Contract Management: Agencies Are Not Maximizing Opportunities for Competition or Savings under Blanket Purchase Agreements despite Significant Increase in Usage
Published: 2009-09-09T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Federal Acquisition Regulation (FAR) allows agencies to establish blanket purchase agreements (BPA) under the General Services Administration's (GSA) Schedules Program, where contracts are awarded to multiple vendors for commercial goods and services and made available for agency use. BPAs are agreements between agencies and vendors with terms in place for future use; funds are obligated when orders are placed. When establishing BPAs under schedule contracts, agencies must follow procedures regarding the number of vendors considered, request discounts, and conduct annual reviews in accordance with requirements. This report assesses selected agencies' use of schedule BPAs and evaluates whether they considered more than one vendor when establishing BPAs and placing orders under them, took opportunities for savings, and conducted annual reviews. To conduct this work, GAO reviewed a sample of 336 schedule BPAs and 352 fiscal year 2007 orders and met with officials.
section_title: What GAO Found
paragraphs: In fiscal year 2008, civilian agencies obligated $3.2 billion under schedule BPAs--up 383 percent from fiscal year 2004. GAO estimates that DOD's obligations ranged from $0.5 to $4.7 billion, placing total obligations in 2008 between $3.7 and $7.9 billion. GAO was unable to determine more fully DOD's obligations because DOD does not utilize fields in the federal procurement data system to distinguish schedule BPAs from other BPAs. DOD has begun to take actions to address this issue. Civilian agencies' use of BPAs for services grew significantly faster--475 percent--than their overall services contracting between 2004 and 2008. Contracting officers use BPAs for flexibility and speed, noting, for example, advantages in disaster response preparation and when funding for a fiscal year is unknown. Of the BPAs GAO reviewed, 64 percent had been competed--meaning, for purposes of this report, that more than one vendor was considered--when established. For 12 percent of BPAs that had not been competed, contracting officers provided a variety of justifications, some of which appear inconsistent with sound procurement policy. The FAR is not clear about justification requirements for BPAs awarded with limited competition, including to one vendor. Also, the majority of BPAs had been awarded to a single vendor, which resulted in a lack of competition when placing orders because the FAR does not currently require competition of orders under single award BPAs. Multiple award BPAs--awarded to more than one vendor for the same requirement--provide an opportunity to benefit from further competition when placing orders, but many contracting officers placed orders directly with one vendor without further competition. Congress recently enhanced competition requirements for multiple award contracts, but the application of this requirement to schedule BPAs has not yet been established. Some of the BPAs GAO reviewed had lengthy durations, exceeding 5 years. GAO found no evidence that agencies sought discounts when 47 percent of the BPAs reviewed were established. In the other cases, some contracting officers explicitly requested, or even demanded, discounts, while others merely encouraged them. Agencies frequently received discounts when they requested them. For instance, the Justice Department was able to save $20 million under a BPA where the contracting officer requested and received discounts. However, at times, such opportunities were missed when discounts were not requested, even when the estimated amount of the BPA was in the hundreds of millions of dollars. Contracting officials rarely conducted the required annual reviews. The reviews for only 19 of the 320 BPAs that required them addressed all of the FAR elements. By not conducting annual reviews, agencies miss opportunities for savings and can run the risk of violating competition requirements. One contracting officer was unaware that the underlying GSA schedule contract had expired, and orders continued to be placed under the BPA--a potential violation of the Competition in Contracting Act.

section_title: Letter
paragraphs: Federal contracting officers can choose from a variety of contracting  mechanisms when buying goods and services. For example, they can  award new contracts, issue orders under existing contracts at their  agency, or issue orders under other agencies’ contracts. The General  Services Administration’s (GSA) Schedules program is an interagency  contracting mechanism used by many federal agencies. Under this  program, GSA awards contracts to multiple vendors for commercially  available goods and services and federal agencies place orders under the  contracts. Agencies may establish blanket purchase agreements (BPA)  under GSA’s schedule contracts. BPAs are intended to be a simplified  method of fulfilling repetitive needs for supplies and services that also  provide an opportunity to seek reduced pricing from vendors’ schedule  prices. Agencies may award BPAs to one vendor (known as a single award  BPA) or to more than one vendor (multiple award BPAs), and then issue  individual orders to fulfill requirements for goods and services as they  arise.
BPAs are not contracts, but rather agreements between government  agencies and vendors with terms and conditions, including prices, in place  for future use. The Federal Acquisition Regulation (FAR) was amended in  2004 to require agencies to follow certain procedures when establishing  and ordering from schedule BPAs and to document annual reviews to  determine: whether each BPA still represents the best value; whether the  GSA schedule contract under which the schedule BPA was established is  still in effect; and whether the agency has exceeded its initial estimated  purchase amount under the BPA, indicating a potential for discounts when  more orders are placed.
You expressed interest in understanding more about federal agencies’ use  of schedule BPAs. Accordingly, we assessed (1) the extent to which  agencies use schedule BPAs, what they buy with them, and why agencies  use them; (2) whether agencies are competing BPAs and the orders under  them; (3) whether agencies are taking advantage of opportunities for  savings by seeking discounts when using these BPAs; and (4) whether  agencies are conducting the required annual reviews.
To conduct our work for each objective, we used an electronic data  collection instrument to review 336 schedule BPAs and the largest fiscal  year 2007 order under each, the most recent available data at the time we  began our work. Our scope included five civilian agencies and three  defense agency locations. We reviewed 263 BPAs from the following  agencies: the departments of Agriculture, Health and Human Services,  Homeland Security, and Justice and the Social Security Administration.  These agencies represented roughly 80 percent of the civilian dollars  obligated under schedule BPAs in fiscal year 2007, based on data provided  by GSA from the Federal Procurement Data System-Next Generation  (FPDS-NG), the government’s primary database for information on  procurement actions. Because the Department of Homeland Security  (DHS) had obligated the largest dollar amount, we selected all 155 of the  department’s BPAs under which orders were placed during fiscal year  2007. Therefore, our findings reflect the full universe of DHS schedule  BPAs used in fiscal year 2007. We selected a random sample of 30  schedule BPAs from each of the other four civilian agencies; our findings  for those agencies are projectable to those agencies. We were unable to  review 12 of the BPAs in our sample because some agencies could not  locate the files.
Because the Department of Defense (DOD) does not use available codes in  FPDS-NG to identify its schedule BPAs, our methodology for selecting the  defense locations (discussed in app. I) was more complex. We reviewed a  random sample of 29 BPAs used by the Marine Corps Systems Command,  30 from the Naval Air Systems Command, Naval Air Warfare Center, and  all 14 of the schedule BPAs the Air Force District of Washington used  during fiscal year 2007. Our findings are projectable only to the DOD  locations selected.
To assess the extent to which agencies are using schedule BPAs, we  analyzed data from FPDS-NG for fiscal years 2004 to 2008 for civilian  agencies. For DOD, given the data limitation discussed above, we  constructed an estimate of its fiscal year 2008 usage based on our analysis  of 100 randomly-selected procurements that we identified as BPAs using  DOD’s contract naming system. We identified, via DOD’s online contract  retrieval system, those in our sample that were in fact schedule BPAs and  applied this percentage to DOD’s total spending under BPAs in general.
