Sole Source Contracting: Defining and Tracking Bridge Contracts Would Help Agencies Manage Their Use
Published: 2015-10-14T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: When an existing contract is set to expire but the follow-on contract is not ready to be awarded, the government can extend the existing contract or award a short-term sole-source contract to avoid a gap in service. These have been referred to as “bridge contracts.” While bridge contracts can be necessary tools, they are awarded without competition, which puts the government at risk of paying too much. GAO was asked to review federal agencies' use of bridge contracts. This report examines (1) insights selected agencies have into their use of bridge contracts; (2) key characteristics of bridge contracts; and (3) the reasons bridge contracts are used.
Because bridge contracts are not defined in the FAR, GAO constructed a definition based on its prior work and that of other federal agencies. GAO reviewed policies and procedures at three agencies that were among those with the highest number of potential bridge contracts. GAO analyzed a nongeneralizable sample of 73 contracts for services, based on a customized search of the federal procurement data system and contract information provided by agencies. For a more in-depth review, GAO selected a subset of 29 contracts based on contract value and other factors.
section_title: What GAO Found
paragraphs: The agencies included in GAO's review—the Departments of Defense (DOD), Health and Human Services, and Justice—had limited or no insight into their use of bridge contracts, as bridge contracts were not defined or addressed in department-level guidance or in the Federal Acquisition Regulation (FAR). However, GAO found that two DOD components, the Navy and Defense Logistics Agency, have instituted definitions, policies, and procedures to manage and track their use. The components took these steps due to concerns that bridge contracts were being used too frequently and reducing competition. Federal internal control standards stipulate that management should identify, analyze, and monitor risks associated with achieving objectives, such as maximizing competition. Staff from the Office of Federal Procurement Policy (OFPP), which provides direction for government-wide procurement policies so as to promote efficiency and effectiveness in government acquisitions, acknowledge that the use of bridge contracts may introduce risks related to a lack of competition. Without a definition of bridge contracts and guidance for tracking and managing their use, agencies are not able to fully identify and monitor these risks and increase opportunities for competition.
The 73 bridge contracts GAO analyzed varied widely in characteristics such as the type of service and length of contract. Almost half of the contracts were used to procure either professional management services or information technology services. Although bridge contracts are typically envisioned as short-term, GAO found that some bridge contracts spanned multiple years, potentially undetected by approving officials. For example, of the 29 contracts GAO reviewed in-depth, 6 were longer than 3 years. As the figure below illustrates, an Army bridge contract for computer support services was initially planned as a 12-month bridge, but because of subsequent bridges, ultimately spanned 42 months.
Even after lengthy bridge contract scenarios, most follow-on contracts were awarded competitively. Of the 26 cases in GAO's review where follow-on contracts were awarded, 23 were awarded competitively, in some instances leading to savings. The fact that competition occurred in almost all cases, which can save the government money, highlights the importance of better management controls over use of bridge contracts.
Acquisition planning delays, such as revisions to statements of work and delays in source selection, as well as an inexperienced and overwhelmed acquisition workforce, bid protests, and budget uncertainties contributed to the use of bridge contracts in the cases GAO studied. Often, more than one of these factors led to the use of a bridge contract.
section_title: What GAO Recommends
paragraphs: GAO recommends that OFPP take steps to amend the FAR to incorporate a definition of bridge contracts, and, in the interim, provide guidance for agencies to track and manage their use. OFPP agreed with the recommendation to provide guidance to agencies and plans to explore the value of adding a definition to the FAR.

section_title: Letter
paragraphs: When a contract is set to expire and there is a continuing need for  services, but the follow-on contract is not ready to be awarded, the  government can extend the existing contract or award a short-term sole- source contract to an incumbent contractor. These types of contracting  arrangements have been referred to as “bridge contracts” and are used to  ensure there is no gap in services. While bridge contracts can be a  necessary and appropriate tool, their use has also been associated with  negative effects, such as higher contract prices due to a lack of  competition and the inefficient use of staff and resources. For example,  contracting officials have to devote their time to awarding a bridge  contract while concurrently preparing to award a follow-on contract.
You asked us to assess the use of bridge contracts by federal agencies.  This report examines (1) the insights of selected agencies into their use of  bridge contracts; (2) key characteristics of selected bridge contracts; and  (3) the reasons why bridge contracts are being used.
Since bridge contracts are not identified in the Federal Procurement Data  System-Next Generation (FPDS-NG) or any other federal database, to  answer these objectives, we developed, for the purposes of this report, a  definition of bridge contracts. We also developed a customized search  methodology using data from FPDS-NG to identify potential bridge  contracts. Our methodology included searching for (1) contract  extensions between fiscal years 2010 to 2013 that extended a contract’s  period of performance and (2) sole-source contracts awarded in fiscal  year 2013 that had been awarded to the same contractor by the same  contracting organization and for the same services as a preceding  contract—and with periods of performance of no more than 12 months.  We selected these timeframes so as to increase the likelihood that we  could include follow-on contracts in our review. Using the result of this  search, we selected three agencies (the Department of Defense (DOD),  the Department of Health and Human Services (HHS), and the  Department of Justice (DOJ)) and several components within each  agency for review, based on those with the highest number of potential  bridge contracts. We selected the following eight components for review:
DOD: Air Force, Army, Navy, and Defense Logistics Agency (DLA)
HHS: National Institutes of Health (NIH) and Indian Health Service  (IHS)
DOJ: Drug Enforcement Administration (DEA) and Federal Bureau of  Prisons (BOP)
To gain insights into the selected agencies’ use of bridge contracts, we  collected and analyzed any policies and procedures on bridge contracts  and interviewed officials about their knowledge of the use of bridge  contracts and any management controls that may be in place. Because of  its role to provide direction for government-wide procurement policies,  regulations, and procedures and to promote economy, efficiency, and  effectiveness in government acquisitions, we interviewed staff at the  Office of Management and Budget’s (OMB) Office of Federal  Procurement Policy (OFPP) to discuss their views on the benefits and  challenges on the use of bridge contracts. We also used federal internal  control standards as criteria for assessing agencies’ insights into the use  of bridge contracts.
