 32 percent; research and development, 13 percent; construction, 9 percent; ADP 

services, 6 percent; ADP equipment, 4 percent; architect and engineering, 1 percent; and real 

property, less than 1 percent. The percentages do not add up exactly to 100 due to rounding.
Page 18 GAO-01-119 Federal Procurement

Figure 5: Federal Expenditures for New Contracts over $25,000 by Product and Service Category, Fiscal Years 1993-1999

Other services Research and development

Construction Equipment
Page 19 GAO-01-119 Federal Procurement

Note: Amounts are in constant fiscal year 1999 dollars and are for new contracts over $25,000 only.

Source: GAO analysis of FPDS data.

(in billions) (in billions) (in billions)

(in billions) (in billions)

Real Property ADP Equipment

Architect and engineering ADP services
Page 20 GAO-01-119 Federal Procurement

The Share of Expenditures Going 

to Small Businesses Under 

Selected Contract Vehicles Has 

Increased

We analyzed FPDS data on the governmentwide use of certain contract 

vehicles for contracts over $25,000, including those that became popular 

during the 1990s. We found that these vehicles represent a small but 

growing share of federal procurement expenditures. Because FPDS only 

captures data for some of these contract vehicles, we had to limit our 

analysis to MACs, IDIQs, BPAs, and GSA schedules.15

Expenditures for the four types of contract vehicles we analyzed 

represented 25 percent of federal procurement expenditures on contracts 

over $25,000 in fiscal year 1999, compared with 16 percent in fiscal year 

1994.16 Small businesses received 32 percent of expenditures for these 

contract vehicles in fiscal year 1999 compared with 24 percent in fiscal year 

1994. 

For each of the four types of contract vehicles in our analysis, the share of 

expenditures going to small businesses was between 26 and 55 percent in 

fiscal year 1999, depending on the type of contract vehicle. For example, 

expenditures going to small businesses for MACs increased from 

$524 million in fiscal year 1994, or 8 percent of all expenditures for MACs, 

to $2 billion in fiscal year 1999, or 26 percent of all expenditures for MACs. 

Expenditures going to small businesses for IDIQs from fiscal years 1994 to 

1999 remained relatively stable, near $7 billion. The percentage of total 

expenditures for IDIQs going to small businesses increased from 

24 percent of total expenditures for IDIQs in fiscal year 1994 to 28 percent 

in 1999. The small business share of GSA schedules increased from 

27 percent in fiscal year 1994 to 36 percent in fiscal year 1999, from 

$523 million to $3 billion. Finally, the small business share of BPAs fell from 

97 percent in fiscal year 1994 to about 55 percent in fiscal year 1999, 

although the expenditures increased for small businesses from about 

$141 million in fiscal year 1994 to about $2 billion in fiscal year 1999.

15 FPDS did not collect information on bundled contracts for fiscal years 1993 through 1999. 

Although FPDS does not have a data category for GWACs, information on GWACs may be 

included under MACs and IDIQs.

16 Because FPDS officials told us that they began collecting information on MACs in fiscal 

year 1994, we limited our analysis of MACs, IDIQs, BPAs, and GSA schedules to fiscal years 

1994 through 1999.
Page 21 GAO-01-119 Federal Procurement

Data on Contract 

Bundling and Its Effect 

on Small Businesses 

Are Very Limited

In conducting a review of contract bundling in 2000,17 we found that there 

are only limited governmentwide data on the extent of contract bundling 

and its actual effect on small businesses. Federal agencies do not currently 

report information on contract bundling to FPDC; therefore, FPDC does 

not have data on this topic.18 Our review of consolidated contracts worth 

$12.4 billion at 3 procurement centers showed that the number of 

contractors and the contract dollars were generally reduced due to 

consolidation as agencies sought to streamline procurement and reduce its 

associated administrative costs. SBA determined that the consolidation of 

the contracts we reviewed did not necessarily constitute bundling. In fact, 2 

of the largest consolidated contracts involved only large businesses and the 

remaining 11 consolidated contracts were awarded to small businesses.