For each objective, we supplemented our file reviews with follow-up  questions when documentation in the file was insufficient. When agency  officials did not respond to our questions or did not provide  documentation that supported their response, we report these responses  as providing no evidence. We also spoke with over 60 contracting officials  across the agencies in our review about their use of schedule BPAs.  Moreover, we spoke with officials from GSA to discuss the agency’s role  with respect to schedule BPAs and FAR requirements for competition,  discounts, and annual reviews. We spoke with officials from the Office of  Federal Procurement Policy about policies concerning schedule BPAs.
A more detailed description of our scope and methodology is presented in  appendix I.
As we describe in our methodology, we performed extensive tests to  assess the reliability of the automated information we used to select our  collection of BPAs. For example, we confirmed that the information  contained in the automated records reflected the information contained in  the contract files. We based our estimate of DOD’s use of schedule BPAs  on information we verified using automated images of the contract  records. Accordingly, we believe that the data we used to support our  findings are reliable for our intended purposes.
We conducted this performance audit from June 2008 to August 2009 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 the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives.
subsections: section_title: Background
paragraphs: The FAR states that a BPA is a simplified method of filling anticipated  repetitive needs for supplies or services that functions as a “charge  account,” with terms and conditions agreed upon when the BPA is  established. A BPA is not a contract; therefore, the government is not  obligated to purchase a minimum quantity or dollar amount and the  contractor is not obligated to perform until it accepts an order under the  BPA. BPAs do not obligate funds; funds are obligated when an order  subsequently is placed.
Agencies may establish BPAs under GSA’s Schedule program contracts.  Subpart 8.4 of the FAR provides procedures for using GSA schedule  contracts, including establishing and ordering from BPAs. Prior to the  issuance of the FAR in 1984 as the governmentwide procurement  regulation, “blanket purchase arrangements,” a vehicle similar to BPAs,  were permitted to be established with schedule contractors, if not  inconsistent with the terms of the schedule contract, as early as the 1950s.
Schedule BPAs use the pre-established terms and conditions of the GSA  contract (such as prices and delivery terms) as a starting point, but  ordering agencies may add terms and conditions, such as discounted  pricing, as long as they do not conflict with those of the GSA contract.  Each schedule BPA must address the frequency with which orders will be  placed; invoicing procedures; discounts; delivery locations; time and  requirements, such as the amount or quantity the agency expects to  purchase under the BPA and the work the vendor will perform. The  potential volume of orders under a BPA, as indicated by the estimated  amount or quantity, provides an opportunity to seek discounts from the  GSA schedule contract prices.
From the first issuance of the FAR until 1994, agencies establishing  schedule BPAs were required to follow the simplified acquisition  procedures of Part 13, which emphasized “adequate” or “maximum  practicable competition” at the time orders were placed. From 1994 until  1997, the FAR and subsequent GAO bid protest decisions indicated that  the policies and procedures of Part 13 did not apply to schedule BPAs and  that agencies were to follow the procedures of Subpart 8.4 for placing  orders on schedule BPAs, but not for their establishment. Beginning in  1997, the FAR applied the ordering procedures in Subpart 8.4 to the  establishment of schedule BPAs, including such steps as considering  information about the supply or service offered under schedule contracts  or reviewing the catalogs of schedule contractors. It also encouraged  agencies to seek discounts when establishing schedule BPAs. A 2004  amendment to the FAR clarified the BPA ordering procedures under  Subpart 8.4 and explicitly required agencies to seek discounts.
The FAR currently requires federal agencies to seek price reductions from  vendors’ schedule prices and to follow certain procedures when  establishing schedule BPAs. Which procedures are to be followed depends  on whether the BPA will be used to purchase a product or service  performed for a fixed price or for a service performed at an hourly rate,  and thus requiring a statement of work. Procedures for establishing  schedule BPAs and seeking discounts are depicted in figure 1.
Agencies may award a schedule BPA to a single vendor or to multiple  vendors to fulfill the same requirement. The decision is to be based on a  strategy that is expected to maximize the effectiveness of the BPA(s). The  FAR states that, in determining how many BPAs to establish, contracting  officers are to consider:  the scope and complexity of the requirement(s);  the need to periodically compare multiple technical approaches or prices;  the administrative costs of BPAs; and  the technical qualifications of the schedule contractors.
After the BPA is established, requirements vary for considering more than  one vendor when placing orders, as shown in table 1.
DOD is required to adhere to more stringent competition requirements  than are at present applicable to civilian agencies. Section 803 of the  National Defense Authorization Act for Fiscal Year 2002 directed DOD to  amend its regulations to require that any purchase of services exceeding  $100,000 under a multiple award contract be made on a competitive basis,  subject to limited exceptions. DOD’s implementation of this provision  extended the competition requirement to orders under multiple award  BPAs. Hence, for such orders exceeding $100,000, DOD contracting  officers are required to either (1) notify as many schedule contractors as  practicable of the purchase to reasonably ensure that offers would be  received from at least three contractors and receive three offers (or  determine in writing that no additional contractors could be identified that  can fulfill the requirement) or (2) notify all contractors offering the  required services under the applicable schedule and afford all responding  contractors a fair opportunity to submit an offer and have that offer fairly  considered. Congress recently took action to apply multiple award  competition requirements that are similar to those in the 2002 statute to all  executive agencies. The implementing regulations have not yet been  promulgated.
section_title: Civilian Agencies’ Use of Schedule BPAs for Services Has Increased Significantly, but DOD Data Issues Preclude an Accurate Picture of Total Government Use
paragraphs: We estimate that the federal government obligated between $3.7 billion  and $7.9 billion by placing orders under schedule BPAs during fiscal year  2008. Civilian agencies reported spending almost $3.2 billion under  schedule BPAs, with the five civilian agencies in our review obligating  almost $2.3 billion of this amount, or almost 72 percent of total civilian  agency obligations. Although orders under schedule BPAs (for goods and  services) comprised only about 2.3 percent of civilian agencies’ reported  obligations during fiscal year 2008, usage of schedule BPAs by civilian  agencies has grown substantially over time, by 382 percent from fiscal year  2004 to 2008 ($659 million to $3.2 billion).
We were unable to develop similar trend information for DOD due to the  data’s being unavailable, but for fiscal year 2008, we estimate that DOD  obligated between $0.5 billion and $4.7 billion under schedule BPAs.  Unlike civilian agencies, DOD does not use the available fields in FPDS-NG  to distinguish its schedule BPAs from its traditional BPAs and indefinite  delivery contracts. Therefore we could not readily determine DOD’s  overall usage of schedule BPAs or what DOD is buying under these BPAs.  We attempted to use data from DOD’s own procurement database (the  DD350 database) and information from defense agency officials to identify  schedule BPAs, but found additional inaccuracies. For example, we  identified possible schedule BPAs for several Army organizations with  obligations totaling roughly $319.8 million in fiscal year 2007. However,  after further review and consultation with Army officials, we found that  only about 16 percent of this amount had actually been obligated under  schedule BPAs. A DOD acquisition official informed us that the  department is taking actions to implement new reporting procedures in  FPDS-NG.
subsections: section_title: Significant Growth in Use of Schedule BPAs for Services
paragraphs: Civilian agencies’ use of schedule BPAs to purchase services has increased  vastly more than their overall growth in services contracting in recent  years. From fiscal years 2004 to 2008, civilian agency schedule BPA  obligations for services increased by 475 percent, compared to a slightly  negative growth in their overall service contracting. In addition, civilian  agency schedule BPA purchases of services increased far more than their  purchases for goods during the same time period. Figure 2 illustrates the  trend in civilian agency obligations under schedule BPAs for products and  services. We could not portray a similar analysis for DOD because of the  data issue discussed earlier.
