DEFENSE 

CONTRACTING

Actions Needed to 

Increase Competition

Report to Congressional Committees

March 2013

GAO-13-325

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-325, a report to 

congressional committees

March 2013

DEFENSE CONTRACTING

Actions Needed to Increase Competition

Why GAO Did This Study

Competition is the cornerstone of a 

sound acquisition process and a critical 

tool for achieving the best return on 

investment for taxpayers. In fiscal year 

2012, DOD obligated $359 billion 

through contracts and task orders, of 

which 57 percent was competed. DOD 

also obligates billions of dollars 

annually on contracts that are awarded 

competitively, but for which the 

government received only one offer. 

DOD implemented the Better Buying 

Power initiative in 2010, in an effort to 

increase competition. 

The conference report for the National 

Defense Authorization Act for Fiscal 

Year 2012 directed GAO to report on 

DOD’s non-competitive and one-offer 

contracts. GAO examined (1) trends in 

DOD’s use of noncompetitive awards; 

(2) factors influencing DOD’s 

competition rate; (3) the extent to 

which justifications provided insight 

into the reasons for noncompetitive 

awards; and (4) the impact of DOD’s 

new requirement for competitive 

solicitations that only elicit one offer. 

GAO analyzed federal procurement 

data for fiscal years 2008 through 

2012, reviewed DOD policy and 

competition reports, examined 

nongeneralizable samples of awards,

and interviewed DOD officials.

What GAO Recommends

GAO recommends that DOD identify, 

track, and consider the specific factors 

that affect competition when setting 

competition goals; develop guidance to 

apply lessons learned from past 

procurements to help achieve 

competition in the future; and collect 

reliable data on one-offer awards.

DOD concurred with these

recommendations.

What GAO Found

The Department of Defense’s (DOD) competition rate for all contract obligations 

declined over the past five fiscal years, from 62.6 percent in fiscal year 2008 to 

57.1 percent in fiscal year 2012. GAO also found that the competition rate in 

fiscal year 2012 varied by specific DOD component with the Air Force having the 

lowest at 37.1 percent and the Defense Logistics Agency the highest at 83.3

percent. The majority of the noncompetitive awards cited the availability of only 

one responsible source to meet the government’s needs as the reason for using 

noncompetitive procedures.

A number of factors affect DOD’s competition rate, but these factors are not 

always considered when setting DOD’s annual competition goals. For example, 

reliance on an original equipment manufacturer throughout the life cycle of a 

program has been a long-standing challenge for DOD competition, and budget 

uncertainty can also hinder DOD’s ability to compete. Noncompetitive purchases 

that DOD makes on behalf of foreign governments can also affect DOD’s 

competition rate. DOD does not systematically consider these and other factors 

when setting its annual competition goals. For example, it sets competition goals 

for individual DOD components by simply adding two percentage points to the 

rate achieved in the previous year. Without identifying and tracking the specific 

factors affecting competition DOD cannot set meaningful goals for improving 

competition or accurately gauge its progress toward achieving them. 

Many of the noncompetitive justifications GAO reviewed included the required 

elements as defined by the Federal Acquisition Regulation; however, the level of 

insight into the reasons for noncompetitive awards varied. For example, some 

justifications included clear descriptions of market environments where only one 

source was available to meet the government’s needs or described planned 

actions that could help improve competition in the future. However, other 

justifications provided limited insight into the reasons for the noncompetitive 

award or did not fully describe actions that the agency could take to increase 

future competition. Without this information, DOD may be missing opportunities 

to gain a fuller understanding of why past acquisitions were not competitive and 

may be unable to apply those lessons to effectively facilitate competition for 

future acquisitions. 

In 2010, DOD introduced a new requirement that applies to competitive awards 

that elicit only one offer (one-offer awards); however, the impact of the 

requirement is unknown because of unreliable data. To address the risk 

associated with one-offer awards, the requirement established rules that were 

intended to help ensure adequate solicitation time, ensure that contract 

requirements are not unnecessarily restrictive, and verify that offers received are 

fair and reasonable. However, GAO’s analysis of 35 one-offer awards 

determined that contracting officers had incorrectly coded 10 of these awards in 

the procurement database that DOD relies on to measure the impact of its new 

requirement. Six of the 10 awards were noncompetitive awards and the 

remaining 4 had received multiple offers. As a result, GAO determined that 

DOD’s data cannot be used to accurately calculate the amount obligated on oneoffer awards during fiscal year 2012. Without reliable data, DOD cannot 

accurately measure the impact of its new requirement.

View GAO-13-325. For more information, 

contact Michael J. Courts at (202) 512-4841 or 

courtsm@gao.gov.
Page i GAO-13-325 Defense Contracting

Letter 1 

Background 4

DOD’s Competition Rate Continues to Decline 8

Multiple Factors Affect DOD’s Competition Rate, but They Are Not 

Always Considered When Setting Competition Goals 13

Justifications Provided Varied Levels of Insight 17

Impact of DOD’S One-Offer Requirement Is Unknown 22

Conclusions 27

Recommendations for Executive Action 28

Agency Comments 28

Appendix I Objectives, Scope, and Methodology 30

Appendix II Comments from the Department of Defense 34

Appendix III GAO Contact and Staff Acknowledgments 36

Tables

Table 1: Organizational Level of Approval for Justifications for 

Other than Full and Open Competition 6

Table 2: New Noncompetitive Awards in Fiscal Year 2012 9

Figures

Figure 1: DOD Competition Rate for All Contract Obligations from 

Fiscal Years 2008 through 2012 9

Figure 2: DOD’s Competition Rate and Competitive Contract 

Dollars Obligated for Products, Non-R&D Services and 

R&D Services in Fiscal Year 2012 10

Figure 3: Competition Rates by DOD Component for Fiscal Years 

2008 through 2012 11

Figure 4: Competition Exceptions for New Fiscal Year 2012 DOD 

Noncompetitive Contracts and Task Orders on Single 

Award Contracts 12

Contents 
Page ii GAO-13-325 Defense Contracting

Figure 5: Impact of Foreign Military Sales Awards on the Air 

Force’s Competition Rate and Noncompetitive 

Obligations for New Awards in Fiscal Year 2012 16

Figure 6: DOD’s One-Offer Requirement Includes Three Rules 23

Abbreviations

CICA Competition in Contracting Act 

DFARS Defense Federal Acquisition Regulation Supplement 

DLA Defense Logistics Agency 

DOD Department of Defense 

FAR Federal Acquisition Regulation

FMS foreign military sales

FPDS-NG Federal Procurement Data System-Next Generation

GSA General Service Administration

IDIQ indefinite delivery/indefinite quantity 

NASA National Aeronautics and Space Administration

OMB Office of Management and Budget

R&D research and development

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Page 1 GAO-13-325 Defense Contracting

United States Government Accountability Office

Washington, DC 20548

March 28, 2013

The Honorable Carl Levin

Chairman

The Honorable James M. Inhofe

Ranking Member

Committee on Armed Services 

United States Senate

The Honorable Howard P. “Buck” McKeon

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services 

House of Representatives

Competition is the cornerstone of a sound acquisition process and a 

critical tool for achieving the best return on investment for taxpayers. The 

benefits of competition in acquiring goods and services from the private 

sector are well established. Competitive contracts can help save taxpayer 

money, conserve scarce resources, improve contractor performance, 

curb fraud, and promote accountability for results. In fiscal year 2012, the 

Department of Defense (DOD) obligated $359 billion through contracts 

and task orders, of which 57 percent was competed. Recognizing the 

need to make more efficient use of resources, DOD’s 2010 “Better Buying 

Power” initiative placed an emphasis on maximizing opportunities for 

competition in the acquisition of products and services.