Purchase Card 

Expenditures Are 

Increasing

We analyzed the total amount of governmentwide purchase-card 

expenditures for fiscal years 1993 to 1999 and found that in fiscal year 1999 

such expenditures totaled $10 billion, or about 5 percent, of all federal 

procurement purchases. As figure 6 shows, these purchases have steadily 

increased since 1993, when the total amount bought with purchase cards 

was $527 million. These data include expenditures for all purchase-card 

transactions, both under and over $2,500. 

17 Small Businesses: Limited Information Available on Contract Bundling's Extent and 

Effects (GAO/GGD-00-82, Mar. 31, 2000).

18 The Small Business Reauthorization Act of 1997 requires that FPDS be modified to collect 

data on bundled contracts anticipated to exceed $5 million. However, FPDC did not begin 

collecting information on bundling until fiscal year 2001 because these data could not be 

collected until final regulations were issued.
Page 22 GAO-01-119 Federal Procurement

Figure 6: Federal Purchase Card Expenditures as a Percentage of Total Federal 

Procurement, Fiscal Years 1993-1999

Note: Dollar amounts are shown in constant fiscal year 1999 dollars.

Source: GAO analysis of FPDS data.

FASA permits purchases for goods or services up to $2,500 from any 

qualified suppliers. Since FPDS does not collect detailed data on purchasecard expenditures, we could not determine what share of such 

governmentwide expenditures are going to small businesses.

Agency Comments and 

Our Evaluation

We requested comments on a draft of this report from the Administrator of 

SBA, the Director of OMB, and the Administrator of GSA. SBA's Chief 

Operating Officer provided written comments in concurrence with our 

report. She pointed out that preliminary data for fiscal year 2000 show that 

federal agencies are finding it more difficult to meet the legislative goal of 

ensuring that 23 percent of the value of federal prime contracts go to small 

businesses. We did not include data for fiscal year 2000 in our review 

because these data are preliminary. Another area of concern was that since 

detailed data on purchase-card expenditures are not included in the FPDS 

database, trend analyses of these expenditures were not included in our 
Page 23 GAO-01-119 Federal Procurement

report. As we note in our report, purchase-card expenditures have 

increased, but data are not available to determine the share of these 

purchases going to small businesses. In addition, SBA's Chief Operating 

Officer made several technical comments that we have reflected in this 

report, as appropriate. 

Officials from GSA's Offices of Enterprise Development and 

Governmentwide Policy provided technical comments that we have 

addressed in this report, as appropriate. OMB had no comments on our 

draft report. The comments we received from SBA are in appendix III.

Objectives, Scope, and 

Methodology

To identify procurement changes that could affect small business 

contractors, we reviewed FASA, the Clinger-Cohen Act, the Small Business 

Reauthorization Act of 1997, and the Federal Acquisition Regulation. We 

also identified other changes that occurred during the 1990s that might 

have an effect on small businesses by interviewing agency officials and 

representatives of industry associations, and by reviewing agency 

documents. We met with officials from GSA, SBA, OMB's Office of Federal 

Procurement Policy (OFPP), and the Procurement Executives Council. We 

also met with representatives of the U.S. Chamber of Commerce, Small 

Business Legislative Council, and Independent Office Products and 

Furniture Dealers Association. 

To determine the trends in federal procurement from small businesses, we 

analyzed data from the Federal Procurement Data Center's (FPDC) Federal 

Procurement Report for fiscal years 1993 through 1999 and other data we 

requested from FPDC and SBA for those same years. FPDC administers the 

Federal Procurement Data System (FPDS) within GSA.19 Since FPDC relies 

on federal agencies to report their procurement information, these data are 

only as reliable, accurate, and complete as the agencies report. In 1998, 

FPDC conducted an accuracy audit and reported that the average rate of 

accurate reporting in the FPDS database was 96 percent. Our analyses 

focused on total contract expenditures for federal procurement and the 

percentage of expenditures going to small businesses for new contracts 

and for certain contract vehicles. Unless otherwise noted, all expenditures 

were adjusted for inflation and represent constant fiscal year 1999 dollars.

19 FPDC collects procurement data from approximately 70 executive branch agencies. The 

U.S. Postal Service and the legislative and judicial branches are not required to report their 

procurement activities to FPDS.
Page 24 GAO-01-119 Federal Procurement

We conducted our review between March and October 2000 in accordance 

with generally accepted government auditing standards. A detailed 

discussion of our objectives, scope, and methodology is presented in 

appendix II.