The majority of schedule BPAs in our sample—74 percent of the 336 DOD  and civilian agency BPAs we reviewed—were established to acquire  services as opposed to goods. The most frequently cited broad categories  of services in the BPAs we reviewed were management support services,  other professional services, and program management/support services.  The estimated purchase amounts when the BPAs were established ranged  from $10,000 to $734 million, with the average estimated dollar amount  just over $64 million.
Specific examples of services acquired under the schedule BPAs in our  review include:    a BPA established by DHS for a range of acquisition support services,  including drafting performance work statements and quality assurance  surveillance plans;    a BPA established by the Federal Emergency Management Agency  (FEMA) to provide program management support for implementing the  Pre-Disaster Mitigation Program;    several BPAs established by the Navy to obtain analytical support for  budget formulation and execution and other activities; and    a BPA established by the Food Safety and Inspection Service to obtain  court reporting services.
When the agencies established the BPAs in our sample to acquire goods,  the most frequently cited categories were for data processing software;  software and system configuration; and printing, duplicating, and  bookbinding. For example, the Social Security Administration established  a BPA to buy color copiers, and the Navy established a BPA to obtain  software. Other examples of goods purchased through schedule BPAs in  our sample include:    special purpose boats purchased by the Coast Guard for various law    body armor purchased by the Air Force;  laboratory equipment and supplies purchased by the Department of Health  and Human Services; and  fire engines purchased by the Forest Service.
section_title: Agencies Used BPAs for Flexibility, Speed, and to Meet Small Business Goals
paragraphs: In addition to saying they use schedule BPAs to fulfill recurring needs,  many of the contracting officials we spoke with cited BPAs’ flexibility and  the speed with which they can be used as reasons they chose to use them  as opposed to other contract vehicles, such as indefinite delivery  contracts. Several contracting officials noted that schedule BPAs do not  require the government to commit to any minimum dollar obligation or  amount, as would an indefinite delivery/indefinite quantity contract. For  example, a contract specialist at DHS’s Immigration and Customs  Enforcement explained that his office does not receive funding, and  therefore cannot obligate funds, until the budget is passed; in recent years,  this has occurred during the second quarter of the fiscal year. Using a  schedule BPA allows his office to be ready whenever it receives funds.  Also, a contracting officer at FEMA said that she can establish a schedule  BPA and have it ready for use when the agency has to respond to natural  disasters and to conduct recovery operations without having to guarantee  a minimum amount. However, some contracting officials noted that the  lack of a binding contract can be a potential negative, since a vendor can  decline to accept an order. One contracting official at the Marine Corps  said that he prefers to have multiple BPA holders to ensure that vendors  are available to meet the demand for goods and services.
Contracting officers also indicated that the speed with which they can  both establish BPAs and place orders under them is an advantage. For  example, a contracting officer at the Marine Corps noted that schedule  BPAs do not take a long time to negotiate because the solicitation process  is streamlined and contracting officers are not required to advertise the  solicitation on FedBizOpps, the Web site where government business  opportunities greater than $25,000 are posted. As a result, he said it usually  takes him a month or less to establish a schedule BPA, whereas it  frequently takes him 3 to 4 months to award an indefinite delivery  contract. Some contracting officers also told us that the ability to place  BPA orders without competition is an advantage in terms of time saved.  For example, a contracting officer at the Centers for Disease Control  noted that a schedule BPA that has a broad scope of work makes it  unnecessary to conduct a time-consuming competition each time he wants  to place an order. A contracting officer at the Food Safety and Inspection  Service stated that she can place orders under a single award BPA without  further competition in less time than would be needed to meet the  competition requirements for ordering directly from a GSA schedule  contract.
Some agencies also use schedule BPAs to help meet their small business  goals. A contracting officer at the Social Security Administration told us  that he uses schedule BPAs in part because there are many companies on  the GSA schedule that meet the requirements of the Small Business  Administration’s 8(a) business development program. We also reviewed a  number of schedule BPAs, established by the Air Force to provide a wide  range of advisory and assistance services, that involved teams of vendors  often led by small businesses serving as prime contractors.
section_title: Agencies Did Not Take Full Advantage of Opportunities for Competition
paragraphs: Agencies in our sample competed BPAs when establishing them—meaning  that, for purposes of this report, contracting officers considered more than  one vendor—64 percent of the time. For a small number of BPAs in our  sample (12 percent) contracting officers documented their rationale for  not competing. We found no evidence that the remainder, 24 percent of  the BPAs in our sample, were competed. For instance, at the National  Institutes of Health (NIH), we found no evidence that 18 of the BPAs  included in our sample were competed when established. Competition is  the cornerstone of the acquisition system, and the benefits of competition  are well established. It saves the taxpayer money, improves contractor  performance, curbs fraud, and promotes accountability for results.
When orders are placed under GSA schedule contracts, the FAR allows  contracting officers to limit the number of vendors they consider, which  includes considering only one vendor. However, the FAR does not  explicitly apply this provision to the establishment of BPAs. The FAR  specifically lists some examples of circumstances in which limited  competition may be justified, including instances when (1) the work is  unique or specialized in nature and only one source is capable of  responding; (2) the new work is a logical follow-on to a previous  requirement; or (3) an urgent and compelling need exists. In assessing  agencies’ rationale for awarding BPAs directly to vendors without  competition, we found justifications for doing so that were based on each  of these circumstances. For example:    Agencies purchased software from vendors who were the sole authorized  vendors holding a GSA schedule contract.
The Social Security Administration awarded a BPA for program  management, technical management, and administrative support because  it was a logical follow-on to previous work.
The Coast Guard awarded a BPA to bridge the gap between the expiration  of one contract and the competitive award of the next contract.
In addition, we found four instances in which schedule BPAs were issued  directly to one vendor because the vendor was designated as a small  business or as an Alaska Native Corporation-owned business.
However, we also found examples of justifications for awarding BPAs  directly to one vendor that are not specifically mentioned in the FAR,  some of which may not conform with sound procurement policy. A Navy  contracting officer stated that it was not necessary to compete a BPA for  engineering and technical services because GSA had already determined  the vendor’s schedule pricing to be fair and reasonable. In two instances  at the Justice Department, the contracting officer in one case stated that  the vendor had performed well on a previous BPA, and in the other, that  the vendor provided a deep discount.