To identify key characteristics of selected bridge contracts and assess the  reasons why bridge contracts are being used, we selected a  nongeneralizable sample of 73 bridge contracts for services. We focused  on service contracts since agency officials and our prior work indicated  that bridge contracts were predominantly used for services. We used two  processes for identifying the 73 contracts included in our review: (1) 52  contracts identified based on our customized search of FPDS-NG, and (2)  21 contracts initially identified by selected components and verified by us  as bridge contracts. To arrive at the selection of the 52 contracts, we  provided a list of potential bridge contracts identified through the search  methodology described above to each component included in our review.  The components then provided contract documentation that we analyzed  to determine whether the selected contracts matched our definition of  bridge contracts. Based on this analysis, we identified 52 bridge contracts  across the components to be included in our review. We then added in 21  contracts identified on lists of bridge contracts provided to us by  components included in our review. We conducted a high level review of  the 73 contracts—collecting and reviewing contract award and extension  documentation, such as justification and approval (J&A) documents, price  negotiation memorandums, relevant contract modifications, and file  memoranda. We then selected a subset of 29 contracts from 6 of the 8  components for a more in-depth review, based on several factors,  specifically the contract value, obtaining a mix of contract extensions and  stand-alone bridge contracts, and the location of the contract files. For  this in-depth review, we reviewed the bridge contract, the contract  preceding it, and, if awarded at the time of our review, the follow-on  contract. The results from the sample of contracts included in our review  are not generalizable, but are designed to provide illustrative examples of  the characteristics and rationale for the use of bridge contracts at the  selected agencies and components and supplement the information  obtained from our interviews and review of agency policies and  procedures. We also interviewed contracting and program officials to  discuss the facts and circumstances related to the award of the bridge  contracts for the subset of 29 contracts in our sample, and the  challenges, if any, related to their use. A more detailed description of our  scope and methodology is presented in appendix I.
We conducted this performance audit from June 2014 to October 2015 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.
subsections: section_title: Background
paragraphs: The federal government contracts for a variety of services, from elevator  maintenance to program management support, and often has a need to  continue these services beyond the lifespan of an individual contract.  However, in certain situations, it may become evident that a base contract  and any option years will expire before a subsequent contract to meet the  same need can be awarded. In these cases, because of time constraints,  contracting officers generally use one of two options: (1) extend the  existing contract for up to 6 months or (2) award a short-term stand-alone  contract to the incumbent contractor on a sole-source basis to avoid a  lapse in services. While these contracting options have been informally  referred to as bridge contracts by some in the acquisition community, no  formal definition of bridge contracts exists nor is there a requirement to  track them in the Federal Acquisition Regulation (FAR). For the purposes  of this report, we established the following definitions:
Bridge contract. An extension to an existing contract beyond the  period of performance (including option years), or a new, short-term  contract awarded on a sole-source basis to an incumbent contractor  to avoid a lapse in service caused by a delay in awarding a follow-on  contract.
Predecessor contract. The contract in place prior to the award of a  bridge contract.
Follow-on contract. A longer-term contract that follows a bridge  contract for the same or similar services. This contract can be  competitively awarded or awarded on a sole-source basis.
Contract extensions and the award of stand-alone bridge contracts are  established in different ways. If a contracting officer needs a bridge  contract and opts to extend an existing, predecessor contract, the  contracting officer may use a number of different authorities to do this. If  the predecessor contract included the “option to extend services clause,”  the contracting officer could use this clause to extend the contract for up  to six months, based on the FAR. If the contracting officer determines  that a new short-term sole-source contract should be awarded to avoid a  gap in services, the FAR generally requires that the contract award be  supported by a written justification known as a justification and approval  document (J&A). The J&A must include sufficient facts and rationale to  justify the use of a sole-source contract and include, among other things,  the following information:
The nature or description of the action being approved;
A description of the supplies or services required to meet the agency’s  need, including the estimated value of the contract;
The statutory authority being cited to justify a noncompetitive  contract—for example urgency, only one-source available, etc;
A demonstration that the proposed contractor’s unique qualifications  or the nature of the acquisition requires use of the authority cited; and
A determination by the contracting officer that the anticipated cost to  the government will be fair and reasonable.
While OMB has stated that noncompetitive contracts can play an  important role in helping agencies address the needs that arise during  emergencies, we and others have noted that competition is the  cornerstone of a sound acquisition process and OMB has issued  guidelines for federal agencies to increase competition and reduce their  spending on sole-source contracts. Further, the FAR prescribes policies  and procedures to promote full and open competition.
There are few, if any, federal contracting reviews or reports focused  solely on bridge contracts. However, we and others have identified such  contracts in prior reviews and, in some cases, reported on challenges  related to their use. For instance, in an August 2011 report on acquisition  planning, we reported that a prior GAO bid protest decision found that the  Department of Homeland Security’s U.S. Customs and Border Protection  had not properly justified an $11.5 million bridge contract and had failed  to engage in reasonable advanced acquisition planning. In a March 2012  report on competition, we found that 18 out of the 111 J&As we reviewed  were for bridge contracts with a total value of over $9 billion. We found  that these bridge contracts were caused by delays in the acquisition  planning process, unexpected expansion of requirements, and bid  protests. In March 2014, we issued a report on noncompetitive contracts  awarded on the basis of urgency. We found that 12 of the 34 contracts  we reviewed were bridge contracts. The average period of performance  for these 12 contracts was 11 months with a total contract value over  $466 million. Additionally, in a March 2010 report on competition for  services contracts, the Institute for Defense Analyses reported that nearly  one in four sole-source contracts reviewed were bridge contracts. That  report noted that bridge contracts represented a potentially large cost to  DOD due to process inefficiencies such as the cost of administering the  bridge contracts, the strain on the limited DOD contracting workforce  because bridge contracts must be justified and awarded while the follow- on contract was being planned, and the loss of benefits associated with  competition during the period that the bridge contracts are in place.
section_title: Selected Agencies Have Little to No Insight into Their Use of Bridge Contracts but Two Components Have Instituted Policies
paragraphs: The agencies we reviewed had limited or no insights into their use of  bridge contracts. None of the agencies have agency-level policies to  manage and track their use of bridge contracts, nor do their acquisition  regulations define bridge contracts. HHS officials told us that their agency  has no overarching policy because the agency does not have a standard  definition for bridge contracts. Officials at DOD said that, at the  department-level, the agency did not have any policies because bridge  contracts had not previously been raised as a specific concern at the  department. DOJ officials indicated they see defining bridge contracts as  a government-wide issue, and officials from one of their components told  us that the concept of defining bridge contracts was a new one to them.
HHS officials also stated that the agency has some visibility into high- dollar bridge contracts through the FAR-required reviews of J&As.
Two of the eight components—the Navy and DLA—established policies in  2012 and 2013, respectively, regarding the use of bridge contracts. Both  components’ policies were established to reduce reliance on bridge  contracts and note that bridge contracts can be an impediment to  competition. DLA’s policy further states that bridge contracts may be  indicative of a lack of adequate preparation for follow-on acquisitions.  DLA officials we spoke with told us that there was concern at DLA  regarding the impact bridge contracts could have on competition, since  they effectively delay competition by extending existing contracts or  awarding sole-source contracts to incumbent contractors. Officials said  that they hope the policy will increase competition at DLA by focusing  management attention on the use of bridge contracts and tracking their  use. In both cases, these components’ policies go beyond the standard  J&A requirements for sole-source contracts to specifically address bridge  contracts. Features of these components’ policies on bridge contracts are  included in table 1.