While federal statute and acquisition regulations generally require that 

contracts be awarded on the basis of full and open competition, they also 

permit federal agencies to award noncompetitive contracts in certain 

circumstances, for example, when only one vendor can supply the 

requirements or when a sole-source award is made under specified small 

business programs. Generally, noncompetitive contracts must be 

supported by written justifications and approvals (justifications) that 

address the specific exception to full and open competition that is being 

applied to the procurement. Also, the government obligates billions of 

dollars annually under contracts and task orders that are awarded using 

competitive procedures but for which the government receives only one 

offer—situations the Office of Management and Budget (OMB) has 

recently cited as high risk. DOD has termed this “ineffective competition” 

 
 

Page 2 GAO-13-325 Defense Contracting

and has issued a new policy requiring that additional steps be taken 

before a contract may be awarded when only one offer is received.

Since 2009, OMB and DOD have implemented initiatives to increase 

competition—including actions to address some opportunities we 

previously identified.1 The conference report for the National Defense 

Authorization Act for Fiscal Year 2012 directed us to report annually for 

the next three years on DOD’s noncompetitive awards and competitive 

awards based on receipt of only one offer.2

To identify trends in DOD’s use of noncompetitive awards, we used the 

Federal Procurement Data System-Next Generation (FPDS-NG) to 

identify DOD obligations under competitive and noncompetitive contracts 

in fiscal years 2008 through 2012.

Accordingly, we examined (1) 

the trends in DOD’s use of noncompetitive awards; (2) the factors 

affecting DOD’s competition rate; (3) the extent to which justifications for 

exceptions to competitive procedures provided insight into the reasons for 

noncompetitive awards; and (4) the impact of DOD’s new requirement on 

contracts awarded using competitive procedures but for which only oneoffer was received.

3

 

1

GAO, Federal Contracting: Opportunities Exist to Increase Competition and Assess 

Reasons When Only One Offer Is Received, 

For the purposes of this report, we 

defined noncompetitive obligations to include obligations through 

contracts that were awarded using the exceptions to full and open 

competition listed in Federal Acquisition Regulation (FAR) Subpart 6.3, 

orders issued under multiple award indefinite delivery/indefinite quantity 

(IDIQ) contracts under the exceptions to the fair opportunity process in 

section 16.505(b) of the FAR, or under limited sources provisions for 

orders issued under the General Service Administration’s (GSA) 

GAO-10-833 (Washington, D.C.: July 26, 

2010). 

2

H.R. Conf. Rep. No. 112-329, at 676 (2011).

3

FPDS-NG is the government’s procurement database. We assessed the reliability of 

FPDS-NG data by (1) performing electronic testing of required data elements, (2) 

reviewing existing information about the data and the system that produced them, and (3) 

comparing reported data from FPDS-NG to information from contract files in our review. 

We determined that the data were sufficiently reliable for the purposes of this report, 

except where noted. For additional information, see appendix I.
 

Page 3 GAO-13-325 Defense Contracting

schedules program in section 8.405-6 of the FAR.

4 We also used FPDSNG data to identify the specific exceptions to full and open competition 

that were cited for noncompetitive awards in fiscal year 2012. We 

calculated the competition rate as the dollars obligated annually on 

competitive contracts and orders as a percentage of dollars obligated on 

all contracts and orders. For the purposes of this report, we divided DOD 

into five components: Air Force, Army, the Defense Logistics Agency 

(DLA), Navy, and other defense agencies.5

To understand the factors affecting DOD’s competition rate, we used 

FPDS-NG data to examine obligations for new awards and foreign 

military sale awards to understand the impact on the competition rate 

across DOD and within each component included in our review. We also 

spoke with component competition advocates and other DOD officials to 

understand how DOD calculates its competition rate and how various 

factors may impact it.

To assess the extent to which justifications for exceptions to competitive 

procedures provided insight into the reasons for noncompetitive awards, 

we randomly selected a nongeneralizable sample of 56 contracts and 

orders coded as noncompetitive in FPDS-NG. Our sample included the 

largest noncompetitive contracts and task orders, measured by 

obligations, as well as a random selection of awards across DOD. For 

awards in our sample, we reviewed documentation in the contract files 

such as the signed justification and approval memorandum, the 

acquisition plan, documentation of market research, the price negotiation 

memorandum, and other key information. We reviewed the justifications 

for these awards to determine whether they met criteria in the FAR for the 

 

4

IDIQ contracts do not procure or specify a firm quantity (other than a minimum or 

maximum) and provide for the issuance of task orders (services) or delivery orders 

(supply) during the contract period. FAR §§ 16.501-1;16.504. Multiple award IDIQ 

contracts are awarded to multiple contractors through one solicitation. For task orders 

subject to fair opportunity, generally the contracting officer must provide each contractor a 

fair opportunity to be considered for each order under multiple-award IDIQ contracts, with 

certain statutory exceptions which must be documented in writing. For task orders not 

subject to fair opportunity, including those on single award IDIQ contracts, the competition 

data for task orders in FPDS-NG is derived from the competition data for the underlying 

IDIQ contract.

5

Other defense agencies data include obligations made by any DOD contracting office 

that are not part of the Air Force, Army, DLA, or Navy. These include, but are not limited 

to: Defense Contract Management Agency, Missile Defense Agency, TRICARE 

Management Activity, and Defense Threat Reduction Agency.
 

Page 4 GAO-13-325 Defense Contracting

contents, timing, approval, and whether they were made publicly 

available. In particular, we assessed whether the justifications contained 

sufficient information to justify the use of the specific authority cited as 

required by the FAR. In addition, we conducted e-mail and telephone 

follow-up with contracting and program officials involved in these awards 

to obtain additional information as needed.

To examine the impact of DOD’s new requirement on contracts awarded 

using competitive procedures but for which only one-offer was received, 

we reviewed a nongeneralizable sample of 25 contracts and task orders. 

The sample included the 25 largest awards, measured by obligations, 

made between April 1, 2011, and March 31, 2012. Only awards for which 

one offer was received in response to a solicitation issued using 

competitive procedures, as coded in FPDS-NG, were included in the 

sample. For each selected award, we obtained evidence of the solicitation 

issuance and response due date, price negotiation memorandum, and 

other key information. If necessary, we contacted contracting and 

program officials to obtain additional information. We also reviewed 

FPDS-NG data to determine if there had been a decline in the number of 

contract awards for which only one offer had been received in response 

to the competitive solicitation. In addition, we spoke with DOD officials 

about the implementation and impact of the new requirement.

A more detailed description of our scope and methodology is presented in 

appendix I. We conducted this performance audit from May 2012 to 

March 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.

Federal agencies are generally required to use full and open competition 

to award contracts, with certain exceptions. The Competition in 

Contracting Act (CICA) of 1984 requires agencies to obtain full and open 

competition through the use of competitive procedures in their 

procurement activities unless otherwise authorized by law.6

 

6

Pub. L. No. 98-369, § 2701.

Using 

Background 
 

Page 5 GAO-13-325 Defense Contracting

competitive procedures to award contracts means that all prospective 

contractors that meet certain criteria are permitted to submit proposals. 

Agencies generally are required to perform acquisition planning and 

conduct market research to promote full and open competition.

While CICA generally requires federal agencies to award contracts using 

full and open competition, agencies are allowed to award contracts 

noncompetitively under certain circumstances. Generally, these awards 

must be supported by written justifications that address the specific 

exception to full and open competition that is being used in the 

procurement. In addition, federal agencies can establish IDIQ contracts 

with one or more contractors and may issue orders under these contracts. 

For multiple award IDIQ contracts, agencies are generally required to 

provide all contractors on the IDIQ contract a fair opportunity to be 

considered for each order above certain dollar thresholds; however, 

agencies can award noncompetitive orders under a process called an 

exception to the fair opportunity process—which must be supported with 

a documented justification. Also, GSA administers IDIQ contracts with 

vendors for commercially available goods and services, and federal 

agencies place orders under the contracts. When doing so 

noncompetitively, procuring agencies must justify the need to restrict the 

number of vendors considered, known as a limited sources justification 

and approval. Finally, agencies can also competitively award contracts 

after limiting the pool of available contractors—a process called full and 

open competition after exclusion of sources. For example, agencies are 

required to set aside procurements for small businesses if there is a 

reasonable expectation that two or more responsible small businesses 

will compete for the work and will offer fair market prices.