We discussed the lack of clarity regarding the applicability of FAR  provisions regarding limiting competition when establishing BPAs with  officials from the Office of Federal Procurement Policy. They agreed that  action is needed to clarify the relevant provisions of the FAR and noted  that discussions are ongoing regarding implementation of the provisions of  section 863 of the Duncan Hunter National Defense Authorization Act for  Fiscal Year 2009, regarding competition requirements under multiple  award contracts.
subsections: section_title: Frequent Use of Single Award BPAs Resulted in Lack of Competition of Orders
paragraphs: The FAR allows a contracting officer to decide whether to award a BPA to  a single vendor or to multiple vendors for the same requirement. In  determining how many BPAs to establish, the contracting officer is to  consider such factors as the scope and complexity of the requirement and  the administrative costs of the BPA. Over half of the BPAs in our sample  (60 percent or 200) were single-award BPAs, and of these, we found no  evidence of competition when the BPA was established for 19 percent or  37 of them. One of the single award BPAs, established in 2004, for which  we found no evidence of competition had an estimated amount of nearly  $60 million.
Further, once a single award BPA is established, all orders may be issued  directly with the vendor without additional competition. We found this to  be the case for the vast majority of orders under the single award BPAs in  our sample; only 10 percent had been competed. Indeed, a number of  contracting officers we spoke with cited this feature of single award BPAs  as an advantage. The dollar value of some of the non-competed orders was  fairly significant; 45 of the orders not competed under single award BPAs  were greater than $1 million. For instance, DHS issued one of these orders  for $37.6 million for professional information analysis and intelligence  support, and the Coast Guard issued a $13.1 million order for network  integration, software, and system integration support services.
Agencies established a number of single award BPAs of fairly long  duration, resulting in an extended period of time under which orders could  be placed without additional competition. The FAR currently suggests that  schedule BPAs should not exceed five years in length, but permits BPAs of  longer duration. We found 28 instances in which agencies established  single award BPAs with durations of at least 6 years, with a few single  award BPAs in place for longer than 10 years, and one for over 20 years.  Furthermore, of these 28 instances, we found evidence that competition  occurred when establishing the BPAs in only ten cases and that  competition occurred when placing orders in only four of the cases.
section_title: Agencies Did Not Take Full Advantage of Opportunities for Competition under Multiple Award BPAs
paragraphs: The FAR requires agencies to follow specific procedures to compete  orders under multiple award BPAs that exceed the micropurchase  threshold ($3,000). Specifically, agencies are required to forward  requirements, or statements of work and evaluation criteria, to an  “appropriate number” of BPA holders, with the determination of what  constitutes an appropriate number left to the discretion of the contracting  officer. Contracting officers competed 49 percent of the orders above the  micropurchase threshold with more than one vendor under the multiple  award BPAs we reviewed. For 32 percent of the orders, contracting  officers placed the order directly with one vendor and did not compete it  with other vendors, the appropriate number effectively being one. For  example, the Department of Agriculture did not compete an order worth  $1.2 million for fire engines. For the remaining 19 percent of these orders,  we found no evidence that contracting officers competed the order with  more than one vendor. We found no evidence, for example, to suggest that  DHS competed a $2.1 million order under one of its multiple award BPAs  for information technology. Figure 3 shows the percentage of schedule  BPAs in our sample that were established with a single vendor or with  multiple vendors and the dollar value of orders competed and not  competed for each type.
The defense supplement to the FAR contains additional competition  requirements for DOD, specifically that DOD compete orders under  schedule BPAs exceeding $100,000 or justify the award if an order is not  competed. Of the 37 orders subject to this requirement included in our  sample, DOD competed or properly justified as sole source 28 of them. For  the remaining 9 orders, there was no evidence of competition. Recent  legislation directs that acquisition regulations be amended to require  executive agencies to place on a competitive basis any order exceeding  $100,000 that is made under a multiple award contract, but the  implementing regulations are still pending and the extent to which this  requirement will apply to orders under schedule BPAs is not certain.
section_title: Agencies Often Did Not Seek or Receive Discounts from Schedule Pricing
paragraphs: Agencies frequently did not seek discounts when establishing schedule   BPAs and rarely tried to obtain better pricing when placing orders. We  found no evidence that agencies requested a discount for 47 percent of the  BPAs we reviewed, even though GSA notes that agencies’ ability to  negotiate discounts from schedule prices by leveraging their buying power  through larger volume purchasing is one of the advantages of using  schedule BPAs. By not requesting discounts when establishing schedule  BPAs, agencies are missing opportunities to save money.
Agencies frequently received discounts from GSA schedule prices if they  requested them when establishing BPAs. For the 179 BPAs in our sample  for which agencies requested discounts, discounts were received for 75  percent of them. For example, the Department of Justice requested and  subsequently received an 18 percent discount from the vendor’s GSA  schedule pricing for a BPA used to procure information technology  services. This discount saved the government roughly $20 million from  fiscal year 2006, when the BPA was established, through July 2009 when  the last order was placed, based on obligation data in FPDS-NG. In  another instance, two BPAs awarded to the same vendor highlight the  importance of requesting discounts. A contracting officer requested a  discount when establishing a Navy BPA for analytical support services,  and the vendor provided a 5 percent discount from its GSA schedule  prices. In contrast, when establishing a different BPA for similar services  from the same vendor, the contracting officer did not seek or receive a  discount. If he had done so and received the same 5 percent discount  applied to orders placed during the life of the BPA, the Navy would have  saved almost $87,000. In another instance, a contracting officer at the  Marine Corps did not seek, and subsequently did not receive, a discount  for a schedule BPA whose estimated value was $205 million.
Some contracting officers did not appear to understand the current  requirement to seek discounts. In some cases, their rationale for not  seeking discounts was based upon the statement in the FAR that GSA has  already determined prices in the underlying schedule contract to be “fair  and reasonable.” However, this FAR statement addresses the fact that  ordering activities are not required to conduct additional price analyses  when ordering supplies and services not requiring a statement of work  under the GSA schedule contracts. It does not negate the requirement to  seek discounts when establishing schedule BPAs, which is clearly stated in  FAR Subpart 8.4. One contracting officer said that using competition when  establishing the BPA is the more significant determining factor for pricing,  and thus he did not focus specifically on requesting discounts.
Contracting officers who did request a discount usually included such  language in the solicitation when establishing the BPA. In some cases, the  contracting officer even made the offer of a discount a condition for  awarding the BPAs—in effect, demanding a discount. For example, the  request for quotation for two Navy BPAs stated, “Quoted prices, inclusive  of fees must be discounted below GSA schedule prices.” The Department  of Agriculture included the following statement in the request for  quotation for one BPA: “Provide a proposed discount off your normal GSA  schedule rates for the entire BPA period of performance.” The Air Force  stated the following: “the contractor is expected to offer their (sic) best  prices at or below the schedule price list.” In other cases, the request for a  discount was more tentative. For example, the solicitation for a FEMA  BPA stated, “the Government requests that you consider offering a  discount percentage beyond the GSA Schedule pricing…” In a few  instances, the contracting officer requested discounts via email or during  negotiations. For example, a DHS contracting officer requested discounts  during negotiations to establish a schedule BPA to provide technical  support services to the Office of Immigration Statistics.