As the table shows, DLA’s definition of bridge contracts explicitly includes  contract extensions whereas the Navy’s has additional guidance as to  when contract extensions are considered bridges. A DLA official told us  that they included contract extensions in their definition because  extensions still enable officials to bridge a gap in service without  competition. The Navy report to the Office of the Deputy Assistant  Secretary of the Navy, Acquisition and Procurement includes contract  numbers, periods of performance for the predecessor and bridge  contracts, dollar values, and the rationale supporting the use of a bridge  contract, among other information. The DLA report to the Acquisition  Operations Division includes contract numbers, periods of performance  for the bridge contract, dollar values, number of the bridge contracts  awarded for the requirement, and other information.
According to Navy officials, the department is monitoring the contract  values of bridge contracts awarded. For example, officials told us that in  fiscal year 2014 the Navy made bridge contract awards in excess of $1.6  billion. Navy officials told us that while it is too early to quantify, the  implementation of the policy brought about a cultural shift away from  more frequent use of bridge contracts and helped significantly curb  prolonged use of bridge contracts. According to a DLA official responsible  for compiling bridge contract information, DLA awarded $1.3 billion in  bridge contract awards in fiscal year 2014. DLA officials also told us that  they were seeing reductions in the use of bridge contracts based on an  internal review process. Increased attention to bridge contracts, according  to a DLA official, sends a message to program-level activities that DLA  wants to reduce its use of bridge contracts, and requiring approval  appears to be an effective deterrent to awarding bridge contracts if the  program or contracting office does not have a good reason to do so, such  as poor acquisition planning.
In addition, one activity within the Army—the Health Care Acquisition  Activity (HCAA), which was not included as part of our review—issued a  policy memorandum in November 2008 that established a definition and  an approval and tracking mechanism for bridge contracts. Similar to the  policies at the Navy and DLA, HCAA’s policy was established due to  concern over the increasing reliance on bridge contracts at the activity. In  particular, the policy stated that there was concern that bridge contracts,  which prevent competition, were being awarded to expand the scope of  the original requirement, which was increasing costs. The policy and  compliance branch at HCAA developed a tracking system to account for  the number of bridge contracts awarded. According to HCAA officials,  issuing the policy memorandum and requiring officials to report their use  of bridge contracts has enhanced the activity’s ability to track bridge  contract use and prevented the award of bridge contracts that increase  the scope of work established by the predecessor contract.
Federal internal control standards state that agencies should identify,  analyze, and monitor risks associated with achieving objectives, and that  information needs to be recorded and communicated to management so  as to achieve agency objectives. One common procurement objective at  federal agencies is to maximize competition. However, without a definition  for bridge contracts, and strategies for tracking and managing their use,  agencies are not able to fully identify and monitor the risks related to  these contracts, and therefore may be missing opportunities to increase  competition. As we noted earlier, the FAR does not define bridge  contracts. Staff from OMB’s OFPP, one of the entities responsible for  initiating revisions to the FAR, acknowledged that the use of bridge  contracts may introduce risks related to a lack of competition, such as the  risk of higher contract prices. Similarly, contracting, program, and policy  officials we spoke with also stated that while bridge contracts are an  important “tool in their toolbox” for ensuring continuity of services, some  officials indicated that their prolonged use poses a risk to competition,  and that use of bridge contracts should be avoided when possible.
section_title: Bridge Contracts Cover a Variety of Services and Can Span Multiple Years, and Follow-on Contracts Were Generally Competed
paragraphs: DOD, DOJ, and HHS awarded bridge contracts to procure a diverse array  of services, ranging from professional and administrative support to  housekeeping. While most of the 73 contracts we reviewed had periods of  performance of six months or less, when we did a deeper dive on 29 of  these contracts, we found that more than half of these actually had  periods of performance far greater than initially apparent. Some spanned  several years. Overall, roughly one-third of the 29 contracts had periods  of performance that exceeded two years. The increased periods of  performance also corresponded to increased contract values. In terms of  pricing, contracting officers generally based the prices of bridge contracts  we reviewed on historical prices, and our price analysis found some  instances of increased prices between the predecessor and bridge  contracts. However, even after lengthy bridge contracts, we found that  competition occurred in most cases. For 23 of the 26 cases where follow- on contracts were in place, they had been competitively awarded. In  some cases, we were able to quantify savings from the competition of the  follow-on contracts based on our price analysis. Competition has  generally been considered to be associated with achieving more  favorable prices, our prior work and those of others has cited potential  savings from competition.
subsections: section_title: Bridge Contracts Are Awarded for a Variety of Services
paragraphs: DOD, DOJ, and HHS awarded bridge contracts for a wide range of  services. Figure 1 shows a break-out of the types of services procured  through the 73 bridge contracts included in our review.
Over a quarter of the 73 bridge contracts we reviewed were awarded to  ensure the continued provision of professional and administrative  services, such as the employment of graphic artists and public affairs  officers to assist in Navy recruiting efforts, as well as the organization of  an NIH-sponsored coalition to adopt nationwide medical imaging  standards. Another 23 percent of the bridge contracts we reviewed were  awarded for information technology services, including base-wide  multimedia and broadcast services for the Army; text mining software  used by NIH officials to categorize and report on research findings; and  technology used to track evidence at DEA. Fifteen percent of the bridge  contracts were awarded by BOP to provide residential reentry services for  eligible inmates, which includes employment, housing, and other  opportunities to assist federal offenders’ transition back into their  communities. Bridge contracts were also awarded for a variety of other  services, such as utilities; housekeeping (which runs the gamut from  janitorial services to pest control); research and development; and  maintenance and repair of equipment or facilities.
section_title: Periods of Performance for Many Bridge Contracts Were Longer than Initially Apparent and Spanned Multiple Years
paragraphs: Most of the 73 bridge contracts had periods of performance of less than  six months. However, when we conducted our more in-depth review of 29  of these contracts, we found that more than half involved one or more  bridges that spanned much longer periods of time. Specifically, we found  that 20 of the 29 contracts had additional bridges that were not apparent  in our review of the initial documentation, and that more than half of the  29 contracts had periods of performance greater than six months. For  example, during our initial review of J&A documentation for an NIH bridge  contract for utility services at a research facility, we found no record of an  additional four-month bridge contract. Through our interviews with  contracting officials, however, we learned that another bridge contract  had been awarded prior to the bridge contract we had identified. In  another example, our initial review of a J&A for a residential reentry  services contract at BOP indicated that contracting officials granted  approval for a seven-month bridge contract, but upon further review, we  found that there were five separate bridge contracts awarded over a 27- month period between the predecessor and follow-on contracts. Figure 2  depicts the multiple bridges and indicates the 7-month bridge that we had  initially identified.
In another example, our initial review of the J&A documentation for an  Army bridge contract to procure computer support services indicated that  contracting officials had granted approval for a bridge contract that was  not to exceed 12 months. However, we later learned from speaking with  officials and reviewing additional contract file documentation that the  actual period of performance spanned 42 months, as shown in figure 3.
