DOD Small Business Contracting: Use of Sole-Source 8 a Contracts over $20 Million Continues to Decline
Published: 2016-06-08T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Small Business Administration's 8(a) program is one of the federal government's primary vehicles for developing small businesses. Tribal 8(a) firms, such as firms owned by Alaska Native Corporations, can win sole-source contracts for any dollar amount in the 8(a) program, while other 8(a) firms generally must compete for contracts valued above certain dollar thresholds.
In March 2011, the Federal Acquisition Regulation was amended to include a new requirement for a written justification for sole-source 8(a) awards over $20 million, where previously no justification was required. GAO has previously reported on tribal 8(a) contracting and recommended improved oversight.
The Appropriations Act of 2015 contained a provision for GAO to assess the impact of the 8(a) justification at DOD. This report addresses: (1) trends among DOD sole-source and competitive 8(a) awards from fiscal years 2006 through 2015; and (2) the factors to which DOD officials attribute these trends. GAO analyzed data from the Federal Procurement Data System-Next Generation, reviewed 14 sole-source 8(a) contracts over $20 million—9 of which had been followed by additional contracts for the same requirement, and spoke with contracting officials. GAO judgmentally selected most of the 14 contracts from offices that had awarded numerous sole-source 8(a) contracts in the past.
GAO is not making any recommendations in this report. The Department of Defense had no comments on a draft of this report.
section_title: What GAO Found
paragraphs: The number of sole-source contracts over $20 million that the Department of Defense (DOD) awards to small businesses under the 8(a) program has been steadily declining since 2011 when the new requirement for a written justification for these contracts went into effect. In contrast, the number of competitive 8(a) contracts over $20 million has increased in recent years (see figure).
Between GAO's last report on this topic in September 2014 and the end of fiscal year 2015, DOD awarded two sole-source 8(a) contracts over $20 million—one for vehicle maintenance and repair and one for engineering services. The contracting officer for the vehicle repair contract told GAO that the service will not be needed in the future, while the contracting officer for engineering services stated that he intends to competitively award the next contract for these services. Tribal 8(a) firms eligible for sole-source contracts over $20 million have won a growing number of competed 8(a) contracts since the justification went into effect in 2011.
DOD contracting officials GAO spoke to overwhelmingly cited an agency-wide emphasis on using competition to obtain benefits, such as better pricing, as a reason for the decline in the use of sole-source 8(a) contracts over $20 million. Further, officials from almost half of the offices also noted that a decline in their budgets or the amount of goods and services needed rendered the 8(a) justification not applicable because most of their contracts fall below the $20 million threshold. Of the 9 sole-source 8(a) contracts GAO reviewed with subsequently awarded contracts, over half were ultimately competed. For example, the Army competitively awarded a 4-year $140 million contract for base operations support, a service that had been previously met by a 10-year $397 million sole-source 8(a) contract.

section_title: Letter
paragraphs: The Small Business Administration’s (SBA) 8(a) program is one of the  federal government’s primary vehicles for developing small businesses  owned by socially and economically disadvantaged individuals. In fiscal  year 2015, $16.6 billion was obligated through the 8(a) program. Contract  awards to businesses in this program can be competed among eligible  8(a) firms or awarded on a sole-source basis to 8(a) firms in certain  instances, such as when the firm is owned by an Alaska Native  Corporation or Indian Tribe (we collectively refer to these as tribal 8(a)  firms). Tribal 8(a) firms can win sole-source contracts for any dollar  amount in the 8(a) program, while other firms generally must compete for  contracts valued above certain thresholds: $4 million or $7 million,  depending on what is being purchased.
In March 2011, the Federal Acquisition Regulation (FAR) was amended— per Section 811 in the National Defense Authorization Act of Fiscal Year  2010—to include a new requirement for a written justification and  approval for sole-source 8(a) awards over $20 million where previously  no justification was required. This new 8(a) justification brought more  attention to large sole-source contracts in the 8(a) program, which have  primarily gone to tribal 8(a) firms. In October 2015, the threshold value  for contracts requiring an 8(a) justification was raised from $20 million to  $22 million.