The discounts agencies received when establishing BPAs varied widely.  Vendors sometimes offered a single, flat rate discount for all items offered  under the BPA, but we found it was more common for vendors to offer a  range of discounts, with some goods or services more heavily discounted  than others. Vendors’ flat rate discounts usually fell between 1 and 10  percent. For instance, the Air Force obtained a 10 percent discount when  establishing an estimated $99 million BPA to obtain advisory and  assistance services. Some discounts were larger. DHS, for example,  received a 76 percent flat rate discount on a $22 million BPA established to  purchase software and services. When vendors provided ranges of  discounts, the minimum discount was most often between zero and  10 percent, while maximum discounts were more dispersed, with a  majority ranging up to 30 percent. Some BPAs included discounts that  varied by volume, while others included discounts that varied according to  the product or service offered. For example, under a Department of  Agriculture schedule BPA for software and associated maintenance, the  vendor provided discounts ranging from 5 percent on a single order up to  $250,000 to 20 percent on a single order over $1 million. The Social  Security Administration received discounts ranging from 15 percent off  labor rates to 91 percent off software under one of its schedule BPAs used  to purchase software, maintenance, consulting services, and training.  Figure 4 demonstrates the wide range of discounts received by each of the  agencies in our sample.
subsections: section_title: Discounts Rarely Sought and Received for Orders
paragraphs: In addition to requesting a discount at the time the schedule BPA is  established, agencies can request additional discounts when they issue  orders, although the FAR does not require them to do so. The agencies in  our review infrequently requested discounts when placing orders. Of the  352 orders we reviewed, agencies clearly requested discounts for 51 of  them. Contracting officers indicated that their rationale for not seeking  additional discounts when placing orders was the fact that pricing was  already established at the time the BPAs were awarded. As with discounts  at the time a BPA is established, we found that agencies were more likely  to receive discounts when they specifically requested them than when they  did not. In some cases, agencies had negotiated discounts when  establishing the schedule BPAs and were also able to obtain further  discounts for orders. In the Department of Justice example noted above, in  which the vendor provided an 18 percent discount for the BPA, the  contracting officer received an additional 10 percent discount for a $6.3  million order, saving $630,000. A vendor also provided an additional  45 percent discount for a $2.6 million order under a BPA for which the  Social Security Administration had already received discounts when the  BPA was established, resulting in a dollar savings of over $1 million. As an  illustrative example of the potential for savings, had the contracting officer  in another case we reviewed negotiated even a 2 percent discount for a  BPA with an estimated amount of $205 million, it would have saved nearly  $4 million based on obligations under this BPA from its establishment in  2005.
section_title: Agencies Generally Did Not Comply wit the Annual Review Requirement and Missed Oppo for Savings
subsections: section_title: Few Contracting Officers Conducted Complete Annual Reviews
paragraphs: Contracting officers conducted annual reviews that addressed all of the  required FAR elements for only 19 of the 320 BPAs in our sample that  required an annual review. A number of contracting officers stated that  they were unfamiliar with the FAR’s specific annual review requirements  for schedule BPAs. Contracting officers also cited heavy workloads and a  lack of acquisition personnel as additional reasons for not conducting  annual reviews. Some contracting officers said that they did not know the  requirement existed at all. For example, when we asked if an annual  review had been conducted, one contracting official at FEMA asked to  which FAR requirements we were referring.
In 63 additional instances, agencies did not complete all of the required  elements of the annual review. In some cases, these reviews occurred  while the contracting officers were conducting other activities associated  with the BPAs. One contracting officer at the Department of Agriculture  conducted a best value assessment when exercising an option year and  verified that the GSA schedule contract was still in effect but did not  document whether the original estimated BPA amount had been  exceeded. In a case from the Department of Justice, a contracting officer  verified that the GSA schedule contract was still in effect when issuing  modifications to the BPA, but did not address any of the other required  elements of the annual review. In other cases, contracting officers cited  parts of the FAR outside of Section 8.4 when conducting their annual  reviews and in doing so often did not complete required elements. When  conducting annual reviews following sections of the FAR other than Part  8, contracting officers often did not verify that the underlying schedule  contract was still in effect or check to see if obligations under the BPA had  exceeded the estimated amount. Some also failed to conduct a best value  assessment that would inform decisions about whether the BPA should be  continued. In seven cases, contracting officers at the Department of  Agriculture and the Coast Guard documented annual reviews using FAR  Section 13.303, which covers traditional BPAs, but did not make sure that  the GSA schedule contract was still valid and did not determine whether  the estimated amounts of the BPAs had been exceeded. In four other  cases, contracting officers cited FAR Part 17 when conducting an annual  review, which includes requirements for the exercise of options. In  another case, a contracting officer cited FAR Section 16.702, which covers  basic agreements.
We found only two contracting activities that regularly conducted some  sort of annual review. Contracting officers at DHS’s Citizenship and  Immigration Services conducted annual reviews for 10 of the agency’s  schedule BPAs we reviewed, although not all contained each of the  required elements. The head of the contracting office attributed the  consistency to an extremely low staff turnover rate as well as a mandatory  back-up system that ensures that staff members’ workloads are always  covered. In addition, all but one of the BPA files we reviewed at NIH  contained some form of annual review, although, again, not all elements  were always covered. An official responsible for NIH’s BPA program told  us that contracting officials generally conducted the annual reviews to  identify and terminate BPAs that were not being used.
section_title: Annual Reviews Present Opportunities for Savings
paragraphs: The required annual reviews present contracting officers with an  opportunity to assess whether the BPA still represents the best value and  to identify additional opportunities for discounts by determining whether  the quantities or amounts estimated when the BPA was established have  been exceeded and whether additional price reductions can be obtained.  In some of the instances in which contracting officers conducted annual  reviews, they determined that the schedule BPAs still represented the best  value to the government in a variety of ways. For example, an annual  review for a Health and Human Service BPA noted that the BPA still filled  an existing need and provided continuity of service. A contracting officer  managing a Marine Corps BPA checked that prices were still reasonable,  while other annual reviews assessed whether market conditions had  changed since the BPA was established. A contracting officer at the Social  Security Administration used an annual review to obtain discounts. While  conducting the review, he determined that the original estimated amount  had been exceeded and successfully obtained discounts from the vendor.  Contracting officers also informed us of instances in which conducting  annual reviews helped them to better manage schedule BPAs. One  contracting officer stated that when conducting annual reviews, she has  occasionally found that prices for the schedule BPA have escalated, which  led her to cease using those BPAs.