As agreed with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report for 30 days. At that 

point, copies of this report will be sent to appropriate congressional 

committees and other interested Members of Congress; the Administrator 

of the Small Business Administration; the Administrator of the General 

Services Administration; the Director of the Office of Management and 

Budget; and other interested parties. We will also make copies available to 

others on request.

Staff acknowledgements are listed in appendix IV. If you or your staff have 

any questions about this report, please contact me at (202) 512-8984 or 

Hilary Sullivan at (214) 777-5652. 

JayEtta Z. Hecker

Director 

Physical Infrastructure Team
Page 25 GAO-01-119 Federal Procurement
Page 26 GAO-01-119 Federal Procurement

Appendix I

Descriptions Of Contract Vehicles ApApenednxidxeiIs

Indefinite-Delivery, Indefinite-Quantity Contract: This type of contract 

provides for an indefinite quantity, within stated limits, of goods or services 

during a fixed period of time. Agencies place separate task or delivery 

orders for individual requirements that specify the quantity and delivery 

terms associated with each order. The Federal Acquisition Regulation 

(FAR) expresses a preference for multiple awards of these contracts, 

which allows orders to be placed using a streamlined, commercial style 

selection process where consideration is limited to the contract awardees. 

The competition between the multiple awardees is designed to encourage 

better prices and responses than if the agency were negotiating with a 

single contractor. Contractors are to be afforded a fair opportunity to be 

considered for award of task and delivery orders but cannot generally 

protest the award of such orders. Indefinite-delivery, indefinite-quantity 

contracts include GWACs and GSA federal supply schedule contracts.

Federal Supply Schedules: Under the schedule program, GSA enters into 

indefinite-delivery, indefinite-quantity contracts with commercial firms to 

provide commercial goods and services governmentwide at stated prices 

for given periods of time. Authorized buyers at agencies place separate 

orders for individual requirements that specify the quantity and delivery 

terms associated with each order, and the contractor delivers products or 

services directly to the agency. The program is designed to provide federal 

agencies with a simplified process for obtaining millions of commonly used 

commercial supplies and services at prices associated with volume buying. 

The program consists of single award schedules with one supplier and 

multiple award schedules, in which GSA awards contracts to multiple 

companies supplying comparable services and products, often at varying 

prices. When agency requirements are to be satisfied through the use of 

multiple award schedules, the small business provisions (such as the 

exclusive reservation for small businesses for contracts over $2,500 up to 

$100,000) of the FAR do not apply.

Blanket Purchase Agreement: A simplified method of filling anticipated 

repetitive needs for supplies or services by establishing “charge accounts”

with qualified sources of supply, and may include federal supply schedule 

contractors. Under such an agreement, the contractor and the agency agree 

to contract clauses applying to future orders between the parties during its 

term. Future orders would incorporate, by reference or attachment, 

clauses covering purchase limitations, authorized individuals, itemized lists 

of supplies or services furnished, date of delivery or shipments, billing 

procedures, and discounts. Under the FAR, the existence of a blanket 
Appendix I

Descriptions Of Contract Vehicles

Page 27 GAO-01-119 Federal Procurement

purchase agreement does not justify purchasing from only one source or 

avoiding small business preferences.
Page 28 GAO-01-119 Federal Procurement

Appendix II

Objectives, Scope, and Methodology ApendxiI

Our objectives were to identify (1) provisions in acquisition reform 

legislation enacted in the 1990s and other changes in procurement taking 

place during this time that could affect small business contractors and (2) 

trends that might indicate possible shifts in the ability of small businesses 

to obtain federal contracts in the 1990s.

