GAO-13-308R, DOD Sole Source 8(a) Contracts

United States Government Accountability Office

Washington, DC 20548

February 8, 2013

The Honorable Carl Levin

Chairman

The Honorable James Inhofe

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Howard P. McKeon

Chairman 

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

Subject: DOD’s Implementation of Justifications for 8(a) Sole-Source Contracts

The conference report accompanying the National Defense Authorization Act (NDAA) for 

Fiscal Year 2012 directed GAO to assess the Department of Defense’s (DOD) 

implementation of a new requirement for written justifications of sole-source contracts over 

$20 million awarded under the Small Business Administration’s 8(a) program.1

Section 811 of the NDAA for Fiscal Year 2010, enacted on October 28, 2009, required the 

Federal Acquisition Regulation (FAR) to be amended to include a new requirement for a 

written justification of sole-source 8(a) awards over $20 million. The requirement was 

implemented in the FAR on March 16, 2011. Previously, no justification was required for 

sole-source 8(a) awards of any amount. Section 811 of the NDAA for Fiscal Year 2010 did 

not require agencies to implement the new justification requirement until it was implemented 

in the FAR. 

The 8(a) 

program is one of the federal government’s primary means for developing small businesses 

owned by socially and economically disadvantaged individuals. Contract awards under this 

program may be competed among eligible 8(a) firms or awarded on a sole-source basis to 

8(a) firms in certain instances. For example, DOD may award 8(a) sole source contracts to 

firms owned by Alaska Native Corporations and Indian tribes. 

GAO’s assessment of DOD’s implementation of the justification requirement was to be 

provided no later than 90 days after DOD submitted a March 1, 2012, report to Congress on 

the subject. DOD did not meet the March date, issuing the report on November 12, 2012.

 

1

H.R. Rep. No. 112-329 (2011), at 675-676 (Conf. Rep.). See Under Secretary of Defense for Acquisition, 

Technology and Logistics, Report to Congress on the Implementation of Section 811 of the National Defense 

Authorization Act for Fiscal Year 2010 (Washington, D.C.: Nov. 12, 2012).
Page 2 GAO-13-308R, DOD Sole Source 8(a) Contracts

In December 2012, we issued a report that reviewed government-wide implementation of 

this new justification requirement, including DOD’s implementation activities.2

To address these objectives, we drew on audit work conducted at DOD during our 

government-wide review. To determine the number of 8(a) sole-source contracts over $20 

million awarded by DOD since enactment of the justification requirement, we obtained and 

analyzed data from the Federal Procurement Data System-Next Generation (FPDS-NG) 

from October 28, 2009 to September 30, 2012 to identify relevant contracts. We took 

several steps to assess data reliability, including reviewing seven contracts identified as 

valued between $19.5 million and $20 million to confirm that they were not subject to the 

new justification requirement. We determined that the data for this period were sufficiently 

reliable to identify contracts that were subject to the 8(a) justification requirements. To 

assess the extent to which DOD has implemented the justification requirement, we used the 

results of contract file reviews conducted at DOD during our government-wide review. For 

that report, we primarily used FPDS-NG data to identify all reported sole-source 8(a) 

contracts over $20 million awarded by DOD between the implementation of the justification 

requirement in the FAR on March 16, 2011 and March 31, 2012, the most recent data 

available at the time we conducted our government-wide review. For each contract 

identified, we obtained and reviewed the justification and other relevant contract documents, 

and interviewed contracting officials to supplement information obtained from our review of

contract documents. For further details on our scope and methodology, see appendix I of 

our December 2012 report.

Our findings 

on DOD’s implementation, discussed below, are drawn from this recently completed review. 

As agreed with your staff, this report addresses (1) the number of sole source 8(a) contracts 

over $20 million DOD has awarded in the period since the justification requirement was 

enacted in October 2009, and (2) the extent to which DOD has implemented the new 

justification requirement since it was incorporated into the FAR in March 2011.

3

We conducted this performance audit from December 2012 to February 2013 in accordance 

with generally accepted government auditing standards. Those standards require that we 

plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based on our audit objectives. We believe that the 

evidence obtained provides a reasonable basis for our findings and conclusions based on 

our audit objectives.

In summary, we found that DOD awarded 51 sole source 8(a) contracts over $20 million 

between October 2009 and September 2012. As we reported in our December 2012 

government-wide review, DOD awarded eight sole-source 8(a) contracts worth over $20 

million from March 16, 2011, when the requirement was implemented in the FAR, through 

March 31, 2012, the most recent data available at the time of our review. Of the eight, six 

contracts did not meet the new justification requirement because contracting officials were 

not aware of the requirement or because they were confused about the type of justification 

to complete.