By not doing the annual reviews, contracting officers missed opportunities  for additional savings. For some of the BPAs in our sample, the BPA  amount originally estimated had been exceeded, but because annual  reviews were not conducted, agencies missed opportunities to obtain  discounts. For instance, orders under a BPA established by the Marine  Corps exceeded the BPA’s estimated amount within the third year of a 10- year period of performance. Had the contracting officer conducted an  annual review, he may have been able to use the volume of purchases as  leverage to negotiate better prices with the vendor.
section_title: By Not Conducting Annual Reviews, Agencies Risk Violating Competition Rules
paragraphs: As part of the annual review process, contracting officers are required to  verify that the underlying GSA schedule contract—under which the BPA is  established—is still in effect. BPAs established under the schedule  contract using the procedures of Subpart 8.4 are considered to be issued  using full and open competition. Thus, orders properly placed under a  valid schedule contract, whether directly or via a BPA, meet the  requirements for competition under the Competition in Contracting Act  (CICA) of 1984. In the absence of a valid schedule contract, any order  placed using a schedule BPA does not meet those competition  requirements, unless the procedures used to obtain the order  independently satisfy the CICA requirements. Accordingly, if the  underlying schedule contract has expired, subsequent orders using the  schedule BPA may not be valid. We found one instance in which CICA was  potentially violated among the BPAs and orders we reviewed.  The  underlying schedule contract for a Defense Logistics Agency BPA, under  which the Navy placed an order in our sample, had expired. Although the  Navy considered more than one schedule vendor when placing the order,  this situation still involves a potential CICA violation because the  underlying schedule contract had expired by the time the order was placed  and it is not clear that statutory requirements for full and open  competition were otherwise met.
section_title: Conclusions
paragraphs: Schedule BPAs can provide federal agencies with a flexible and  streamlined contracting mechanism for meeting repetitive procurement  needs. However, especially in light of the significant increase in  obligations under schedule BPAs, these potential benefits must be  balanced with ensuring that this mechanism is used appropriately and  serves the best interests of the government and the taxpayer. Based on the  failure of contracting officers across the agencies in our review to leverage  competition, seek better pricing through discounts, and monitor the use of  schedule BPAs by conducting annual reviews, it is apparent that those  interests are not being met in many cases. This is particularly true for  procedural requirements when establishing and ordering under schedule  BPAs that require the consideration of multiple vendors. The high use of  single award BPAs, under which no further competition is required when  placing orders of any amount, reduces the potential to harness the benefits  of competition, including additional savings for the taxpayer. And the  FAR’s lack of clarity about the circumstances under which agencies can  limit the number of vendors considered when establishing schedule BPAs,  including establishing them with only one vendor, can lead to situations,  such as we found, where justifications appear inconsistent with sound  procurement policy. Further, the fact that so many contracting officers are  either unaware of the requirement for annual reviews or simply are not  conducting them means that opportunities are being missed to ensure that  competition requirements are met and to seek better pricing from vendors.  Finally, while some contracting officers clearly sought discounts from  schedule prices, sometimes leading to millions in savings, many others did  not.
section_title: Recommendations for Executive Action
paragraphs: We are making the following three recommendations to the Administrator  of the Office of Federal Procurement Policy:  To ensure that federal agencies take greater advantage of the  opportunities that competition provides under schedule BPAs:  take steps to amend the FAR to clarify when establishing a schedule BPA  using the limited source justifications of the FAR, including when to only  one vendor, is or is not appropriate; and    consider including in the pending proposed FAR rule that implements the  provisions of section 863 of the National Defense Authorization Act of  2009 an amendment to FAR 8.4 specifying that the requirement to place on  a competitive basis any order above the simplified acquisition threshold  (generally $100,000) under multiple award contracts also applies to orders  under single and multiple award BPAs.
To improve compliance with the FAR requirement to conduct annual  reviews of schedule BPAs, increasing opportunities for additional savings  and avoiding violations of competition rules, take steps to require federal  agencies to put procedures in place to ensure that annual reviews are  conducted.
Further, to assist federal agencies in requesting and obtaining discounts  when establishing schedule BPAs, we recommend that the GSA  Administrator include in the guidance on GSA’s Web site specific language  which agencies can use in their requests for quotation to clearly request  discounted pricing when establishing schedule BPAs.
section_title: Agency Comments and Our Evaluation
paragraphs: We requested comments on a draft of this report from the Office of  Federal Procurement Policy; the departments of Agriculture, Defense,  Health and Human Services, Homeland Security, and Justice; GSA; and the  Social Security Administration. In oral comments, the Office of Federal  Procurement Policy concurred with our recommendations. In written  comments, included in appendix II, GSA concurred with our  recommendation, noting that it will include in the guidance on its Web site  specific language that agencies can use in their requests for quotation to  clearly request discounted pricing when establishing schedule BPAs.  The  departments of Health and Human Services and Homeland Security  generally agreed with our report and provided written comments, included  in appendixes III and IV, respectively.  The Department of Health and  Human Services stated that it plans to take steps to reinforce compliance  with BPA requirements. Health and Human Services also commented that  while we found no evidence of competition for NIH’s BPAs included in our  sample, NIH’s policy is to ensure that prices are competitive before  awarding BPAs. Nonetheless, our review of the contract files for the 18  BPAs selected showed no evidence of competition. The Department of  Homeland Security discussed several actions it plans to take to improve  management and use of BPAs.
The Social Security Administration provided written comments, contained  in appendix V, and provided new information regarding an example we  had identified as a potential CICA violation that was discussed in our draft  report. An annual review had not been conducted for the BPA, and the  underlying GSA schedule contract had been canceled one year into a 7- year period of performance. The agency had continued to place orders,  totaling $3.4 million, under this BPA. In its comments, the Social Security  Administration stated that there was no CICA violation because of changes  made to the vendor’s underlying schedule contract. Several of the vendor’s  schedule contracts had been consolidated into one single schedule  contract, which was assigned a new contract number by GSA. The agency  stated that the contracting officer had failed to reference the correct  schedule contract number when placing orders under the BPA, but that  this action did not violate CICA because the BPA was competed. We  independently verified this new information, which was not contained in  the BPA file, and therefore removed the example from our report.  The  Administration further noted that it has issued a reminder to its  contracting officers to review BPAs annually to ensure, in part, that the  underlying GSA schedule contracts are still in effect.
In oral comments, the Department of Agriculture generally agreed with  our report and did not provide additional comments. The departments of  Defense and Justice did not provide comments.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution of it until 30 days from  the date of this report. We will then send copies of this report to interested  congressional committees; the Secretaries of Agriculture, Defense, Health  and Human Services, and Homeland Security; the Attorney General; the  Administrators of the General Services Administration and the Office of  Federal Procurement Policy; and the Commissioner of the Social Security  Administration. The report also is available at no charge on the GAO Web  site at http://www.gao.gov. If you or your staff have any questions about  this report, please contact me at (202) 512-4841 or huttonj@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 made  major contributions to this report are listed in appendix VI.
section_title: Appendix I: Scope and Methodology
paragraphs: The overall focus of this review was agencies’ use of blanket purchase  agreements (BPA) established under the General Administration Service’s  (GSA) schedules program. Our objectives were to determine: (1) the  extent to which agencies use schedule BPAs, what they buy with them,  and why agencies use them; (2) whether agencies are competing BPAs and  the orders under them; (3) whether agencies are taking advantage of  opportunities for savings by seeking discounts when using these BPAs;  and (4) whether agencies are conducting the required annual reviews.
To conduct our work for each objective, we used an electronic data  collection instrument to review 336 schedule BPAs and the largest  associated order under each during fiscal year 2007, the most recent data  available at the time we began our work. Our scope included five civilian  agencies and three defense agency locations. We reviewed 263 BPAs from  the following civilian agencies: the Departments of Agriculture, Health and  Human Services, Homeland Security (DHS), and Justice and the Social  Security Administration; and 73 BPAs from the following Department of  Defense (DOD) components: Air Force, Marine Corps, and Navy.