The justifications are to provide sufficient facts and rationale to justify the 

use of the specific exception to competition. For example, under FAR part 

6, justifications must include, at a minimum, 12 elements.7

• a description of the supplies or services required to meet the agency’s 

needs and their estimated value;

Examples of 

these required elements include:

 

7

FAR § 6.303-2(d). The FAR requires that justifications for noncompetitive awards under 

Subpart 8.4 (Federal Supply Schedules) and 16.5 (Indefinite-Delivery Contracts) contain 

similar information. See FAR § 8.405-6(c)(2) and FAR § 16.505(b)(2)(ii).
 

Page 6 GAO-13-325 Defense Contracting

• identification of the statutory authority permitting other than full and 

open competition;

• a determination by the contracting officer that the anticipated cost to 

the government will be fair and reasonable;

• a description of market research conducted, if any; and

• a statement of the actions, if any, the agency may take to remove or 

overcome any barriers to competition before any subsequent 

acquisitions for the supplies or services required.

Examples of allowable exceptions to full and open competition include 

circumstances when the contractor is the only source capable of 

performing the requirement or when an agency’s need is of such unusual 

and compelling urgency that the government would be seriously injured 

unless the agency is permitted to limit the number of sources. The FAR 

generally requires that justifications be published on the Federal Business 

Opportunities (FedBizOpps.gov) website and be approved at various 

levels within the contracting organization. These levels vary according to 

the dollar value of the procurement (see table 1).

Table 1: Organizational Level of Approval for Justifications for Other than Full and Open Competition 

Estimated value of proposed contract action Approval by 

$650,000 or less Contracting officera 

Over $650,000 but not exceeding $12.5 million Competition advocate for the procuring activityb 

Over $12.5 million but not exceeding $62.5 million ($85.5 million for DOD, NASA, 

and Coast Guard)c Head of the procuring activity, or designee 

More than $62.5 million (or $85.5 million for DOD, NASA, and Coast Guard) Agency senior procurement executive 

Source: GAO analysis of FAR § 6.304, Approval of the justification. 

a

Agency procedures may require approval of the justification at a level higher than what is required by 

the FAR.

b

The justification may be approved by the competition advocate of the procuring activity, the head of 

the procuring activity or the agency senior procurement executive. Competition advocates are 

responsible for promoting the acquisition of commercial items, promoting full and open competition, 

and challenging barriers to the acquisition of commercial items and full and open competition, such as 

unnecessarily restrictive statements of work or unnecessarily detailed specifications among other 

things. FAR § 6.502(a). 

c

National Aeronautics and Space Administration. 

Justifications can be made on an individual or class basis; a class 

justification generally covers programs or sets of programs and has a 

dollar limit and time period for all actions taken under the authority. Each 
 

Page 7 GAO-13-325 Defense Contracting

justification, individual or class, must be approved through the same 

process. Once a class justification has been approved, award of an 

individual contract can generally be approved for sole-source award by 

the local procuring activity, as long as the amount is within the scope of 

the class justification.8

Contracts that are awarded using competitive procedures but for which 

only one offer is received (one-offer awards) recently have gained 

attention as an area of concern. OMB’s Office of Federal Procurement 

Policy noted that competitions that yield only one offer in response to a 

solicitation deprive agencies of the ability to consider alternative solutions 

in a reasoned and structured manner. In DOD’s September 2010 Better 

Buying Power initiative memorandum, competitive procurements for 

which only one offer to a solicitation was received even when publicized 

under full and open competition are termed “ineffective competition.” In 

November 2010, DOD introduced a new policy containing two new 

requirements concerning competitive one-offer awards. In June 2012, 

DOD codified the policy in the Defense Federal Acquisition Regulation 

Supplement (DFARS) adding a third requirement as follows:9

• If a solicitation allowed for fewer than 30 days and only one offer is 

received, then the contracting officer shall:

1. consult with the requiring activity as to whether the requirements 

document should be revised in order to promote more 

competition, and

2. resolicit for an additional period of at least 30 days.

• If a solicitation allowed for at least 30 days and only one offer is 

received, the contracting officer shall determine through cost or price 

analysis whether the offered price is fair and reasonable and that 

adequate price competition exists or if cost and price data have not 

been waived obtain necessary cost and pricing data and enter into 

negotiations with the offeror to establish a fair and reasonable price.

 

8

When a justification is made and approved on a class basis, the contracting officer must 

ensure that each contract action taken under that authority is within the class justification’s 

scope and must document the contract file for each contract action accordingly. FAR §

6.303-1(d). The approval level within an organization for class justifications is determined 

by the estimated total dollar value of the class. FAR § 6.304(c).

9

DFARS § 215.371; 77 Fed. Reg. 39126, (June 29, 2012).
 

Page 8 GAO-13-325 Defense Contracting

DOD’s Better Buying Power initiative also outlines a series of actions and 

directives to achieve greater efficiencies in part through the promotion of 

competition, such as:

• presenting a competitive strategy at each program milestone for 

defense acquisition programs;

• removing obstacles to competition; and

• establishing rules for the acquisition of technical data rights.

The Better Buying Power initiative increased the role of the DOD 

competition advocates by directing them to develop a plan to improve the 

overall rate of competition for each component by at least 2 percent per 

year, and the rate of effective competition—when more than one offer is 

received under a competitive solicitation—by at least 10 percent per year.

DOD’s overall competition rate has declined over the past five years, and 

the competition rate differs among the specific DOD components. Among 

the components, in fiscal year 2012, DLA had the highest competition 

rate for all awards, while the Air Force had the lowest. Based on FPDSNG data we found that noncompetitive awards cited several exceptions 

from competitive procedures.

DOD’s competition rate for all contract obligations generally has declined 

over the last five fiscal years. Since fiscal year 2008 the competition rate 

has declined 5.5 percentage points, from 62.6 percent in fiscal year 2008 

to 57.1 percent in fiscal year 2012 (see figure 1). In fiscal year 2012, DOD 

obligated $205.3 billion on competitive awards from a total of $359.7 

billion for all contract obligations.

DOD’s Competition 

Rate Continues to 

Decline 

Competition Rate Has 

Declined and Varies by 

Component 
 

Page 9 GAO-13-325 Defense Contracting

Figure 1: DOD Competition Rate for All Contract Obligations from Fiscal Years 2008 

through 2012

In fiscal year 2012, the majority of DOD’s new noncompetitive award 

obligations were on contracts or task orders issued under single award 

contracts (see table 2).

Table 2: New Noncompetitive Awards in Fiscal Year 2012

Type of new noncompetitive award

Number of 

awards

Dollars 

obligated

(in billions)

Contracts 86,734 $29.6 

Task orders issued under single award contracts 1,818,545 33

Task orders issued under multiple award contracts 

and subject to the fair opportunity process 16,725 3.9 

Source: GAO analysis of FPDS-NG data. 

We found that a majority of all DOD’s obligations in fiscal year 2012 were 

to purchase services ($185.7 billion, or 51.6 percent). As we have 
 

Page 10 GAO-13-325 Defense Contracting

previously reported, DOD’s competition rate for non-research and 

development (R&D) services was higher than the competition rate for 

products.10

Figure 2: DOD’s Competition Rate and Competitive Contract Dollars Obligated for 

Products, Non-R&D Services and R&D Services in Fiscal Year 2012

Specifically, the competition rate was 75.5 percent for nonR&D services compared to 40.8 percent for products. The competition 

rate for R&D services was 59.3 percent (see figure 2).