The longer periods of performance observed in our in-depth review  corresponded with an increased value of the contracts from what was  apparent in our initial review. Most of the 73 contracts included in our  high-level review had relatively small dollar values—less than $1 million,  while ten percent of the contracts had values greater than $10 million— with the highest valued at $79 million. Our in-depth review, however,  revealed the value of the majority of the 29 bridge contracts included in  that review to be greater than initially apparent. For example, the J&A for  a bridge contract to provide computer support services at the Army  awarded to an Alaska Native Corporation—included as a part of our high  level review—had an estimate of $20 million. However, based on our in- depth review, the total reported value of the two bridge contracts awarded  to bridge the gap in services was over $28 million. In another example,  a BOP contract for inmate reentry services, the J&A we initially reviewed  estimated the bridge contract value to be about $454,000, but our in- depth review revealed that the value of the five stand-alone bridge  contracts awarded for this requirement exceeded $1.2 million. In all, the  value of the stand-alone bridge contracts awarded on the contracts we  reviewed in-depth was over $225 million.
The fact that the full length of a bridge contract, or multiple bridge  contracts for the same requirement, is not readily apparent from the  review of an individual J&A presents a challenge for those agency  officials responsible for approving the use of bridge contracts. Approving  officials, signing off on individual J&As, would not have insight into the  total number of bridge contracts that may be put in place by looking at  individual J&As alone. Without a definition and a policy for bridge  contracts, J&A documentation generally provides information on the  individual contract covered by the J&A, and on the anticipated period of  performance and estimated contract value at the time of award, rather  than a full picture of the cumulative time and cost associated with bridging  a gap in services for a requirement.
Overall the average period of performance for the 73 contracts we  reviewed at a high-level was 8 months, and the average period of  performance for the 29 contracts we reviewed in-depth was 21 months.  Figure 4 illustrates that the actual periods of performance for these 29  bridge contracts ranged from two weeks to over five-and-a-half years;  about one-third of the contracts had periods of performance that  exceeded two years.
For 20 bridge contracts included in our in-depth review, contracting  officials used the option to extend services clause to bridge, at least in  part, the predecessor to the follow-on contract. This clause allows  contracting officials to award more than one extension as long as the total  period of performance does not exceed six months, but we found that for  five of the 29 cases, three of which were in the Army, contracting officials  failed to follow the clause in that they had extended the contract beyond  the six-month timeframe. For instance, in the example displayed in Figure  3, Army contracting officials extended a bridge contract on two occasions,  with each extension lasting six months in duration. This means an  additional year was added to the initial period of performance of one year.  For both extensions, contracting officials cited the option to extend  services clause. Additionally, we learned from contract file review  documentation that contracting officials had attempted to extend this  bridge contract a third time, but the local office of small business  programs denied this request because the incumbent contractor no  longer qualified as a small business. Because of the recurring nature of  this issue at one location within the Army, we plan to report on the issue  separately.
section_title: Navy Documentation on Bridge Contracts Tended to Be Relatively More Robust
paragraphs: While Navy bridge contracts spanned similar lengths of time to those of  other agencies, we found that the Navy contract files had much more  robust documentation and generally identified the reasons for the use of  bridge contracts in each J&A. Some of the Navy’s J&A documentation  included a full account of the length and cost of the bridge contract. For  example, the J&A we reviewed for a nine month bridge contract for  electromagnetic spectrum management support included the periods of  performance for the predecessor contract and one prior bridge contract,  and provided a detailed account of the reasons for the delays. In addition,  the Navy submitted a follow-on J&A to account for a four-month extension  to the bridge contract. The initial J&As listed the value of the bridge  contract at almost $4 million. Our in-depth review showed that the  combined value of all bridge contracts awarded for this requirement was  $4.6 million, which was roughly similar to the estimate provided in the  J&As.
J&A documentation we reviewed from other components in our review  generally did not detail information on the total cost of the bridge contract  in the individual J&A. Further, in some cases, the combined value of the  total bridge was more than had been conveyed in an individual J&A. For  example, a J&A for a contract to provide scientific, logistical, and  administrative support to NIH indicated that a contract extension for six  months was estimated to cost $1.5 million. However, our in-depth review  of this contract, as well as its predecessor and follow-on contracts,  showed that the combined value of all bridge contracts awarded for this  requirement was approximately $5 million.
section_title: Contracting Officers Cited Historical Price Data in Establishing Fair and Reasonable Prices, and Price Analysis Revealed Some Increased Prices on Bridge Contracts
paragraphs: The FAR requires that contracting officers establish that the prices paid  for contracts are fair and reasonable and expresses a preference for  comparison of prices obtained through competition. Because competition  is absent with the award of a bridge contract, contracting officers’ fair and  reasonable price determinations become imperative. We were able to  collect information on how a contracting officer determined price  reasonableness for 73 bridge contracts. Most contracting officials noted  that they compared the proposed prices to the historical prices paid for  the same or similar services, or used more than one method to establish  price reasonableness (see figure 5).
To determine the extent to which the price paid by the government  changed when a bridge contract was awarded to the incumbent  contractor for the same services acquired under a previous contract, we  conducted a price analysis for 10 of the 29 bridge contracts included in  our in-depth review. We compared the rates of selected individual  Contract Line Item Numbers (CLIN) for 5 of the 10 bridge contracts to  those of their predecessor and competitive follow-on contracts. For 4 of  the 10 bridge contracts, which provided residential reentry services to  federal inmates, we compared the daily rate paid per inmate, and for the  one remaining bridge contract included in this analysis, we compared the  hourly price paid for three labor categories to those of the predecessor  and follow-on contract. For the remaining 19 contracts we were unable to  establish a direct comparison of CLINs or labor categories due to  changes to the scope of the requirement or pricing type of the  predecessor, bridge, or follow-on contract. Although our analysis was by  necessity limited to those CLINs or labor categories that could be traced  across the predecessor, bridge, and follow-on contracts, it provided  insights into pricing trends for similar services over time.
We found that for 5 of the 10 contracts, the price paid for services on the  initial stand-alone bridge contract or contract extension increased from  that of the predecessor contract. For example, the monthly rate for  administrative and information technology support services increased by  nearly $47,000, or 6.4 percent, under a Navy bridge contract, awarded  when the predecessor contract expired. However, when the contract was  further extended, the price paid decreased by nearly $105,000, or 13.5  percent. Similarly, the CLIN for monthly materials and travel, under a  stand-alone Army bridge contract for research and development testing  and evaluation services, increased by approximately 5 percent, or  $67,400, when compared to the rate of it’s predecessor contract.  Moreover, when that bridge contract was further extended, the price  increased by another 16.6 percent, or $265,000. However, the price paid  remained unchanged when the bridge contract was further extended. Of  the remaining 5 contracts, in 4 cases the price paid remained the same,  and for the remaining contract the price decreased.
section_title: Almost All Follow-On Contracts Were Competed, and in Some Cases Savings Could Be Quantified
paragraphs: Follow-on contracts were competitively awarded for 23 of 26 contracts  included in our in-depth review. The 3 remaining follow-on contracts  were awarded on a sole-source basis. As noted above, competition  generally leads to more favorable pricing. The fact that the vast majority  of follow-on contracts were competed after the bridge contract expired  highlights the urgency of ending bridge contracts as soon as possible,  since these contracts are almost always sole-source.