The five civilian agencies in our review represented roughly 80 percent of  civilian agency obligations using orders under schedule BPAs during fiscal  year 2007, based on data provided by GSA from the Federal Procurement  Data System–Next Generation (FPDS-NG) on the dollar value of orders at  the time the orders were placed. We selected a random sample of 30  schedule BPAs per agency from the Departments of Agriculture,Health  and Human Services, Justice, and the Social Security Administration,  taken from the universe of all BPAs that the agencies ordered under  during fiscal year 2007. Our findings for those agencies are projectable to  those agencies. Because DHS had obligated the largest dollar amount to  orders under schedule BPAs, we selected all 155 BPAs under which orders  were placed during fiscal year 2007. Our findings reflect the full universe  of DHS’s schedule BPAs used in fiscal year 2007.
In some instances, agency officials could not locate or provide the files  associated with a given BPA. For example, Department of Agriculture  officials could not locate the file for one of the BPAs in our sample, so we  reviewed only 29 of Agriculture’s schedule BPAs. Likewise, because DHS  officials could not locate and provide files for 11 of the BPAs, we reviewed  144 BPA files. Table 2 shows the number of BPAs selected and reviewed at  each civilian agency.
We attempted to identify the agencies at DOD that represented roughly  80 percent of DOD obligations to orders under schedule BPAs during fiscal  year 2007, based on the dollar value of orders at the time the orders were  placed, but were unable to do so because DOD was not using the fields in  FPDS-NG that distinguish between BPAs and indefinite-delivery/indefinite- quantity contracts. We attempted to use the DD350 data (DOD’s former  procurement database) to identify DOD obligations to orders under  possible schedule BPAs during fiscal year 2007 but found inconsistencies  in the coding. Based on FPDS-NG data on all DOD BPAs—schedule and  traditional—the Army, Defense Logistics Agency, Marine Corps, and Navy  represented about 80 percent of defense obligations under all BPAs, based  on the dollar value of orders at the time the orders were placed. Because  of DOD’s size and geographic dispersion, we selected the contracting  activity/location with the most dollars obligated to orders under possible  schedule BPAs in fiscal year 2007 within the selected services and  agencies, based on the preliminary data. We then selected a random  sample of possible schedule BPAs from the selected contracting  activities/locations. Our findings are projectable only to the DOD locations  selected.
We sought to determine whether the DOD BPAs in our sample were  schedule BPAs by reviewing the documentation available in DOD’s  Electronic Document Access System (EDA). For the Marine Corps, all of  the BPAs we selected were schedule BPAs. For the Navy contracting  activity we had selected, only one of the original 30 BPAs we selected was  not a schedule BPA (and therefore out of the scope of this review). We  selected another BPA as a replacement. For the Defense Logistics Agency  (DLA), the location that had the greatest obligations under BPAs was the  Defense Supply Center-Philadelphia, Systems & Procedures Division.  Because none of that location’s BPAs were listed in EDA, we asked  officials at the Systems & Procedures Division to tell us whether the 30  BPAs in our sample were schedule BPAs; they stated that none of them  were schedule BPAs. We then contacted officials at another DLA location,  the Defense Supply Center, Pacific Region, who stated that none of their  BPAs were schedule BPAs. As a result, DLA dropped from our sample and  we replaced it with the Air Force.
We provided the Air Force contracting activity (the Air Force District of  Washington) with a list of 25 possible schedule BPAs–the total number  that had orders placed under them during fiscal year 2007–and asked  officials to identify which ones were in fact schedule BPAs. An official at  the Air Force District of Washington indicated that all 25 were schedule  BPAs; however, when we reviewed the BPA files, we discovered that 6 of  them were not schedule BPAs and dropped them from our sample. In  addition, the Air Force contracting activity could not locate one BPA file,  and the 754th Electronic Systems Group, Maxwell Air Force Base-Gunter  Annex failed to provide information for four of the BPAs under which the  Air Force District of Washington placed orders.
With regard to the Army, based on FPDS-NG data, we identified the Army’s  Communications and Electronics Command (CECOM) in Ft. Monmouth,  New Jersey, as having the greatest amount obligated to orders under  schedule BPAs. By reviewing the BPAs available in EDA, we discovered  that only 2 of the 17 BPAs identified were schedule BPAs. We next looked  at the Army’s Tank-Automotive and Armaments Command (TACOM) in  Warren, Michigan. Because many of the BPAs used by TACOM were not  available in EDA, we asked TACOM officials to identify which of the BPAs  were schedule BPAs. They identified only 7 out of 63 BPAs as schedule  BPAs. We next looked to the Army Contracting Command in Kuwait; an  Army contracting official told us that all 76 of their BPAs were not  schedule BPAs. Finally, we contacted the Army’s Contracting Center of  Excellence in Washington, D.C. to ask officials there to identify the  schedule BPAs from a list of 50 candidates. An associate director from the  Center of Excellence told us that the center was unable to identify the  schedule BPAs. We did not replace the Army with another defense agency.  Table 3 shows the number of reviewed at the selected defense agencies.
For all agencies, both civilian and defense, we selected the BPAs based on  the agency and location where the orders were placed. For example, the  Navy location selected for our review, the Naval Air Systems Command,  had placed orders under four schedule BPAs established by the Naval  Inventory Control Point – Mechanicsburg. We included these four BPAs in  our sample for the Naval Air Systems Command. In another instance, the  Naval Air Systems Command ordered under a schedule BPA established  by the Defense Information Systems Agency; again, the BPA was included  in our sample.
We reviewed 352 orders under the BPAs in our sample. We selected the  order placed during fiscal year 2007 that obligated the largest dollar value  at the time of award. In some instances, more than one order was selected  under a single BPA, resulting in a greater number of orders than BPAs  selected. For example, at DHS, both Citizenship and Immigration Services  and Immigration and Customs Enforcement placed orders under the same  BPA; we selected the highest dollar value order placed under the BPA  from each component for review. In addition, in some cases, where an  agency could not provide the file for the BPA, the agency was able to  provide the file for the order.
We used an electronic data collection instrument and verified the  information on-site to conduct our review of the BPA and order files and  to facilitate our analysis. We supplemented our file reviews with follow-up  questions when documentation in the file was not available, insufficient,  or unclear. In some instances, we received additional documentation from  agency officials, which we analyzed and incorporated in our final results  when appropriate. When agency officials did not provide documentation  that supported their response, we reported the response to our question as  “not documented” or “no evidence.” In some cases, we interviewed the  contracting officer or contract specialist to obtain clarification.
To assess the extent to which agencies use schedule BPAs, what they buy  with them, and why agencies use them, we used data from FPDS-NG, data  from our file review, and information provided by contracting officials.  More specifically, we analyzed data from FPDS-NG on civilian agency  procurements for fiscal years 2004 to 2008 to determine the 5-year trend in  BPA use among civilian agencies and to compare the use of schedule  BPAs to obtain services with the overall growth in contracting for services.  To do so, we converted the data into fiscal year 2008 constant dollars  using the Bureau of Economic Analysis price index for services in the  federal consumption expenditures category. To determine why agency  officials chose to establish and use schedule BPAs rather than other  contracting vehicles, we interviewed contracting officials across the  agencies included in our review about their use of schedule BPAs. To  determine what products and services agencies intended to purchase  using the schedule BPAs in our sample, we analyzed data from our file  review.