We also found that the competition rate for all contract obligations varied 

by DOD component in fiscal year 2012. Of the five major components we 

reviewed—Air Force, Army, Navy, DLA and other defense agencies—in 

fiscal year 2012, the Air Force had the lowest rate of competition, 37.1 

percent, whereas DLA had the highest, 83.3 percent. A 2011 Air Force 

report on competition highlights a number of challenges to competition, 

noting that reliance on original equipment manufacturers of existing major 

 

10GAO, Defense Contracting: Competition for Services and Recent Initiatives to Increase 

Competitive Procurements, GAO-12-384 (Washington, D.C.: Mar. 15, 2012).
 

Page 11 GAO-13-325 Defense Contracting

weapon systems for large sole-source awards was a particular concern. 

Figure 3 outlines the competition rate by component for fiscal years 2008 

through 2012.

Figure 3: Competition Rates by DOD Component for Fiscal Years 2008 through 2012
 

Page 12 GAO-13-325 Defense Contracting

Based on our analysis of FPDS-NG data in fiscal year 2012 the majority 

of DOD’s noncompetitive contracts and task orders on single award 

contracts were coded under the “only one responsible source” 

exception.11

Figure 4: Competition Exceptions for New Fiscal Year 2012 DOD Noncompetitive 

Contracts and Task Orders on Single Award Contracts 

The next two most frequently cited exceptions were 

“authorized by statute” or “international agreement” (see figure 4).

a

“Only one responsible source” includes contracts and orders placed on single award contracts that 

cited the following categories in FPDS-NG: unique source, follow-on contract, patent or data rights, 

utilities; standardizations; only one source-other; and brand name description. FAR § 6.302-1. 

 

11Not all task orders are subject to fair opportunity, including those on single award IDIQ 

contracts. In these cases, the competition data for task orders in FPDS-NG is derived from 

the competition data for the underlying IDIQ contract. Most fiscal year 2012 DOD 

noncompeted obligations on task orders were not coded as subject to fair opportunity in 

FPDS-NG. 

Majority of New 

Noncompetitive Awards 

Coded as “Only One 

Responsible Source” 
 

Page 13 GAO-13-325 Defense Contracting

b

FAR § 6.302-5. 

c

FAR § 6.302-4. 

d

“Other” includes contracts and orders placed on single award contracts that cited the following 

competition exceptions: urgency; industrial mobilization; engineering, developmental or research 

capability; expert services; national security; public interest, FAR §§ 6.302-2, 6.302-3, 6.302-6 and 

6.302-7; and not competed using simplified acquisition procedures under FAR subpart 13.3.

Based on our analysis, the majority of noncompetitive task orders issued 

under multiple award contracts and subject to the fair opportunity process 

reported two exceptions to the fair opportunity process. Specifically, 

“follow-on actions,” orders for the same good or service with the original 

vendor, was cited for 41 percent of the obligations and “only one source” 

was cited for 40 percent.12

There are a number of factors that affect DOD’s competition rate. For 

example, reliance on an original equipment manufacturer throughout the 

life cycle of a program and budget uncertainty are long-standing 

challenges impacting DOD’s ability to compete. Noncompetitive 

purchases that DOD makes on behalf of foreign governments affect 

DOD’s competition rate as well. DOD does not systematically identify, 

track, and consider the specific factors that are affecting competition 

when setting its annual competition goals.

A long-standing factor impacting DOD’s competition rate is its reliance on 

an original equipment manufacturer throughout the life cycle of a program 

because of a previous decision not to purchase proprietary technical data. 

Technical data is recorded information used to define a design and to 

produce, support, maintain or operate an item.13

 

12“Follow-on action following competitive initial action” captures awards made under FAR 

§ 16.505(b)(2)(i)(C). Specifically, these awards are “issued on a sole-source basis in the 

interest of economy and efficiency because it is a logical follow-on to an order already 

issued under the contract, provided that all awardees were given a fair opportunity to be 

considered for the original order.” 

Prior GAO work has 

13DFARS § 252.227-7013 defines technical data as “recorded information, regardless of 

the form or method of the recording, of a scientific or technical nature (including computer 

software documentation)... [but not including] computer software or data incidental to 

contract administration, such as financial and/or management information.” Technical data 

for weapon systems includes drawings, specifications, standards, and other details 

necessary to ensure the adequacy of item performance, as well as manuals that contain 

instructions for installation, operation, maintenance, and other actions needed to support 

weapon systems. 

Multiple Factors 

Affect DOD’s 

Competition Rate, but 

They Are Not Always 

Considered When 

Setting Competition 

Goals 
 

Page 14 GAO-13-325 Defense Contracting

noted that technical data can help control costs and maintain flexibility.14

A more recent factor affecting DOD is budget uncertainty. GAO has 

previously reported on the impact of uncertain budget environments on 

agencies’ ability to plan.

Without the technical data rights, it can be difficult to compete a new 

award, because another vendor would need the technical data in order to 

meet the government’s needs. DOD has recognized the ownership of 

technical data as a challenge and is addressing this through its Better 

Buying Power initiative. DOD now requires program officials to present a 

business case analysis prior to the official start of the program that 

outlines an approach for purchasing technical data. For example, this 

business case analysis is intended to ensure consideration of competition 

throughout a weapon system’s life cycle. The Better Buying Power 

initiative also added a new requirement that a competitive strategy be 

presented at each milestone for defense acquisition programs. These 

strategies may include identifying work currently performed by 

subcontractors and competing it separately. At the component level, a 

DOD official told us that they have begun to examine sole-source 

acquisitions to determine what pieces can be “broken out” from a 

noncompetitive requirement and competed separately. For example, a 

Navy surveillance system program identified an opportunity to break out 

commercial components. They noted that this resulted in lower pricing 

and a larger, more stable supplier base. While these initiatives are 

intended to reduce the use of noncompetitive procurements, the effect of 

this Better Buying Power initiative may not be felt for several years.

15

 

14GAO, Defense Acquisition: DOD Should Clarify Requirements for Assessing and 

Documenting Technical-Data Needs, 

DOD officials told us that continuing resolutions 

often delay new awards until later in the fiscal year because program 

offices do not know if they will receive funding for a new award. Also, with 

uncertain budgets, program offices may struggle to adequately plan for 

future procurements. For example, one official told us his program 

planned to compete a new award to replace aging equipment. However, 

due to budget issues, the program office may have to abandon 

competition plans for new equipment and continue with a noncompetitive 

award to maintain the existing equipment.

GAO-11-469 (Washington, D.C.: May 11, 2011). 

15GAO, Continuing Resolutions: Uncertainty Limited Management Options and Increased 

Workload in Selected Agencies, GAO-09-879 (Washington, D.C.: Sept. 24, 2009). 
 

Page 15 GAO-13-325 Defense Contracting

Another factor that impacts DOD’s competition rate is the amount of 

noncompetitive foreign military sales (FMS). FMS awards are government 

to government sales of defense articles or defense services, from DOD 

stocks or through new procurements under DOD-managed contracts, 

regardless of the source of financing.16

FMS awards are generally noncompetitive and are included in DOD’s 

competition rate calculation. In fiscal year 2012, one-fifth of DOD’s 

obligations on new, noncompetitive awards were for FMS. A DOD 

component competition advocate explained that to the extent a 

component has noncompetitive FMS obligations in a fiscal year it will 

lower the competition rates. We analyzed FPDS-NG data for fiscal year 

2012 to determine the impact of FMS on component competition rates 

and noted a negative impact across DOD, with the Air Force being 

affected the most. Using DOD’s method for calculating the competition 

rate by measuring all contract obligations, we noted an 8 percentage 

point increase in the Air Force competition rate by removing FMS awards 

from the calculation. An even greater improvement is indicated when 

calculating competition for new awards only. For example, we found that 

the Air Force’s competition rate for new awards improves from 34.8 

percent to 49.8 percent when FMS are removed from the calculation, 

almost a 15 percentage point increase (see figure 5).

FMS awards may provide a 

benefit to DOD. For example, when an FMS award is in addition to 

products or services that DOD is already purchasing, it may help DOD to 

obtain a lower price with a vendor which can result in a better value for 

the government. 