The Consolidated and Further Continuing Appropriations Act of 2015  contained a provision for us to assess the impact of the 8(a) justification.  It also required us to evaluate a Department of Defense (DOD) report— also mandated in this law—on the effect of the 8(a) justification on sole- source 8(a) contracts awarded over $20 million. DOD submitted its  report to the Congressional Defense Committees in March 2015. Our  report assesses (1) trends among DOD sole-source and competitive 8(a)  awards over $20 million from fiscal years 2006 through 2015; and (2) the  factors to which DOD officials attribute these trends. As part of our work,  we also reviewed the DOD report.
To identify trends in DOD 8(a) contracts over $20 million, we analyzed  data from the Federal Procurement Data System-Next Generation  (FPDS-NG) on 8(a) contracts from fiscal years 2006 through 2015. We  took several steps to assess data reliability, including reviewing 36 8(a)  contracts that were coded as competed—which represent 3 percent of  the total number of competed contracts for fiscal years 2006 through  2015—and reviewing contract documentation to compare against key  data points in FPDS-NG. Further, when determining the value of the  competed 8(a) contracts, we identified and grouped multiple award  indefinite-delivery indefinite-quantity (IDIQ) contracts stemming from the  same solicitation together so as not to double count the total contract  values for contracts for the same requirement—that is, the goods or  services being procured. We determined that the federal procurement  data for this period was sufficiently reliable to identify 8(a) contracts that  exceeded the $20 million threshold.
To determine DOD officials’ opinions on factors influencing these trends,  we identified 14 contracting offices that (1) had awarded the highest  number of sole-source 8(a) contracts over $20 million over the period in  question (10 offices); (2) were identified in our prior work on this subject  as having used a sole-source 8(a) contract to meet a large requirement   (2 offices); or (3) had awarded a sole-source 8(a) contract over $20  million in fiscal year 2015 (2 offices). For each office, we selected one  contract for a requirement that was met by a sole-source 8(a) contract  over $20 million. For 9 of the 14 contracts selected, we reviewed the  subsequently awarded contracts for the same requirement, which we  refer to as follow-on contracts. Of the remaining 5 contracts, 2 were  awarded in fiscal year 2015, and 2 were for construction and thus did not  have follow-on contracts. For one $76 million contract for duffel bags,  contracting officials were in the process of awarding the follow-on  competitively, but it had not yet been awarded at the time of our review.  We interviewed contracting officials about their experiences with the 8(a)  justification and, where applicable, how they are now meeting  requirements previously met by sole-source 8(a) contracts over $20  million. Our sample of contracting offices included eight Army contracting  offices; three Navy contracting offices (including two from the Marine  Corps); one Air Force contracting office; and two other DOD offices  (Defense Logistics Agency Troop Support and U.S. Special Operations  Command).  We also reviewed DOD’s March 2015 report on sole-source  8(a) contracts over $20 million and compared the number of contracts  DOD reported that met this criterion to the number of contracts we  identified.
We conducted this performance audit from August 2015 to June 2016 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. A more detailed description of  our audit scope and methodology is presented in appendix I.
subsections: section_title: Background
paragraphs: SBA administers the 8(a) program, which includes determining whether it  will accept requirements into the 8(a) program. Agencies must submit an  offer letter to SBA identifying the requirement as well as any procurement  history for the requirement, the estimated dollar amount, and, if the award  is sole-source, the name of the particular 8(a) firm. SBA requires that  agencies keep follow-on acquisitions in the 8(a) program until SBA  releases them from the program.