The government has opportunities for savings when the contract awarded  following a bridge is competitively awarded. For 7 of the 10 contracts  where we conducted a price analysis, savings were achieved upon the  award of the follow-on contract. Examples include:
An Air Force contract for logistic support services that resulted in a  monthly rate reduction of approximately $22,400 or 34 percent;
A daily rate reduction of $10.00 per inmate, or 12.5 percent, for  residential reentry services at BOP;
For a Navy contract providing administrative and professional support  services, the rate was reduced by 15.6 percent, or approximately $16  per man hour;
As shown in Figure 6, the hourly rate changed for three labor  categories for an Army computer support services contract. While the  rate increased from the predecessor contract to the first bridge, it  decreased from the first to second bridge, and decreased again from  the second bridge to the competitive follow-on contract. Most  significant is the rate reduction for the Database Management  Specialist; the award of the follow-on contract resulted in a decreased  hourly rate of nearly $21.00, or 28 percent. The contracting official  responsible for this contract told us that by awarding the follow-on  contract competitively, the incumbent contractor had to re-evaluate  what price the market demands for these services.
Competition has generally been considered to be associated with  achieving more favorable prices, and we and others have cited potential  savings from competition in prior work. For example, a 2013 report by  the Department of Veterans Affairs’ Office of the Inspector General  estimated that the Veterans Affairs’ Technology Acquisition Center could  have saved 20 percent, or approximately $57.9 million, in acquisition  costs if task orders for information technology services had been  competed.
section_title: A Variety of Reasons Caused Delays in the Acquisition Process that Led to the Use of Bridge Contracts
paragraphs: A variety of reasons caused delays that resulted in the use of bridge  contracts, but late completion of documentation needed to solicit follow- on contracts was the most frequent reason that we identified across our  sample of 73 contracts. Contracting officials told us that acquisition  workforce problems—such as inexperienced staff and frequent turnover  of contracting and program office staff—also led to the use of bridge  contracts and influenced other delays, such as late completion of  acquisition planning documentation and challenges during source  selection. The majority of agency officials that we interviewed identified  bid protests as a common reason for the use of bridge contracts, and we  found that bid protests had caused delays in eight of the 29 contracts  included in our in-depth review–roughly a quarter—and that bid protests  created substantial delays in awarding follow-on contracts.
subsections: section_title: Late Completion of Acquisition Planning Documentation Most Frequently Identified Reason for Bridge Contracts
paragraphs: Based on our reviews of contract documentation and information provided  by agency officials, we found that the most commonly cited reasons for  the use of a bridge contract across the 73 contracts were related to  acquisition planning issues—in particular the late completion of key  acquisition planning documentation, such as statements of work, that are  needed to begin a solicitation. Acquisition planning activities generally  begin when the program office identifies a need, involves research and  preparation of acquisition documents by both the program office and the  contracting office, and concludes when the contracting office issues a  solicitation. Our prior work has identified challenges that agencies faced  in relation to acquisition planning on contracts for services, such as  defining their needs and providing guidance to program offices on  timeframes for pre-solicitation activities, such as defining requirements in  a statement of work document.
Other frequently identified reasons for delays included delays in source  selection, acquisition workforce challenges, and bid protests, among  others. Figure 7 illustrates the number of instances each reason was cited  for the contracts included in our sample. For most of the contracts, there  were multiple reasons driving the use of bridge contracts.
Our findings regarding the reasons behind the use of bridge contracts  echo the findings of the Institute for Defense Analyses’ March 2010 report  on competitiveness in contracts for services. That report noted that  bridge contracts occur when a delay in the acquisition process prevents  the award of a competitive follow-on contract until after the contract in  place is due to expire. The report further explained that these delays arise  from various sources, including the requiring agency or program office,  the contracting office, and other sources such as bid protests.
Our in-depth review of 29 contracts further underscored that acquisition  planning issues frequently led to the use of bridge contracts and provided  additional insights into the nature of these issues. For example, the  majority of the contracting officials that we interviewed cited the late  submission of key acquisition planning documentation from program  officials as one of the most common reasons why bridge contracts are  needed. For 18 of the contracts, contracting officials told us that the  statement of work, in particular, was either submitted late by the program  office, required multiple rounds of revisions before it was ready to be  published, or a combination of those two factors contributed to the need  for a bridge contract. Acquisition planning challenges stemming from the  coordination of program and contracting offices have been highlighted in  some of our past work. For example, in a July 2010 report on competition,  we found that several contracting officials from different agencies  expressed concern that program offices sometimes do not allow them  enough time to execute a sufficiently robust acquisition planning process  that could increase opportunities for competition. They told us that  program offices are insufficiently aware of the amount of time needed to  properly define requirements or conduct adequate market research.
A contract awarded by DEA highlights some of the acquisition planning  problems that we found across the 29 contracts. In this example, DEA  contracting officials told us that the program office was late in submitting  the statement of work. According to those officials, a contract extension  was awarded for 6 months to accommodate this delay. During this time,  the contracting office issued a solicitation for this requirement and  received multiple proposals for the follow-on contract, but the source  selection board realized during the proposal evaluation phase that the  statement of work did not accurately reflect the agency’s needs. Upon  realizing that a completely new statement of work was required, DEA  decided to cancel the solicitation and awarded a six month bridge  contract, which was later extended by three months to accommodate the  additional time it needed to award a follow-on contract.