 

16Defense Security Cooperation Agency, Security Assistance Management Manual, CO.7, 

Glossary, accessed February 15, 2013, http://www.dsca.mil/samm/ESAMM/C00/0.07.htm. 
 

Page 16 GAO-13-325 Defense Contracting

Figure 5: Impact of Foreign Military Sales Awards on the Air Force’s Competition 

Rate and Noncompetitive Obligations for New Awards in Fiscal Year 2012

DOD does not currently consider the impact of these or other factors that 

affect the competition rate when establishing competition goals for each 

fiscal year. For example, DOD officials explained that a major 

noncompetitive weapon system contract award, such as the Joint Strike 

Fighter or an aircraft carrier, would have a significant impact on the 

component’s competition rate. Currently, DOD sets component 

competition goals by increasing the prior fiscal year’s achieved 

competition rate, as measured by all contract obligations, by 2 percentage 

points. However, a component competition advocate told us that this 

results in goals that are not as meaningful as they could be because they 

do not address nor account for the specific factors a particular component 

is facing. For example, in its fiscal year 2011 competition report, the Air 

Force noted that it expected a significant impact to its fiscal year 2012 

competition rate as the result of an anticipated $10 billion FMS award. 

DOD officials told us that individual components have an opportunity to 

discuss and raise concerns about the competition goals with the Defense 
 

Page 17 GAO-13-325 Defense Contracting

Procurement and Acquisition Policy officials who set the annual 

competition goals. For example, DOD officials noted that the Army raised 

concerns about the proposed monetary competition goal for fiscal year 

2013 and noted that declining budgets would impact its ability to meet the 

goal. However, DOD does not systematically identify, track, and consider 

the key factors that may impact a component’s competition rate when 

setting the annual competition goals.

Generally, noncompetitive awards must be supported by written 

justifications and approvals that contain the facts and rationale to justify 

the use of the specific exception to full and open competition. While 

justifications for the noncompetitive awards in our sample generally met 

FAR requirements, they varied in providing insight into the reasons for 

noncompetitive awards. Some justifications in our sample provided clear 

descriptions of sole-source environments where only one source was 

available to meet the government’s needs, and others included detailed 

descriptions of planned actions that could help improve competition in the 

future.17 However, other justifications provided limited insight into the 

reasons for the noncompetitive award or did not fully describe actions that 

the agency could take to increase future competition.

DOD contracting officials prepared a written justification for 55 of the 56 

noncompetitive contract awards in our sample, as required by the FAR. 

However, in 1 instance a justification was not prepared due to an 

administrative oversight. Of the 55 awards with justifications, we reviewed 

59 justification documents—2 awards had multiple justifications.18

Many—but not all—justifications typically met FAR requirements. Of the 

59 justifications that we reviewed, we found a number of instances where 

justifications did not fully conform to FAR requirements. For example, 

nearly a third of the justifications in our sample were not made publicly 

available as required by the FAR. Generally, justifications are required to 

 

17FAR § 6.303-2(d). The FAR requires that justifications under Subpart 8.4 (Federal 

Supply Schedules) and 16.5 (Indefinite-Delivery Contracts) contain similar information. 

See FAR § 8.405-6(c)(2) and FAR § 16.505(b)(2)(ii).

18One Army award in our sample had two justifications and a DLA award had four

justifications. For more information on the number of contracts and justifications included 

in our review, see appendix I.

Justifications 

Provided Varied 

Levels of Insight

Justifications Generally 

Met FAR Requirements
 

Page 18 GAO-13-325 Defense Contracting

be made publicly available within 14 days of contract award except for 

information exempt from public disclosure.19

In addition, one justification that we reviewed was not approved within 

required time frames.

This is a relatively recent 

requirement that generally applies to contract actions awarded on or after 

February 17, 2009, the effective date of the rule. In some instances 

contracting officials told us that justifications were not made publicly 

available due to lack of familiarity with posting requirements or an 

administrative oversight. The public availability of justifications increases 

transparency into the contracting process and provides the opportunity for 

the review of justifications for contracts awarded noncompetitively.

20 Specifically, the contract action was awarded 

before the justification was approved by the authorized authority within 

the agency. This error was discovered by contracting officials during an 

annual contract file review, and at that point corrective action was taken 

to obtain the authorized approver’s signature.

In addition to generally meeting FAR requirements, some justifications 

provided detailed descriptions of the reasons for noncompetitive awards. 

Further, in some instances justifications also described actions that could 

help improve future competition or documented lessons learned for future 

acquisitions. For example, we observed the following in our sample:

• Clear descriptions of sole-source environments where only one 

source was available to meet the government’s needs. These 

circumstances were generally rooted in earlier competition decisions 

made at the outset of the program, especially for weapon systems 

acquisitions. For example, we reviewed justifications for 10 awards 

ranging from $22.4 million to $921.5 million that clearly described 

 

19FAR § 6.305(a). In the case of noncompetitive contracts awarded on the basis of 

unusual and compelling urgency, the justification must be posted within 30 days after 

contract award.

20The FAR states that a contracting officer shall not commence negotiations for a solesource contract, commence negotiations for a contract resulting from an unsolicited 

proposal, or award any other contract without providing for full and open competition 

unless the contracting officer justifies, if required in section 6.302, the use of such actions 

in writing; certifies the accuracy and completeness of the justification; and obtains the 

required approval. FAR § 6.303-1.

Some Justifications 

Provided Detailed 

Information 
 

Page 19 GAO-13-325 Defense Contracting

sole-source environments where only one source could meet agency 

requirements because the government did not own the proprietary 

technical data.

• Detailed descriptions of proactive, future steps to move the 

procurement, or parts of it, to a competitive scenario for the follow-on 

contract, including efforts to develop new suppliers or acquire 

technical data. For example, we reviewed a justification for two Missile 

Defense Agency awards for radar hardware production for $582.5 

million and $359.9 million. The justification for these awards stated 

that the government intended to compete future acquisitions and 

described a six-step process for determining the viability of 

competition including time frames.

• Thorough explanations of the cost-benefit analysis conducted to 

determine that the time and money required for purchasing technical 

data rights and developing a new supplier could not be recouped 

through savings from competition, and in some instances would result 

in unacceptable delays. For example, the Air Force awarded a 

noncompetitive contract for $647.8 million for missile production. The 

class justification clearly described the cost-benefit analysis 

conducted to determine that the cost to purchase data rights and 

establish a second source—$750 million—did not justify the 

investment.

Some justifications in our sample provided limited insight into the reasons 

for noncompetitive awards. In addition, justifications did not always fully 

describe actions that the agency can take to increase competition in the 

future. In our sample we observed the following:

• Justifications for lower-dollar awards—which only required certification 

by the contracting officer—typically contained less specificity and 

detail than higher-dollar awards, which are required to be approved by 

component competition advocates or senior procurement 

executives.21

 

21The FAR states that for a proposed contract not exceeding $650,000, the contracting 

officer’s certification required by 6.303-2(b)(12) will serve as approval unless a higher 

approving level is established in agency procedures. FAR § 6.304(a)(1).

Further, some lower-dollar awards in our sample had 

template justifications that allowed contracting officials to check 

applicable boxes for boilerplate language and fill in blanks with 

Other Justifications 

Provided Limited Insight
 

Page 20 GAO-13-325 Defense Contracting

information. While the template provided space for additional 

information, contracting officials did not consistently provide such 

information; thus, these justifications provided limited insight into the 

specific reasons why the particular award could not be competed or 

planned efforts to remove barriers to competition in the future. We 

have previously identified the importance of fully documenting 

acquisition decisions to provide insight for any subsequent awards 

given the frequent staff turnover in the acquisition workforce.22

• One justification was not clearly written and cited an exception to 

competition that was not fully supported by the circumstances of the 

procurement. Specifically, a justification for a $312,000 sole-source 

Army award for information technology equipment cited the exception 

“authorized or required by statute.” However, the information provided 

in the justification did not support the authority cited and a contracting 

official confirmed that the exception that appears to apply was “logical 

follow-on to an order already issued under the contract.” Further, the 

justification indicates that there were other manufacturers for this 

requirement; however, the requiring activity requested to stay with the 

existing equipment manufacturer. Therefore, it is unclear what 

circumstances warranted a noncompetitive order.