Our prior work—going back to 2006—has found that contracting officials  have turned to tribal 8(a) firms as a quick, easy, and legal method of  awarding contracts for any value, but that these benefits are not without  oversight challenges for SBA, which is responsible for managing 8(a)  firms’ participation in the program. For example, in January 2012, we  found that SBA lacked the data and insight to enforce some of the new  requirements put in place to ensure that tribal 8(a) firms do not operate in  the program in perpetuity. We made a number of recommendations to  improve oversight of tribal 8(a) firms, such as ensuring that a new SBA  8(a) database has the capability to track information on 8(a) contracts to  help ensure SBA officials have the information necessary to enforce the  8(a) program regulations. SBA has taken some actions to address these  recommendations, but some have not yet been addressed. In March  2016, we found that SBA’s oversight of tribal 8(a) firm’s participation in  the 8(a) program continued to be a challenge and made several  recommendations to help improve its oversight strategy.
Our prior reports have also found that the number of sole-source 8(a)  awards over $20 million at DOD overall has significantly declined over  time—from 50 in 2008 to 4 in 2013. In December 2012, we reported that  there was confusion regarding the requirements of the 8(a) justification.  We recommended that the Administrator of the Office of Federal  Procurement Policy (OFPP) promulgate guidance to clarify circumstances  in which an 8(a) justification is required. OFPP, as chair of the FAR  council which oversees changes to the acquisition regulations, is in the  process of changing the regulations to address our recommendation.
section_title: DOD Sole-Source 8(a) Contract Awards over $20 Million Have Declined While the Number of Competitive 8(a) Awards Has Increased in Recent Years
paragraphs: From fiscal years 2006 through 2015, the number of sole-source 8(a)  contract awards over $20 million at DOD started to decline in 2011 and  remained low through 2015, while the number of competitive contract  awards over $20 million increased in recent years. Consistent with  findings from our past reports, we found that sole-source awards  generally declined in both number and value since 2011, when the 8(a)  justification requirement went into effect. DOD awarded 22 of these  contracts from fiscal years 2011 through 2015, compared to 163 such  contracts in the prior 5-year period (fiscal years 2006 through 2010). The  most common products and services acquired through 8(a) contracts over  $20 million—under both competed and sole-source contracts—are  construction, facilities support services, and engineering services. Figure  1 shows the decline in sole-source 8(a) contracts over $20 million and  trends in competitively awarded 8(a) contracts of the same size.
Pursuant to the mandate, we reviewed DOD’s March 2015 report to  Congress and found that DOD reported a different number of sole-source  8(a) contract awards over $20 million than what we found in fiscal years  2011 through 2013. DOD reported awarding 23 such contracts in fiscal  year 2011, 8 in 2012, and 5 in 2013, while we identified 13, 3, and 4 such  contracts in those fiscal years, respectively. Consistent with our findings,  DOD found no sole-source 8(a) contracts over $20 million awarded in  fiscal year 2014 and a general decline in such contract awards since  2011. Based on our analysis of DOD’s report and discussions with the  official responsible for the report, the differences are due to DOD’s  inclusion of individual task or delivery orders in its count of sole-source  8(a) contracts. We did not include individual task or delivery orders in our  numbers because they are not subject to the 8(a) justification.
We found that DOD awarded two sole-source 8(a) contracts over $20  million with a total value of over $87 million in fiscal year 2015, one of  which did not complete the 8(a) justification as required. In both cases,  the contracting officers explained that they used sole-source 8(a)  contracts because they were pressed for time.
In one case, a Marine Corps contracting officer awarded a $24 million  sole-source 8(a) contract for vehicle maintenance and repair to the  incumbent contractor. However, the contracting officer did not  complete an 8(a) justification as required. This contracting officer told  us that the previous contracting officer for the requirement had retired  without warning and there was limited time to award the follow-on  contract. The contract went through several levels of review, including  general counsel, and no one realized that a justification was required.  She explained she had very limited experience awarding 8(a)  contracts and was not aware of the required 8(a) justification. In fact,  our analysis of FPDS-NG data showed that this office had not  awarded any other sole-source 8(a) contracts over $20 million since  fiscal year 2006. We did not pursue this issue because the contracting  officer recognized that more training was needed and noted that the  director of her office was developing training to address this issue.  She further noted that there will not be a follow-on contract for this  particular requirement, as the service is no longer needed.