Acquisition planning shortfalls caused substantial delays for some  contracts we reviewed at other components as well. For example, at  BOP, we found a series of 17 stand-alone bridge contracts, most of which  were about three months in length, to provide natural gas service at a  penitentiary that were put in place after the predecessor contract expired  in January 2011—following a four month contract extension. Contracting  officials told us that the program office was extremely late in submitting  the necessary paperwork to award a follow-on contract, and did not  submit the required acquisition planning documents until February 2014,  over three years after the predecessor contract expired. As of the date of  this review, contracting officials have yet to award a follow-on contract  and attribute these delays to personnel shortages within the contracting  office. Specifically, contracting officials told us that they are short-staffed;  explaining that 119 different requirements are handled by only two  contracting officers, therefore, this requirement often gets placed on the  backburner, resulting in the need for bridge contracts to prevent a gap in  critical services.
section_title: Acquisition Workforce Challenges Also Led to Bridge Contracts
paragraphs: As the previous example highlights, challenges related to the acquisition  workforce can exacerbate delays, and thus contribute to the award of  bridge contracts. We found that acquisition workforce challenges—in  particular, inexperienced and overwhelmed staff, as well as staff  turnover—led to the use of bridge contracts and influenced other delays,  such as the late completion of acquisition planning documentation and  challenges during source selection.
subsections: section_title: Inexperienced and Overwhelmed Staff
paragraphs: Contracting officials from multiple agencies told us that late statements of  work were often a symptom of a lack of knowledgeable and seasoned  staff in program offices. For example, contracting and program officials  from the Air Force and Army told us that workforce challenges were  responsible for inefficiencies or missteps that introduced delays into the  acquisition process. Contracting officials at the Air Force told us that in  one instance, inexperienced contracting personnel failed to exercise the  second annual option for a logistics management contract and the  contract expired. However, the contractor continued to provide services  during that time without a contract in place for over five weeks before the  mistake was realized. As a result of this and other problems, the last two  years of the contract could not be used, and a series of noncompetitive  bridge contracts totaling 41 months were used until a competitive follow- on contract was awarded. The same Air Force officials also told us that  the majority of their contracting workforce had less than five years of  experience, which contributed to significant delays in awarding follow-on  contracts. Similarly, three Army contracting officials told us that their  divisions did not have enough experienced contracting officers or  available attorneys to run source-selection boards in order to select  vendors for follow-on contracts. One of those officials also told us that  their overwhelmed contracting office also struggled to award new  contracts in a timely manner. For example, that official told us that a  bridge contract that had been in place for 37 months would likely be  extended yet again even though it was possible to award a follow-on  contract, because it was unclear if anyone in her division would have  enough time to dedicate to that requirement before the current bridge  contract expired. Contracting and program officials from this Army  component concurred that workforce challenges in both the program and  contracting offices were the primary reason why they awarded multiple  bridge contracts that lasted more than three years. We have found and  reported on government-wide acquisition workforce challenges for many  years, including DOD’s efforts to rebuild the capacity of its acquisition  workforce.
section_title: Staff Turnover
paragraphs: Contracting and program officials from all three agencies cited staff  turnover as another driver of bridge contracts. Specifically, officials told us  that turnover contributed to delays for 10 of the 29 bridge contracts in our  in-depth sample. In one example, a program official at DEA told us that  awarding a follow-on contract for counseling services was delayed in part  because there were three different contracting specialists working on the  requirement while it was being recompeted. This official also stated that  there may have been a larger staffing issue in the contracting office  during this time that contributed to the solicitation being issued later than  expected after the statement of work had been finalized.
Through our analysis of contract documentation and information provided  by agency officials, we also found that a lack of institutional knowledge  within the contracting office was apparent for seven of the 73 contracts in  our sample. This acquisition workforce problem was generally the result  of staff turnover coupled with a lack of contract documentation. For  example, after reviewing a contract file for software within DEA  laboratories and interviewing contracting and program officials, we were  unable to determine the specific reason why a bridge contract was  needed. After reviewing the contract documentation following our visit, the  DEA was also unable to identify the specific reason for delay that led to a  bridge contract. Similarly, DLA could not provide specific reasons beyond  the need for continued services for six contracts in our sample. As a point  of comparison, the Navy had greater institutional knowledge regardless of  staff turnover due to the high level of detail provided in their J&As and  contract documentation. Navy officials we spoke with as part of our in- depth review were generally more aware of the facts and circumstances  for the bridge contracts they awarded when compared to their  counterparts at other components. The contracting officials we spoke with  stated that the Navy’s policy on bridge contracts has curtailed their use,  especially since contracting officials have faced pressure from their  superiors to avoid bridge contracts. When bridge contracts are needed,  Navy officials said they know a high degree of scrutiny by management  will ensue.
section_title: Bid Protests Contributed to the Use of Bridge Contracts in Some Cases
paragraphs: The majority of agency officials that we interviewed identified bid protests  as a common reason for the use of bridge contracts. While contract  documentation cited bid protests as reasons for delay in five of the  contracts in our high-level review, when we reviewed the contracts in- depth we found that bid protests caused delays in eight of the 29  contracts—roughly a quarter—and that the protests introduced  substantial delays to the acquisition process. For example, NIH received  nine protests from the incumbent contractor and other unsuccessful  bidders on a requirement for utility maintenance services. In this instance,  contracting officers awarded a series of short-term bridge contracts for  roughly six years to continue to meet the requirement. Similarly, a BOP  contract for residential reentry services received multiple protests that  resulted in three stand-alone bridge contracts. The total period of  performance for that bridge contract requirement was ultimately 27  months.
In seven of the eight instances of bid protests that we identified, the  incumbent contractor protested the award of a follow-on contract to a new  vendor or the terms of the solicitation. However, only two of those  protests were sustained and resulted in the incumbent receiving the  follow-on contract. Most of the losing incumbents were unsuccessful in  obtaining follow-on contracts. We also found that as a result of the  incumbent’s protests, incumbent vendors kept providing services—in a  noncompetitive environment—well after the predecessor contracts  expired.
The relationship between bridge contracts and bid protests was  discussed in a recent U.S. Court of Federal Claims decision. In this  decision, the Court discussed BOP’s procurement of residential reentry  services. In June 2012, BOP issued a Request for Proposals for  residential reentry services. During the acquisition process for the follow- on contract, the incumbent’s contract for the residential reentry services  expired. To avoid a gap in services while completing the acquisition  process, BOP awarded—to the incumbent contractor—a total of three  stand-alone bridge contracts with a total period of performance of 21  months. During the period of performance of the last bridge, BOP  awarded a follow-on contract to a different vendor. The incumbent  contractor filed a protest with GAO in April 2015. Rather than enter into a  fourth bridge contract with the incumbent contractor, BOP decided to  transfer the inmates of the facility being serviced by the incumbent  contractor to other facilities. Based on BOP’s decision to transfer the  inmates, the incumbent filed another protest, this time with the U.S. Court  of Federal Claims. The Court denied the incumbent’s protest on May 29,  2015.
section_title: Contracting Officials Also Cited Budget Uncertainties and Sequestration as Contributing to Bridge Contracts
paragraphs: Contracting officials asserted that budget uncertainty and sequestration  contributed to delays in the award of follow-on contracts for four of the 29  contracts that we reviewed in-depth. For example, officials responsible for  two Navy contracts—one for information technology and administrative  support and the other for information technology and information  management—told us that budget uncertainties, including furloughs  within their office during the government shutdown in October 2013,  contributed to delays in the award of follow-on contracts. They also told  us that one program office was unable to commit funding to a full-term  contract early enough in the acquisition process to award the follow-on  contract in a timely manner. Similarly, BOP officials told us that  sequestration cuts resulted in the award of an additional short-term bridge  contract for residential reentry services during the shutdown. However,  that particular bridge contract was bookended by two extensions to the  predecessor and four other bridge contracts that were caused by bid  protests and source selection challenges. Overall, the impact of budget  uncertainties and sequestration was not immediately clear or quantifiable  for any of the contracts in our sample.