• Other justifications documented limited information about market 

research findings. For example, the Army awarded a $200,000 solesource contract for a specific dental gold alloy. The justification stated 

that market research was conducted via the internet but there was no 

additional information regarding market research findings. Further, the 

justification indicated that six different alloys could potentially meet the 

requirement, but it was unclear in the justification why these and other 

commercially available dental alloys were not considered. During a 

follow-up discussion, Army contracting and program officials 

explained that only one source was determined to meet the 

requirement because every gold alloy has a unique composition. 

Therefore, using an alloy from another source would require the 

development of new dental fabrication processes which officials 

determined would not be cost effective. As a result of our review, 

Army officials indicated that they would include additional information 

 

22GAO, Acquisition Planning: Opportunities to Build Strong Foundations for Better 

Services Contracts, GAO-11-672 (Washington, D.C.: Aug. 9, 2011).
 

Page 21 GAO-13-325 Defense Contracting

in future justifications to better document reasons for why only one 

source could provide a product that is commercially available.

• Awards contained varying documentation to support why the award 

was within the scope of a class justification. Whenever a contract 

award is made pursuant to the authority of a class justification, the 

contracting officer must ensure that the action is within the scope of 

the class justification and shall document the contract file 

accordingly.23 We previously reported that concerns about the level of 

review of individual noncompetitive contracts under class justifications 

have led to efforts to revise the review process for activity under class 

justifications at the Air Force.24

DOD’s Better Buying Power initiative guidance emphasizes the 

importance of removing obstacles from competition. Most noncompetitive 

awards are required to be supported by written justifications that among 

other things document the actions an agency may take to overcome such 

barriers to competition. Some of the justifications that we reviewed 

provided limited insight into the reasons for the noncompetitive award or 

did not fully describe actions that the agency could take to bring about 

competitive awards in future acquisitions of the same goods or services. 

Without this information, DOD may be missing opportunities to learn why 

past acquisitions were not competitive and to employ that knowledge to 

help remove obstacles to competition in future acquisitions.

Our sample included 12 class 

justifications for awards ranging from $266,000 to $2.6 billion. The 

period of actions covered by these justifications ranged from 8 months 

to 9 years, and 3 contracts in our sample had justifications that were 

prepared 5 or 6 years prior to award. We identified that contracting 

officials have different methods for documenting that contract actions 

are within the scope of the class justifications. In some instances, 

officials told us that although there was no explicit documentation of a 

scope determination, this determination was documented by multiple 

references to the class justification in other contract file documents, 

such as the pre-business clearance memorandum.

 

23FAR § 6.303-1(d). Class justifications can cover multiple awards made over many years 

and sometimes combine a complex mix of products and services, which streamlines the 

acquisition process.

24GAO, Defense Contracting: Improved Policies and Tools Could Help Increase 

Competition on DOD’s National Security Exception Procurements, GAO-12-263 

(Washington, D.C.: January 13, 2012).
 

Page 22 GAO-13-325 Defense Contracting

DOD’s one-offer requirement is intended to reduce the number of 

contracts awarded using competitive procedures but for which only one 

offer is received. Although the one-offer requirement has the potential to 

promote multiple offers, some awards are not subject to all of the rules 

established by the requirement. In addition, DOD’s ability to accurately 

measure the impact and effectiveness of the requirement is limited by 

unreliable data.

DOD’s new one-offer requirement seeks to reduce the number of, and 

amount obligated on, one-offer awards by establishing three rules. The 

new rules attempt to ensure adequate solicitation time (i.e., resolicitation 

rule), ensure that contract requirements are not unnecessarily restrictive 

(i.e., program office consultation rule), and verify that offers received are 

fair and reasonable (i.e., cost/price analysis rule). Based on our review of 

one-offer awards, we determined that the awards generally complied with 

the new requirement; however, some awards did not comply with the 

resolicitation rule. We also found that the one-offer requirement will likely 

have a limited impact on unnecessarily restrictive solicitation 

requirements because many awards are not subject to the program office 

consultation rule. Figure 6 illustrates the three rules included in DOD’s 

one-offer requirement.

Impact of DOD’S OneOffer Requirement Is 

Unknown 

DOD Introduced New 

Rules, but Some Awards 

Are Not Subject to All of 

Them
 

Page 23 GAO-13-325 Defense Contracting

Figure 6: DOD’s One-Offer Requirement Includes Three Rules

a

This cost/price analysis rule only applies to solicitations that result in one offer. Thus, if multiple 

offers are received after completing the resolicitation rule, then the contracting officer should conduct 

negotiations, if necessary, and finalize the acquisition process.
 

Page 24 GAO-13-325 Defense Contracting

Our analysis of 25 one-offer awards from April 1, 2011, to March 31, 

2012, shows that all 25 contract awards were conducted in accordance 

with the new cost/price analysis rule; however, 5 contracts were awarded 

despite failing to comply with the resolicitation rule. Specifically, in the 

case of two contract awards, contracting officials simply did not resolicit 

after receiving just one offer during the initial solicitation period; in the 

case of three contract awards, agency officials resolicited for a period 

shorter than the required 30 days. Our analysis did not consider whether 

the awards complied with the program office consultation rule because 

the rule was not implemented until June 2012 and did not apply to the 

awards in our sample. In addition to our review, the DOD Inspector 

General performed a similar compliance review on 78 one-offer awards 

from fiscal year 2011. The review found that 15 awards did not comply 

with the cost/price analysis rule and 23 did not comply with the 

resolicitation rule.25

The new one-offer requirement may result in lower prices and more 

accurate cost information when only one offer is received. For example, 

during our review of one-offer awards, we identified a proposal that 

initially requested a 10 percent profit rate. Cost and price analyses 

determined that the rate was unreasonable, and subsequent negotiations 

resulted in a 1.4 percentage point reduction in the profit rate. In addition, 

as a result of the analyses, the government identified a discrepancy in the 

offeror’s cost data that further reduced the price.

Officials at multiple DOD components told us that, since the 

implementation of the new requirement, more contracting officers allow at 

least 30 days for responses in order to avoid the resolicitation and 

program office consultation rules. Specifically, as illustrated in figure 6, if 

a solicitation allows 30 or more days for responses, the contracting officer 

is required to follow only one of the three rules established in the new 

requirement. Senior DOD officials said that allowing for 30 days is a 

positive outcome of the requirement. In the past, some solicitations 

allowed less than a week for responses, potentially discouraging 

contractors from submitting offers. According to the officials, the new 

requirement incentivizes contracting officers to keep solicitations open for 

at least 30 days, while still allowing the flexibility for fewer than 30 days 

 

25Inspector General, Department of Defense, Improvement Needed With DOD Single-Bid 

Program to Increase Effective Competition for Contracts (Alexandria, Va.: Oct. 4, 2010).
 

Page 25 GAO-13-325 Defense Contracting

when multiple offers are likely—for example, routine procurements that 

consistently elicit multiple offers.

Although DOD’s one-offer requirement has potential to result in contracts 

at lower prices and to lengthen the period for responding to solicitations, 

the impact on overly restrictive requirements is limited because many 

awards are not subject to the program office consultation rule. We 

previously reported that the government’s requirements can influence the 

number of offers received if the requirements are written too 

restrictively.26 DOD established the new program office consultation rule 

which could potentially ensure that solicitation requirements language 

does not discourage multiple offers; however, as illustrated in figure 6, 

this requirement applies only to solicitations that require responses in 

fewer than 30 days. Due to unreliable data within FPDS-NG, we cannot 

quantify the number of one-offer awards in fiscal year 2012 that were not 

subject to the program consultation rule.27

• The FAR generally requires that solicitations allow at least 30 days for 

responses. Although there are many exceptions—for example, 

commercially available items, and orders under IDIQ contracts and 

Federal Supply Schedules—awards that comply with the FAR 

requirement to advertise for 30 days or more will not be subject to the 

program office consultation rule.