In the other case, Army officials said that they had a limited amount of  time to ensure continuity of an engineering services contract for $63  million after a contract awarded through full and open competition was  protested twice by the previous vendor. Contracting staff said that a  sole-source 8(a) contract, which was not awarded to the previous  vendor, was the only way to meet the requirement without a gap in  services. Officials explained that they decided to shorten the period of  performance on the sole-source contract from 5 years to 3 years and  that the follow-on contract will be competed among 8(a) firms.
Our analysis of the period of performance for sole-source and competitive  8(a) contracts over $20 million from fiscal years 2006 through 2015  showed that the average length of sole-source contracts has declined  since 2012, while the average length of competitive contracts has  remained more consistent over the time period. In fiscal year 2006, the  average period of performance for a sole-source 8(a) contract was 4.8  years, yet starting in 2012 the average period of performance—which was  3.7 years—began to decline. By fiscal year 2015, the average period of  performance was 2.1 years. For competed contracts 8(a) over $20  million, the contract length has consistently averaged between 4 and 5  years since 2007.
Since 2011, tribal 8(a) firms have won an increasing number of  competitively awarded 8(a) contracts over $20 million at DOD. Although  these firms represent less than 10 percent of the overall pool of 8(a)  contractors, the number of competitively awarded DOD 8(a) contracts  over $20 million to tribal 8(a) firms grew from 26 in fiscal year 2011—or  20 percent—to 48 contracts in fiscal year 2015—or 32 percent of the  total. In addition, since 2011, tribal 8(a) firms have consistently won  higher value awards than other 8(a) firms for competitive 8(a) contracts  over $20 million. In fiscal year 2015, the average award size of a  competed 8(a) contract to a tribal 8(a) firm was $98 million, while other  8(a) firms had an average award size of $48 million. See appendix II for  more data on awards to tribal versus other 8(a) firms.
section_title: DOD Officials Cited a Variety of Reasons They Are No Longer Awarding Sole- Source 8(a) Contracts over $20 Million
paragraphs: Contracting officials from the 14 offices in our review stated that there is,  in general, a renewed agency-wide emphasis on competition. Whereas in  the past they used sole-source 8(a) contracts to quickly, easily, and  legally meet agency needs—as we have previously reported—officials  explained that awarding large sole-source 8(a) contracts is less palatable  in the current environment. Our review of 9 sole-source 8(a) contracts  and their follow-on procurements supported this view. Five of the 9 sole- source 8(a) contracts we reviewed were competed in the follow-on  contracts, and, for most of the remaining 4 contracts with follow-on sole- source contracts, officials stated that they plan to competitively award  future procurements or are already in the process of doing so. In addition,  DOD officials from almost half of the offices noted that a decline in their  budgets or a decline in the size of their requirements rendered the 8(a)  justification not applicable because most of their contracts fall below the  $20 million threshold. Finally, DOD officials had varying opinions about  whether the 8(a) justification was a deterrent to awarding large sole- source 8(a) contracts. Some noted that the 8(a) justification review  process would deter them, while others said they would award a sole- source contract over $20 million if they found that only one vendor could  meet the requirement.
subsections: section_title: Preference for Competition and Decreasing Requirements Reported as Primary Reasons for Decline
paragraphs: DOD officials we spoke with said that they prefer to compete high-dollar  awards and reported a renewed agency-wide emphasis on competition,  which steered them away from awarding large sole-source 8(a) contracts.  Our prior work has found that agencies liked to use the unique provisions  of tribal 8(a) contracting because they could quickly, easily, and legally  award contracts to meet agency needs. However, in 2012, we reported  that contracting officers—which included DOD contracting officers—were  moving away from sole-source contracts to tribal 8(a) firms and toward  competition. We noted examples where follow-on requirements were  subsequently competed, resulting in estimated savings, according to  agency officials. We also reported that with regard to Alaska Native  Corporations, the Acting Deputy Assistant Secretary of the Army  (Procurement) issued a memo in January 2011, citing the increased  attention around the Army’s extensive use of sole-source contracts  awarded to 8(a) Alaska Native Corporation firms. It stated that high-dollar  sole-source awards to 8(a) Alaska Native Corporation firms should be the  exception rather than the rule and laid out the expectation that these  awards be scrutinized to ensure they are in the government’s best  interest. Officials we spoke with on this review echoed some of these  sentiments—noting that they had to consider whether the benefits of  awarding a large sole-source 8(a) contract outweighed the negative  aspects. For example, DOD officials from four offices stated that they  prefer competition because it is easier to determine price reasonableness  as compared to a sole-source procurement. Some of these officials noted  that it is harder to negotiate with vendors under a sole-source approach,  especially when they lack the staff to handle complex negotiations  associated with larger contracts. One official also said that he prefers  competition because the process of the contracting office performing  market research and outreach to 8(a) contractors promotes transparency,  in contrast to larger sole-source 8(a) contracts directed to specific  vendors which had faced increased scrutiny due to allegations of fraud.