section_title: Conclusions
paragraphs: While bridge contracts can be a useful tool in certain circumstances to  avoid a gap in services, they are typically envisioned to be used for short  periods of time. When these noncompetitive contracts are used frequently  or for prolonged periods of time, the government is at risk of paying more  than it should for goods and services. Because we found that almost all of  the bridge contracts in our review were ultimately followed by competitive  contracts—which can lead to savings for the taxpayer—the importance of  awarding these contracts in a timely manner is heightened. By defining  bridge contracts and implementing a policy related to their use, the Navy  and DLA have taken important steps to enhance these components’  management of bridge contracts. However, bridge contracts have been  identified not only across the three agencies and eight components  included in our review, but at other agencies as well, as evidenced by our  past work and that of others. Therefore, the importance of defining and  tracking bridge contracts is not limited to those agencies included in our  review. A uniform, government-wide definition and strategies for tracking  and managing the use of bridge contracts would help ensure all agencies  have better insights into their use of these contracts and provide agencies  with the information necessary to manage their use. Otherwise, agencies  are left without a complete picture or understanding of how long a bridge  contract has been in place. Without such information, it is difficult for  agencies to take steps to reduce their reliance on noncompetitive bridge  contracts or remediate internal deficiencies—such as issues related to  acquisition planning or challenges with the acquisition workforce—that  may lead to delays in the award of follow-on contracts.
section_title: Recommendations for Executive Action
paragraphs: To gain visibility and enable efficient management on the use of bridge  contracts in federal agencies, we recommend that the Administrator of  OFPP take the following two actions:  1.  Take appropriate steps to develop a standardized definition for bridge  contracts and incorporate it as appropriate into relevant FAR sections,  and  2.  As an interim measure, until the FAR is amended, provide guidance to a definition of bridge contracts, with consideration of contract  extensions as well as stand-alone bridge contracts; and  suggestions for agencies to track and manage their use of these  contracts, such as identifying a contract as a bridge in a J&A when  it meets the definition, and listing the history of previous  extensions and stand-alone bridge contracts back to the  predecessor contract in the J&A.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to OMB, DOD, HHS, and DOJ for  review and comment. DOD and DOJ provided technical comments which  we incorporated as appropriate. HHS had no comments.
In an email response, OMB’s OFPP concurred with our recommendation  to provide guidance to agencies on bridge contracts. With regard to our  recommendation to develop a definition of bridge contracts and  incorporate it in the FAR, OFPP stated its intention to work with members  of the FAR Council to explore the value of doing so. Specifically, OFPP  stated it agreed with our conclusion that heightened management  attention on bridge contracts can help to remediate weaknesses that may  sometimes cause protracted reliance on incumbent contractors after  contract expiration. The response further stated that, for this reason,  OFPP generally concurs with the recommendation to issue guidance and  increase agency attention on these vehicles. It noted that while there is a  legitimate role for bridge contracts in helping to avoid lapses in service  that can cause mission harm, agencies bear a responsibility, as a part of  effective risk management, to ensure this authority is being used only to  the extent necessary and in accordance with FAR requirements that are  designed to promote competition, including limitations on extensions and  execution of justifications and approvals when competition is not used.  OFPP stated that it intends to work with the members of the FAR Council  and U.S. Chief Acquisition Officer’s Council to review relevant FAR  coverage and discuss the value of developing a regulatory definition for a  bridge contract or making other refinements to address non-competitive  work with incumbent contractors beyond the period of contract  performance. We appreciate that OFPP will be taking steps to explore the  option of adding a definition into the FAR, and we continue to believe that  a uniform, government-wide definition for bridge contracts is imperative to  providing agencies with the information necessary to monitor these  contracts and to ensure they are being used as intended.
We are sending copies of this report to the Director of OMB, the  Secretaries of Defense and Health and Human Services, the Attorney  General, and interested congressional committees. In addition, the report  is available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-4841 mackinm@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix II.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our report examines (1) the insights of selected agencies into their use of  bridge contracts; (2) key characteristics of selected bridge contracts; and  (3) the reasons why bridge contracts are being used. Since bridge  contracts are not defined by the Federal Acquisition Regulation (FAR),  we, in consultation with our general counsel, developed a definition for  bridge contracts based on our prior reviews and knowledge of bridge  contracts and the Institute for Defense Analyses report on competition for  service contracts—which defined bridge contracts. For the purposes of  this report, we established the following definitions:
Bridge contract. An extension to an existing contract beyond the  period of performance (including option years), or a new, short-term  contract awarded on a sole-source basis to an incumbent contractor  to avoid a lapse in service caused by a delay in awarding a follow-on  contract.
Predecessor contract. The contract in place prior to the award of a  bridge contract.
Follow-on contract. A longer-term contract that follows a bridge  contract for the same or similar services. This contract can be  competitively awarded or awarded on a sole-source basis.
Since bridge contracts are not identified in any federal database, to select  agencies and components for our review, we developed a customized  search methodology using data from the Federal Procurement Data  System-Next Generation (FPDS-NG) to identify potential bridge contracts.  Details on this customized methodology are outlined in a separate section  below. Using the results of the customized methodology, we selected  three agencies (the Departments of Defense (DOD), Health and Human  Services (HHS), and Justice (DOJ)) and eight components within those  agencies for review. The selected components were as follows:
DOD: Air Force, Army, Navy, and Defense Logistics Agency (DLA)
HHS: National Institutes of Health (NIH) and Indian Health Service  (IHS)
DOJ: Drug Enforcement Administration (DEA) and Federal Bureau of  Prisons (BOP)
To gain insights into the selected agencies’ use of bridge contracts, we  collected and analyzed policies and procedures on bridge contracts in  place at the selected agencies and components. We interviewed  acquisition and contracting officials about their knowledge of the use of  bridge contracts and any management controls, such as tracking or  approval processes, in place in relation to bridge contracts. Because of its  role in providing direction for government-wide procurement policies,  regulations and procedures, and to promote economy, efficiency, and  effectiveness in government acquisitions, we also interviewed staff at the  Office of Management and Budget’s Office of Federal Procurement Policy  (OFPP) to discuss their views on the benefits and challenges on the use  of bridge contracts. We also used federal internal control standards as  criteria for assessing agencies’ insights into the use of bridge contracts.