To achieve our first objective, we analyzed several pieces of legislation 

enacted in the 1990s, federal acquisition regulations, governmentwide 

procurement data, and interviewed federal officials at several agencies. We 

examined the Federal Acquisition Streamlining Act of 1994 (FASA), the 

Clinger-Cohen Act of 1996, the Small Business Reauthorization Act of 1997, 

and the Federal Acquisition Regulation. We analyzed governmentwide 

procurement data reported by GSA's Federal Procurement Data Center 

(FPDC) and data on the governmentwide acquisition workforce reported 

by GSA's Federal Acquisition Institute in its Report on the Federal 

Acquisition Workforce for fiscal years 1991 and 1998. We interviewed 

officials at GSA, OFPP, SBA, and the Procurement Executives Council. We 

also interviewed representatives of the U.S. Chamber of Commerce, Small 

Business Legislative Council, and Independent Office Products and 

Furniture Dealers Association. 

To achieve our second objective, we gathered governmentwide data on 

federal procurement from FPDC and SBA for fiscal years 1993 through 

1999. We could not determine the direct impact of legislative changes and 

other trends on small businesses because of the numerous concurrent 

factors and the insufficiency of governmentwide data to directly measure 

the effect of these changes on small business contractors. Federal agencies 

report procurement data to FPDC in two categories, (1) contract awards of 

$25,000 or less each and (2) contract awards greater than $25,000. Each 

agency reports summary data on contracts worth $25,000 or less to FPDC 

and includes information such as type of contractor and procurement 

methods. Agencies report greater detail on each individual contract over 

$25,000 or more, including type of contract action, type of contractor, and 

product or service purchased. We analyzed aggregate data reported in 

FPDC's Federal Procurement Report for each of the years. We requested 

additional data from FPDC for contracts over $25,000 to include 

information on expenditures going to small businesses for new contracts; 

total expenditures going to small businesses, including for new contracts 

and contract modifications, for specific contract vehicles; and 

expenditures going to small businesses for new contracts for all products 

and services. The data on new contracts that FPDC provided includes 
Appendix II

Objectives, Scope, and Methodology

Page 29 GAO-01-119 Federal Procurement

expenditures on original contract actions, as opposed to expenditures on 

modifications to existing contracts. 

FPDC categorizes all federal contract expenditures into eight broad 

categories of products and services. According to FPDC officials, FPDS is 

updated constantly as federal agencies report updated procurement 

information. The data we received from FPDC are as of July 2000. In 

addition, we analyzed the summary information on government purchasecard transactions from the Federal Procurement Report for each year. We 

also collected data from SBA and FPDC on the achievement of the 

governmentwide federal procurement goal for small businesses. The SBA 

data on the achievement of this goal for fiscal years 1993 through 1997 are 

from The State of Small Business. Because the most recent version The 

State of Small Business was published in fiscal year 1997, we used FPDC 

data published in its annual Federal Procurement Report on the 

achievement of the legislative goal for fiscal years 1998 and 1999. As 

indicated earlier, SBA began using FPDS data to calculate the achievement 

of the small business legislative goal as of fiscal year 1998. Although FASA 

requires that contracts over $2,500 up to $100,000 be exclusively reserved 

for small businesses, we could not determine the amount of expenditures 

or share going to small businesses for these contracts because, in some 

cases, information is reported to FPDC on contracts commingled with 

modifications. Unless otherwise noted, we adjusted all dollar amounts 

using a gross domestic product price index from the Bureau of Economic 

Analysis using fiscal year 1999 as the base year.

We did not independently verify FPDC or SBA data. FPDC relies on 

agencies to report their procurement information. Therefore, data are only 

as reliable, accurate, and complete as the agencies report. In 1998, 

however, FPDC conducted an accuracy audit of some of its data elements 

and reported that the average rate of accurate reporting in the FPDS 

database was 96 percent. 

We performed our work at SBA headquarters, OFPP, and GSA 

headquarters. We conducted our review between March and October 2000 

in accordance with generally accepted government auditing standards.
Page 30 GAO-01-119 Federal Procurement

Appendix III

Comments From SBA ApendxiI
Appendix III

Comments From SBA

Page 31 GAO-01-119 Federal Procurement
Page 32 GAO-01-119 Federal Procurement

Appendix IV

GAO Contacts and Staff Acknowledgements ApendxiIV

GAO Contacts JayEtta Hecker, (202) 512-8984, or Hilary Sullivan, (214) 777-5652

Acknowledgements Jason Bair, William Chatlos, James Higgins, Maria Santos, Adam Vodraska, 

and Wendy Wilson made key contributions to this report.

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