Of the 9 sole-source 8(a) contracts we reviewed that had follow-on  awards, 5 had follow-on contracts that were competitively awarded, while  the other 4 had follow-on contracts that were awarded on a sole-source  basis. All of the sole-source follow-on contracts had values less than  $20 million. See figure 2.
Of the 5 contracts where the follow-on requirement was competed, the  contract values and circumstances varied, as illustrated by the following  examples:
The Air Force awarded a 5-year $76 million competitive follow-on  contract for base operations support to replace a 10-year $523 million  sole-source contract. Officials told us that they made a concerted  effort to engage different 8(a) firms for the follow-on contract because  their market research indicated that multiple firms could meet the  requirement. Although they had to award two short-term sole-source  8(a) bridge contracts to the incumbent to meet the requirement while  preparing the competitive follow-on award, once the requirement was  opened for competition, they received proposals from seven vendors  and awarded the competitive contract to a new vendor. In addition to  shortening the period of performance, they removed a construction  component of the requirement, and officials told us the removed  component is now being met through a multiple award IDIQ contract  that was competitively awarded to six vendors. The contracting  officials also stated that they were exploring possible ways to insource  other functions previously performed under the sole-source contract.
The Army competitively awarded a 4-year $140 million contract for  base operations support, which was previously met by a 10-year $397  million sole-source 8(a) contract. The contracting office had to award  three short-term sole-source bridge contracts to the incumbent vendor  to provide more time to prepare a competitive follow-on award.  However, during the competitive process, six 8(a) firms competed for  the follow-on award and the current contract value is about $7 million  less annually than the value of the most recent sole-source bridge  contract. The follow-on award went to an 8(a) firm owned by the same  tribal entity as the incumbent firm.
The Navy awarded a competitive follow-on to a $49 million sole- source contract for engineering services. The requirement is now met  by a multiple award IDIQ contract to six 8(a) vendors with a total value  of $99 million. A Navy contracting official told us that the prior sole- source 8(a) contract was one of many contracts providing similar  services across this particular command, and, in 2011, the contracting  office implemented a new contracting strategy that would increase  competition and meet its small business goals. This official noted that  the multiple award contract is intended to avoid duplicative contracts  across various contracting offices and that this new strategy is  expected to result in cost savings.
Officials from almost half of the 14 offices we spoke with noted that a  decline in budgets or a decline in the size of requirements rendered the  8(a) justification not applicable because most of their contracts fall below  the $20 million threshold. This was the case in all 4 of the contracts with  sole-source follow-on contracts we reviewed, where requirements are  currently being met by sole-source 8(a) contracts under $20 million, which  are not subject to the 8(a) justification.
The Army awarded a $17 million sole-source 8(a) contract for systems  engineering services as a follow-on to a $31 million sole-source  contract. An Army official told us that the requirement decreased due  to management changes and anticipated growth in need that never  materialized.
As follow-ons to a 5-year $319 million sole-source 8(a) contract for  pre-deployment training exercises, the Marine Corps awarded 2 one- year-long sole-source 8(a) contracts, slightly under $10 million apiece,  within a 6-month period to the same vendor. The current contracting  officer did not know why the previous contracting officer awarded  separate contracts for this requirement. The market research for the  more recent contract stated that there used to be a greater need for  pre-deployment training and estimated that funding for the  requirement had decreased from $85 million annually to less than $10  million in recent years. The contracting officer told us that he intends  to competitively award future follow-on contracts.