To estimate DOD’s usage of schedule BPAs for fiscal year 2008, we used  DOD’s contract coding system to identify the BPAs in FPDS-NG under  which DOD agencies placed orders during fiscal year 2008. From that  universe, we selected a random sample of BPAs. We used the EDA, DOD’s  online contract retrieval system, to review the BPAs. In the event that a  BPA was not available in EDA, we replaced it with the next BPA on our  list until we had 100 BPAs. In the three instances in which the  documentation in EDA was insufficient to make a determination as to  whether the BPA was a schedule BPA, we contacted the agency for  clarification. In two of these instances, the contacting officer did not  respond, and we replaced the BPAs with the next on our list. Next, we  obtained data from FPDS-NG on the amount obligated using orders under  these BPAs during fiscal year 2008. We found that 25 of the BPAs in our  sample of 100 were schedule BPAs; orders under the 25 schedule BPAs  obligated $106,011,561 of the $143,711,789 obligated to orders under the  100 BPAs in our sample. Based on this information, we estimate that 852  of the 5,178 DOD BPAs in FPDS-NG are schedule BPAs, with the 95  percent confidence interval between 589 and 1200 BPAs. We estimate their  value as $3.3 billion, about 65 percent of the $5.1 billion value of all BPAs,  with the 95 percent confidence interval between $0.5 and $4.7 billion.
To determine whether agencies are competing BPAs and the orders under  them and whether agencies are taking advantage of opportunities for  savings by seeking discounts when using these BPAs, we analyzed the data  we obtained during reviews of the BPA and order files concerning  competition and discounts, following up when necessary with additional  questions and interviews of contracting officials. We reviewed BPA files to  determine whether the requirement was competed when the BPA was  established and when an order was placed by determining whether more  than one vendor had been contacted. We also identified the ordering  procedures in the Federal Acquisition Regulation (FAR) and the Defense  Federal Acquisition Regulation Supplement (DFARS) and the level of  competition required under them. We discussed with contracting officials  what factors were considered when deciding to establish single vs.  multiple award BPAs. To determine whether contracting officials sought  discounts and whether the contractor provided discounts either when the  BPA was established or when orders were placed, we reviewed files for  the BPA and the order. We then followed up with contracting officers or  contract specialists as needed.
To determine whether the agencies in our sample are conducting the  required annual reviews, we examined the files for the schedule BPAs in  our sample for documentary evidence of each element of the annual  review as listed in FAR 8.405-3(d). Where there was no documentation of  annual reviews in the contract file, we asked agency officials to provide us  with the appropriate documentation. We conducted interviews with  agency contracting officials, to determine how they interpreted the  relevant FAR provision and clarify information in the BPA files. We  reviewed the contract files to determine whether the GSA schedule  contracts had expired. If there was no GSA schedule data in the BPA file  or the file suggested that the schedule contract had expired, we searched  the GSA website (GSA e-Library) to determine whether the GSA schedule  contracts were still in effect. For those schedule contracts that were no  longer listed on GSA e-Library, we contacted GSA to obtain  documentation of either the date the schedule contract expired or the  current expiration date. We reviewed the BPA files to determine if the  contracting officer or contract specialist checked to see if estimated  amounts had been exceeded.
We visited or contacted the following offices for our review:    Agricultural Research Service, Beltsville, Maryland    Food and Nutrition Service, Alexandria, Virginia    Food Safety and Inspection Service, Beltsville, Maryland    U.S. Forest Service    Arlington, Virginia    Northwest Oregon Contracting Area, Sandy, Oregon    National Finance Center, New Orleans, Louisiana    Office of Procurement and Property Management    Washington, D.C.    Fort Collins, Colorado  General Services Administration, Washington, D.C.
Department of Health and Human Services:    Health Resources and Services Administration, Rockville, Maryland    National Institutes of Health, Rockville, Maryland    Office of the Assistant Secretary for Administration and Management,  Washington, D.C.
Department of Homeland Security:    Citizenship and Immigration Services, Williston, Vermont    Customs and Border Protection    Washington, D.C.
Atlanta, Georgia    Chicago, Illinois    Austin, Texas    Mt. Weather, Virginia    New Orleans, Louisiana    Washington, D.C.
Dallas, Texas    Denver, Colorado    Grand Prairie, Texas    Philadelphia, Pennsylvania    Washington, D.C.
Office of Procurement Operations, Washington, D.C.    U.S. Coast Guard    Baltimore, Maryland    Washington, D.C.
Bureau of Alcohol, Tobacco, Firearms and Explosives, Washington, D.C.    Federal Bureau of Prisons, Washington, D.C.    Drug Enforcement Administration, Arlington, Virginia    Justice Management Division, Washington, D.C.    Office of the Federal Detention Trustee, Arlington, Virginia  Office of Federal Procurement Policy, Washington, D.C.
Social Security Administration, Baltimore, Maryland    Defense Procurement and Acquisition Policy, Arlington, Virginia    Department of the Air Force    Air Force District of Washington, Washington, D.C.
Office of the Deputy Assistant Secretary of the Army, Arlington,    Army Contracting Agency, Contracting Center of Excellence,    Tank-Automotive and Armaments Command, Warren, Michigan    U.S. Marine Corps, Quantico, Virginia    Department of the Navy    Naval Air Warfare Center – Aircraft Division, Patuxent River, Maryland    Naval Inventory Control Point, Mechanicsburg, Pennsylvania    Space and Naval Warfare Systems Command Systems Center, San    Defense Information Systems Agency, Defense Information Technology  Contracting Organization, Scott Air Force Base, Illinois    Defense Supply Center Philadelphia, Pacific Region, Pearl Harbor,    Defense Supply Center Philadelphia, Philadelphia, Pennsylvania    Enterprise Support Base Contracting Office, Fort Belvoir, Virginia  As we describe in our methodology, we performed extensive tests to  assess the reliability of the automated information we used to select our  collection of BPAs. For example, we confirmed that the information  contained in the automated records reflected the information contained in  the contract files. We based our estimate of DOD’s use of schedule BPAs  on information we verified using automated images of the contract  records. Accordingly, we believe that the data we used to support our  findings are reliable for our intended purposes.
We conducted this performance audit from June 2008 to August 2009, 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.
section_title: Appendix II: Comments from the General Services Administration
section_title: Appendix III: Comments from the Department of Health and Human Services
section_title: Appendix IV: Comments from the Department of Homeland Security
section_title: Appendix V: Comments from the Social Security Administration
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: In addition to the contact named above, Michele Mackin, Assistant  Director; Kathryn Edelman; Bridget Grimes; Paula J. Haurilesko; Art  James, Jr.; Brandon Jones; Julia Kennon; Arthur Lord; Susan Neill;  Kenneth Patton; Caitlin A. Tobin; and Alyssa Weir made key contributions  to this report.