However, the following bullets 

highlight some of the reasons why a solicitation would not be subject to 

the program consultation rule, in effect reducing the impact of DOD’s 

effort to increase the number of offers received by revising overly 

restrictive requirements:

28

• DOD officials in multiple components told us that prior to the one-offer 

requirement, their contracting branch already had a policy or long-

 

26GAO-10-833. FAR § 11.105 states “agency requirements shall not be written so as to 

require a particular brand name, product, or feature of a product, peculiar to one 

manufacturer, thereby precluding consideration of a product manufactured by another 

company unless the particular brand name, product, or feature is essential to the 

Government’s requirements, and market research indicates other companies’ similar 

products, or products lacking the particular feature, do not meet, or cannot be modified to 

meet, the agency’s needs.” 

27As described later in the report, we identified unreliable one-offer award data within 

FPDS-NG and determined that the data were not sufficient for certain analysis.

28FAR § 5.203(c).
 

Page 26 GAO-13-325 Defense Contracting

standing practice to advertise for 30 or more days. Thus, even when a 

shorter period is permitted, these branches may advertise for 30 days 

in any case, thereby avoiding the program office consultation rule.

• Since the implementation of the one-offer requirement, DOD officials 

told us that more contracting officers allow 30 or more days to 

respond to solicitations in order to avoid the program office 

consultation rule.

Unreliable data within FPDS-NG hinder DOD’s ability to accurately 

measure the impact of its one-offer requirement. According to FPDS-NG, 

DOD awarded 115,242 one-offer contracts and task orders in fiscal year 

2012. The agency obligated $14.7 billion on new one-offer awards in 

fiscal year 2012, representing 13.8 percent of all new contract obligations 

during the period. Our analysis of 35 one-offer awards determined that 10 

of these awards were incorrectly coded in FDPS-NG by contracting 

officers. As a result, we determined that DOD’s data were unreliable for 

certain analyses. Furthermore, we believe DOD cannot use the data to 

accurately calculate the amount obligated on one-offer awards during 

fiscal year 2012. Thus, the agency is not in a position to accurately 

measure the quantitative impact of the one-offer requirement since it was 

implemented.

Based on our analysis of 35 one-offer awards, 10 awards totaling $271.8 

million were incorrectly coded in FPDS-NG. Six of the 10 awards were 

incorrectly coded as subject to competition in FPDS-NG, when they were 

actually noncompetitive awards. The remaining 4 awards received 

multiple offers, but the contracting officer incorrectly coded them as 

receiving one offer. Since our review focused on large dollar awards, 

which are typically subject to a more rigorous review process within DOD, 

the results of our assessment suggest that more errors may exist in 

unselected awards. In 2010 we reported that similar coding errors existed 

in FPDS-NG one-offer award data.29

DOD relies on FPDS-NG data to make important decisions regarding its 

new requirement on one-offer awards. For example, DOD directed the 

In addition, the DOD Inspector 

General determined that 27 percent of the 107 one-offer awards it 

reviewed from fiscal year 2011 were miscoded in FPDS-NG.

 

29GAO-10-833. 

Unreliable Data Make It 

Difficult to Measure New 

Requirement’s Impact
 

Page 27 GAO-13-325 Defense Contracting

services to increase their effective competition rates—the proportion of 

competitive obligations based on multiple offers—by 10 percent per year 

as part of the Better Buying Power initiative. The one-offer requirement is 

intended to be a means to achieve this goal. However, DOD’s ability to 

calculate the quantitative impact of the requirement and improvements 

toward effective competition goals is limited by unreliable FPDS-NG data. 

Without reliable data, DOD cannot accurately measure the impact of the 

new requirement.

The competition indicators that DOD currently employs shed insufficient 

light on the department’s efforts to maximize full and open competition for 

the goods and services that it acquires. Although DOD’s overall and 

individual component competition rates provide broad indicators of 

competitive contracts and task orders, they provide limited insight into the 

underlying reasons for competition or its decline since fiscal year 2008.

For example, while foreign military sales accounted for about a fifth of 

new, noncompetitive obligations in fiscal year 2012, DOD’s current 

calculations do not consider their impact on its competition rates. We 

found the Air Force competition rate for new awards increased by 15 

percentage points in fiscal year 2012, when foreign military sales were 

removed from the calculations. DOD does not systematically identify, 

track, and consider the specific factors that may be affecting competition 

when setting its annual competition goals. Lacking a set of measures that 

provide meaningful insight into the specific factors that drive competition 

rates, it is difficult for DOD to accurately gauge the relative effectiveness 

of its multifaceted efforts to enhance competition. Without this information 

it is also more difficult for DOD to chart a path to improved competition 

that offers a greater likelihood of success and to make the necessary 

course corrections along the way.

While the justifications and approvals for noncompetitive awards that we 

reviewed generally met FAR requirements, they varied in the level of 

insight that they provided into the reasons for noncompetitive awards. In 

addition, some justifications did little to describe planned actions to bring 

about competitive awards in future acquisitions of the same goods or 

services. Others provided little information about the market research 

findings that helped justify the decision to pursue a noncompetitive award. 

Without this information, DOD may be missing opportunities to gain a 

richer understanding of why past acquisitions were not competitive and to 

apply those lessons to effectively facilitate competition for future 

acquisitions. 

Conclusions 
 

Page 28 GAO-13-325 Defense Contracting

Lastly, due to unreliable data in FPDS-NG, DOD’s ability to measure the 

effectiveness of its new one-offer requirement is limited. Without knowing 

its impact, DOD risks continued investment in a requirement that may not 

address the most significant factors leading to one-offer awards.

To better inform DOD’s efforts to enhance competition, we recommend 

that the Secretary of Defense take the following three actions:

• identify and track the specific factors that affect the competition rate, 

such as foreign military sales, and consider this information when 

setting annual competition goals for each DOD component;

• develop guidance that could enable DOD components to apply 

lessons learned from past procurements to increase competition for 

the same good and services in the future; and

• develop an action plan for DOD components to collect reliable data on 

competitive procurements for which only one offer is received, so that 

the department can determine the effect of its new requirement on 

one-offer contracts.

We provided a draft of this report to DOD for review and comment. In 

written comments, DOD concurred with our recommendations. DOD’s 

comments are reprinted in appendix II. DOD described actions it plans to 

take the address the recommendations. In particular, DOD indicated that 

it will consider specific factors affecting competition in setting annual 

competition goals. In addition, the department noted that it will work with 

components to develop guidance and tools to analyze procurement data 

to apply lessons learned to increase competition for the same good and 

services in the future. To address our third recommendation, the 

department indicated that it will take two actions. First, it will review 

existing training and procedures for reporting of contract actions in FPDSNG. Second, it will update guidance on the reporting of competitive 

procurements in which only one offer is received to increase the reliability 

of the data and better understand the impact of the new requirement on 

one-offer contracts.

Recommendations for 

Executive Action

Agency Comments 
 

Page 29 GAO-13-325 Defense Contracting

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

interested congressional committees. This report will also be available at 

no charge on the GAO website at http://www.gao.gov. 

If you or your staff have any questions concerning this report, please 

contact me at (202) 512-4841 or by e-mail at courtsm@gao.gov. Contact 

points for our Offices of Congressional Relations and Public Affairs may 

be found on the last page of this report. Staff who made key contributions 

to this report are listed in appendix III.

Michael J. Courts

Director, Acquisition and Sourcing Management
Appendix I: Objectives, Scope, and 

Methodology

Page 30 GAO-13-325 Defense Contracting

The objectives for this review were to examine (1) trends in the 

Department of Defense’s (DOD) use of noncompetitive awards; (2) 

factors influencing DOD’s competition rate; (3) the extent to which 

justifications for exceptions to competitive procedures provided insight 

into the reasons for noncompetitive awards; and (4) the impact of DOD’s 

new requirement on contracts awarded using competitive procedures but 

for which only one offer was received.