 

2

GAO, Federal Contracting: Slow Start to Implementation of Justifications for 8(a) Sole-Source Contracts, GAO13-118 (Washington, D.C.: Dec. 12, 2012). 3

GAO-13-118.
Page 3 GAO-13-308R, DOD Sole Source 8(a) Contracts

DOD Awarded 51 Sole-Source 8(a) Contracts over $20 Million between October 2009 

and September 2012

According to FPDS-NG data, DOD awarded 51 contracts that had a reported value of more 

than $20 million in the period from the October 28, 2009, the enactment date of the statute 

requiring the 8(a) justification requirement, through September 30, 2012.4

Table 1: 8(a) Sole-Source Contracts over $20 Million, by DOD Component, Awarded between 

October 28, 2009, and September 30, 2012

As shown in table 

1, the Army awarded the majority of the contracts, which also represent the majority of 

dollars.

DOD 

component Contract value Number of contracts

Air Force $108,844,765 2 

Army 1,604,984,859 34

Navy 512,008,819 12

Other DOD 100,350,371 3 

Total $2,326,188,813 51

Source: GAO analysis of FPDS-NG data

In addition, the number of 8(a) sole source contracts over $20 million at DOD declined 

significantly from fiscal year 2008 through fiscal year 2012, as shown in figure 1. 

Figure 1: Number and Total Value of DOD 8(a) Sole Source Contracts over $20 million 

Awarded From Fiscal Year 2008 through Fiscal Year 2012

 

4

Many of these contracts were not subject to the new justification requirement because they were awarded 

before the requirement was implemented in the FAR on March 16, 2011.
Page 4 GAO-13-308R, DOD Sole Source 8(a) Contracts

Six of Eight DOD Contracts Did Not Meet the New Justification Requirement

As we reported in our December 2012 government-wide review, from March 16, 2011, 

through March 31, 2012, DOD awarded eight sole-source 8(a) contracts worth over $20 

million. Only two of those contracts—both awarded by the Air Force—included the new 

required 8(a) justifications. The DOD components awarding the remaining six contracts did 

not comply with the requirement, either because they were not aware of the requirement 

and did not prepare a justification, or because they were confused and prepared an 

incorrect type of justification.

• The Naval Sea Systems Command awarded a contract for information technology 

services worth about $40.5 million, but did not prepare an 8(a) justification. 

According to Command contracting officials, they were unaware of the requirement 

at the time the contract was awarded in July 2011. The Command issued guidance 

in December 2011 requiring that justifications be prepared not only for 8(a) solesource contracts above the $20 million threshold, but also for any such contracts 

above the 8(a) competition threshold of $4 million (or $6.5 million for manufacturing 

contracts). The contracting officials said that they have begun planning to award the 

successor contract through a competition among 8(a) firms. 

• Three contracts awarded by the Army also lacked 8(a) justifications because 

contracting officials were not aware of the justification requirement. In one of these 

cases, officials at a U.S. Army Corps of Engineers contracting office were aware of 

increased scrutiny of 8(a) sole-source contracts, but were not aware of the 

justification requirement itself. They had received a January 2011 memorandum from 

Army acquisition executives noting the forthcoming justification requirement and 

calling for contracting officials to limit the use of 8(a) sole-source contracts over $20 

million. As a result, when awarding a $35 million 8(a) sole-source contract award for

museum relocation services in May 2011, Army Corps contracting officials prepared 

a memorandum explaining the decision to exceed the $20 million threshold, but it did 

not meet the requirements of an 8(a) justification. 

• In the two remaining cases, contracting officials were aware of the new 8(a) 

justification requirement, but did not correctly implement it due to confusion about 

what the FAR requires. For these two contracts, both awarded by the Army, officials 

determined that their contracts were subject to the new justification requirement, yet 

they prepared justifications required for sole source contracts awarded under the 

Competition in Contracting Act of 1984, rather than justifications required for 8(a) 

contracts over $20 million. The justifications required for 8(a) contracts must address 

five specific elements, including a determination that the use of a sole-source 

contract is in the best interest of the agency. 

Prior GAO Recommendations

In our December 2012 report, we made recommendations to the Administrator of the Office 

of Federal Procurement Policy to promulgate guidance to clarify the circumstances in which 

an 8(a) justification is required to help mitigate future confusion. We are not making any 

additional recommendations to DOD. 

Agency Comments

We requested comments from DOD on a draft of this report, and Department officials 

informed us that they had no comments.
Page 5 GAO-13-308R, DOD Sole Source 8(a) Contracts

We are sending copies of this report to the Secretary of Defense and interested 

congressional committees. In addition, the report is available at no charge on the GAO 

website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-

4841 or mackinm@gao.gov. Contact points for our Offices of Congressional Relations and 

Public Affairs may be found on the last page of this report. GAO staff who contributed to this 

report include Tatiana Winger, Assistant Director; Pamela Davidson; Julia Kennon; Teague 

Lyons; and Sylvia Schatz.

Michele Mackin

Acting Director

Acquisition and Sourcing Management
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