To identify key characteristics of selected bridge contracts and assess the  reasons why bridge contracts are being used, we selected 73 bridge  contracts across the eight components to be included in our high level  review, and a subset of 29 of those contracts to be included in our more  in-depth review. The selection process for the contracts is described in  detail below. For our high level review, we collected and analyzed  contract documentation for the 73 bridge contracts, such as justification  and approval (J&A) documents, contract modifications, price negotiation  memorandums, and other key file documentation used to support the  award of a stand-alone bridge contract or contract extension. We  analyzed this information to identify key characteristics of the bridge  contracts, such as the period of performance and the authority used to  extend the existing contract or award the stand-alone contract. In  addition, we reviewed information in FPDS-NG on these 73 contracts to  identify the types of services procured and the contract value. To identify  the reasons for the award of the bridge contract and the methods used to  determine price reasonableness across the 73 contracts, we analyzed the  contract file documentation and, in situations where the contract file  documentation did not include information on the reason for award or the  methods used to determine price reasonableness, we followed up with  agency officials. To gain additional knowledge about the facts and  circumstances surrounding the award of bridge contracts, we conducted  an in-depth review of the subset of 29 contracts. For the in-depth review,  we conducted site visits to six locations selected based on the location of  contract files, collected and analyzed contract documentation from the  predecessor contract, bridge contract(s), and, if awarded at the time of  our review, the follow-on contract, and conducted interviews with  contracting and program officials for each contract. We analyzed the  contract documentation and the interviews to develop a more in-depth  understanding of certain characteristics of bridge contracts, such as the  length of time between the end of the predecessor contract and the award  of the follow-on contract, the extent to which follow-on contracts were  competed, and the change in prices between the predecessor, bridge,  and follow-on contracts. To determine the extent to which the price paid  by the government changed when a bridge contract was awarded to the  incumbent contractor for the same services acquired under a previous  contract, we conducted a price analysis for 10 of the 29 bridge contracts  included in our in-depth review. We compared the rates of individual  Contract Line Item Numbers (CLIN) for 5 of these bridge contracts, their  predecessor, and competitive follow-on. For 4 of these bridge contracts,  which provide residential reentry services to federal inmates, we  compared the daily rate paid per inmate, and for the remaining bridge  contract included in our analysis, we compared the hourly price paid for  three labor categories, commonly referred to as labor rates. The  remaining 19 contracts included in our in-depth review were excluded  from our price analysis as we were unable to compare these contracts  due to changes to the scope of the requirement or pricing type of the  predecessor, bridge, or follow-on contract. Although our analysis was by  necessity limited to those CLINs or labor categories that could be traced  across the predecessor, bridge, and follow-on contracts, it provided  insights into pricing trends for similar services over time.
We also analyzed the contract documentation and our interviews with  contracting and program officials to develop a more in-depth  understanding of the reasons for the award of bridge contracts.
subsections: section_title: Methodology for Selection of Agencies and Components
paragraphs: Since bridge contracts are not identified in FPDS-NG or any other federal  database, to select agencies and components for our review, we  developed a customized search methodology using data from FPDS-NG  to identify potential bridge contracts. We initially searched for the term  “bridge contracts” in the description field of FPDS-NG for contracts  awarded in fiscal year 2013. We excluded contracts for physical bridges  (i.e., structures that carry a pathway or roadway over a gap or barrier).  This search yielded a total of 11 bridge contracts. Given the small number  of contracts that this search yielded, we developed a customized search  methodology using FPDS-NG data fields so as to increase our chances of  obtaining a larger data set of potential bridge contracts. Our customized  search was based on our definition of bridge contracts and included  searches for both extensions to existing contracts and stand-alone bridge  contracts:
Extensions. To find extensions to existing contracts, we searched  FPDS-NG for sole-source and competitive contracts awarded  between fiscal year 2010 and 2013 where the current completion date  was later than the initial completion date. We excluded annual  contract options, contract closeouts, and terminations from this  search.
Stand-alone bridge contracts. To find potential stand-alone bridge  contracts, we searched for contracts awarded in fiscal year 2013 that  met the following characteristics:
Sequentially awarded contracts (within 90 days) by the same  component and contracting organization, at the same location, to  the same contractor, for the same services.
The second of the sequentially awarded contracts was sole- source and had a period of performance of 12 months or less.
We selected the years 2010-2013 so as to increase the likelihood that a  follow-on contract had been awarded subsequent to the bridge contracts,  and could therefore be included in our review. Using this methodology,  we arrived at the selection of the three agencies and eight components  identified earlier in the appendix. We selected the agencies and  components with consideration of the fact they were among those with  the highest number of potential bridge contracts, and with consideration  of on-going work we had at those entities.
section_title: Methodology for Contract Selection
paragraphs: We developed a nongeneralizable sample of 73 bridge contracts for  services. We focused on service contracts since agency officials and our  prior work indicated that bridge contracts were predominantly for services.  We used two processes for identifying the 73 contracts included in our  review: (1) 52 contracts were identified through our customized search of  FPDS-NG, and (2) 21 contracts were initially identified by selected  components and verified by us as bridge contracts.
Using the results of the FPDS-NG customized search methodology  previously described, we selected contracting offices within the  components reviewed based on the number of potential bridge contracts  and the location of the contracting offices. We compiled a list of  approximately 600 potential bridge contracts from these contracting  offices. In selecting these potential bridge contracts, we aimed to ensure  that there was a mix of contract extensions and stand-alone bridge  contracts. We excluded contracts that had contract values below the  simplified acquisition threshold of $150,000, as these contracts are  generally exempt from the competition requirements of the FAR. We  provided the lists of contracts to each component in our review and asked  them to provide contract award and extension documentation, such as  J&A documents and contract modifications, to verify whether or not the  contracts met our definition of a bridge contract. We excluded some  potential bridge contracts with certain features for the purposes of this  report. At the end of this process, we had identified 52 contracts as  bridge contracts to be included in our review.
In addition, we selected 21 contracts—12 from DLA and 9 from NIH— from agency lists of bridge contracts that these two components had  provided us at the beginning of the review. These contracts were either  awarded, in progress of being awarded, or extended in fiscal year 2013 or  fiscal year 2014. With the addition of these 21 contracts, our sample for  our high level review totaled 73 bridge contracts. See table 2 for a break  out of the contracts in our sample.
To gain additional knowledge as to the facts and circumstances  surrounding the award of bridge contracts, we selected a subset of 29 of  the 73 contracts from 6 of the 8 components for a more in-depth review.
These 29 contracts were selected based on several factors, specifically  contract value, obtaining a mix of contract extensions and stand-alone  bridge contracts, and the location of the contract files.
The sample of contracts included in our review is not generalizable to a  larger universe, but is designed to provide illustrative examples of the  characteristics and rationale for the use of bridge contracts at the  selected agencies and components, and supplement the information  obtained from our interviews and review of agency policies and  procedures.
We conducted this performance audit from June 2014 to October 2015 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: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Janet McKelvey, Assistant  Director; Guisseli Reyes-Turnell, Analyst-in-Charge; Peter W. Anderson,  Emily Bond, Andrew Burton, Virginia Chanley, Julia Kennon, John Krump,  Erin Stockdale, Roxanna Sun, and Holly Williams made key contributions  to this report.