To address these objectives, we used data in the Federal Procurement 

Data System-Next Generation (FPDS-NG), which is the government’s 

procurement database. We assessed the reliability of FPDS-NG data by

(1) performing electronic testing of required data elements, (2) reviewing 

existing information about the data and the system that produced them, 

and (3) comparing reported data to information from the contract files we 

sampled. We determined that the data were sufficiently reliable to 

examine the trends in DOD’s use of noncompetitive awards and the 

factors influencing DOD’s competition rate, including the number of 

awards, dollar amount obligated, and the percentage of contracts 

awarded competitively overall and by component. However, as described 

in this report and later in this appendix, we found the data on one-offer 

awards not sufficiently reliable.

To further examine the trends in DOD’s use of noncompetitive awards, 

we used data from FPDS-NG to identify DOD obligations under 

competitive and noncompetitive contracts from fiscal year 2008 through 

2012. Specifically, we identified contracts and task orders funded by 

DOD. For competitive contract actions, we included contracts and orders 

coded as “full and open competition,” “full and open after exclusion of 

sources,” and “competed under simplified acquisition procedures” as well 

as orders coded as “subject to fair opportunity” and as “fair opportunity 

given.” For noncompetitive contract actions, we included contracts and 

orders coded as “not competed,” “not available for competition,” “not 

competed under simplified acquisition procedures,” and “follow-on to 

competed action” as well as orders coded as “subject to fair opportunity” 

and under an exception to fair opportunity, including “urgency,” “only one 

source,” “minimum guarantee,” “follow-on action following competitive 

initial action,” and “other statutory authority.” We calculated competition 

rates as the percentage of obligations on competitive contracts and 

orders over all obligations on contracts and orders annually. We 

examined the competition rate at the DOD level and at each component 

from fiscal year 2008 through 2012. For fiscal year 2012, we analyzed the 

competition rate for products, non-research and development (R&D) 

services, and R&D services. For new noncompetitive awards in fiscal 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 31 GAO-13-325 Defense Contracting

year 2012, we determined the dollars obligated by award type. We also 

assessed the exceptions cited in FPDS-NG for new noncompetitive DOD 

contracts and task orders in fiscal year 2012.

To examine the factors influencing DOD’s competition rate, we analyzed 

FPDS-NG data to determine the impact of foreign military sale awards on 

DOD’s competition rate. For foreign military sale (FMS) awards, we 

included contracts and orders coded as “foreign funds FMS” in FPDS-NG. 

We defined the competition rate as the ratio of new obligations at the time 

of award on competitive contracts and task orders over all new 

obligations at the time of award on all new contracts and task orders in a 

fiscal year. We also examined DOD’s Better Buying Power initiative, 

DOD’s fiscal year 2011 competition report, which was the most recent 

report available at the time of our review, and prior GAO reports. To gain 

insight into how DOD sets competition goals, we reviewed DOD policy 

and spoke with DOD officials.

To examine the extent to which justifications for exceptions to competitive 

procedures provided insight into the reason for noncompetitive awards, 

we reviewed a nongeneralizable sample of 56 contracts and orders 

awarded noncompetitively by DOD from April 1, 2011, to March 31, 2012, 

as coded in FPDS-NG. At the time our review began, data was not 

available for the last two quarters of fiscal year 2012. In order to review 

justifications for contracts and task orders awarded in all four fiscal year 

quarters, our sample included awards from fiscal years 2011 and 2012. 

We excluded from our sample:

• contracts and orders under the simplified acquisition threshold of 

$150,000;

• noncompetitive orders that were not submitted under multiple award 

indefinite-delivery/indefinite-quantity (IDIQ) contracts, because these 

orders would not require a justification since the decision not to 

compete was made and presumably justified when the base IDIQ 

contract was awarded to one contractor;
Appendix I: Objectives, Scope, and 

Methodology

Page 32 GAO-13-325 Defense Contracting

• noncompetitive contracts and orders justified under the 8(a) program 

because we recently reported on challenges implementing new 

requirements for these types of justifications1

• noncompetitive contracts that do not require a justification, including 

awards not competed under simplified acquisition procedures, justified 

under the “international agreement” exception or certain contracts 

awarded under the “authorized or required by statute” exception.

; 

We initially selected 75 contracts and orders, including: the five largest 

contracts from the Air Force, Army, Defense Logistics Agency (DLA), 

Navy, and other defense agencies; the two largest orders from each of 

these components; and eight randomly selected contracts and orders 

from each component. In addition, we added five contracts to our sample 

which we had initially selected as part of our review of competitive oneoffer awards, but were miscoded in FPDS-NG and actually awarded 

noncompetitively. Of these 80 awards, we removed 24 from our review 

because either they were miscoded and awarded competitively, a 

justification was not required, or the justification was classified for national 

security reasons. For the 56 remaining awards, we reviewed 59 

justifications—in one case a justification was required but not prepared; 

and in two cases awards had multiple justifications.

We reviewed these 59 justifications to determine whether they met criteria 

in the FAR for content, timing, approval, and public availability. In 

particular, we assessed whether the justifications contained sufficient 

information to justify the use of the specific authority cited as required by 

the FAR. To gain additional insight into the rationale for noncompetitive 

awards, we also reviewed other contract file documentation such as the 

acquisition plan, statement of work, price negotiation memorandums, 

records of market research, and other key documents. We conducted email and telephone follow-up with contracting and program officials 

involved in these awards to obtain additional information as needed.

To examine the impact of DOD’s new requirement on competitive 

procurements that received one offer, we examined DOD policies, 

regulations, and other related documents. To determine whether recent 

awards complied with the requirement, we selected a nongeneralizable 

 

1

GAO, Federal Contracting: Slow Start to Implementation of Justification for 8(a) SoleSource Contracts, GAO-13-118 (Washington, D.C.: Dec 12, 2012).
Appendix I: Objectives, Scope, and 

Methodology

Page 33 GAO-13-325 Defense Contracting

sample of 25 contracts and task orders that received one offer in 

response to a solicitation issued using competitive procedures, as coded 

in FPDS-NG. In order to review awards from each fiscal quarter, we 

selected awards issued between April 1, 2011, and March 31, 2012. We 

planned to review a sample of the 25 awards with the highest obligations, 

across DOD—5 each from the Army, Navy, Air Force, DLA, and other 

defense agencies. However, as we selected awards, we identified 10 that 

were out of scope due to coding errors in FPDS-NG. Using the original 

selection criteria, we continued to select awards until we reached a 

sample size of 25 awards. As previously noted, we found the data on 

one-offer awards not reliable for certain analyses.

For the awards in our sample, we obtained and reviewed award 

documentation, including the solicitation and evidence of a cost/price 

analysis to determine whether the awards complied with DOD’s new 

requirement. Our analysis did not consider whether the awards complied 

with the new rule to consult about whether requirements may be 

unnecessarily restrictive because the rule was not in effect at the time of 

our review and therefore did not apply to the awards in our sample. In 

addition, we spoke with officials at the Army, Air Force, Navy, and DLA 

about the implementation and impact of the new requirement.

We conducted this performance audit from May 2012 to March 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.
Appendix II: Comments from the Department 

of Defense

Page 34 GAO-13-325 Defense Contracting

Appendix II: Comments from the Department 

of Defense
Appendix II: Comments from the Department 

of Defense

Page 35 GAO-13-325 Defense Contracting
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 36 GAO-13-325 Defense Contracting

Michael J. Courts, (202) 512-4841 or courtsm@gao.gov

In addition to the contact named above, Penny Berrier, Assistant Director; 

Richard Burkard; Alissa Czyz; Alexandra Dew Silva; Jeffrey Fiore; 

Danielle Greene; Julia Kennon; Jean McSween; Kenneth Patton; 

Roxanna Sun; Kristin Van Wychen; and Andrea Yohe also made key 

contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(121071)
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