Army officials told us that they now use a series of smaller contracts  to meet a technical support services requirement that used to be met  by a $50 million sole-source contract. Officials explained that the  change in acquisition strategy was due to a decline in the need for  these services and an increase in efficiency by using various  contracting vehicles, such as smaller sole-source 8(a) contracts,  competitive 8(a) awards, and task orders from an existing  government-wide IDIQ contract to meet the requirement. They added  that they preferred this strategy to the original $50 million dollar  contract, which was designed to cover a wide swath of requirements,  and that they want to compete more contracts to replace the smaller  sole-source contracts in the future.
Even though the FAR states that competition is the preferred contracting  approach, we previously reported—and officials reaffirmed during this  review—that large sole-source 8(a) contracts were an expedient way to  respond to an increased workload and volume of requirements in the mid  to late 2000s. For example, one office we spoke with said that the total  value of the contracts awarded out of his office each year had increased  from $200 million to $1.2 billion over a 10-year period while staff levels  remained constant. Now that the growth in requirements has slowed while  staff levels have risen and the workload has become more manageable,  the contracting officers have more time to prepare competitive awards.
section_title: DOD Officials’ Opinions Varied on Whether the 8(a) Justification Will Affect Future Awards of Sole- Source 8(a) Contracts over $20 Million
paragraphs: DOD contracting and small business officials had differing views about  whether the 8(a) justification was a deterrent to awarding sole-source 8(a)  contracts over $20 million. A few officials noted that the 8(a) justification is  “not that hard to write,” but it does act as a deterrent because people  have to be willing to review and sign it, which could slow down the  contracting process. Others said that the ability to award sole-source 8(a)  contracts is “another tool in the toolbox” that they would be open to using,  even with the justification requirement, if their market research results  showed that only one 8(a) firm could perform the work. However, a Navy  official noted that a sole-source 8(a) acquisition strategy would be hard to  justify because her office typically awards contracts for services, such as  engineering, that are likely to have multiple vendors that can meet the  requirement. She noted that some of the vendors that were previously  awarded sole-source contracts are now winning competitively awarded  contracts as part of the office’s shift towards competition.
Army officials responsible for one of the contracts in our review told us  that they viewed the 8(a) justification as a means of increasing  transparency and that it was not overly burdensome. In fact, they  explained that they had recently completed an 8(a) justification for a  contract awarded in December 2014—not in our sample—that they  modified to exceed $20 million in potential obligations after the original  contract was awarded for less than $20 million. The justification explained  that the modification would extend the length of the contract and allow  enough time for the contracting office to award a competitive follow-on  contract without a gap in service. We have previously reported that  contracting officials told us that it was not clear to them if a justification  would be required for modifications to sole-source 8(a) contracts. We  recommended that the Administrator of OFPP promulgate guidance to  clarify circumstances in which an 8(a) justification is required, including  cases when the contract is modified. OFPP generally agreed with our  recommendation and is in the process of amending the FAR to address  this issue. Clarifying the regulations for these instances could help; we  found in our analysis of FPDS-NG data that DOD awarded six sole- source 8(a) contracts with base and all options values between $19  million and $20 million in fiscal year 2014 and eight in fiscal year 2015.  If these contracts experience price growth, contracting officers may look  to the updated regulations for guidance on whether an 8(a) justification is  necessary.
section_title: Agency Comments
paragraphs: The Department of Defense had no comments on a draft of this report.
We are sending copies of this report to the appropriate congressional  committees and the Secretary of Defense. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-4841 or MackinM@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of this review were to determine (1) trends among  Department of Defense (DOD) sole-source and competitive 8(a) awards  over $20 million from fiscal year 2006 through fiscal year 2015; and (2)  the factors to which DOD officials attribute these trends. The  Consolidated and Further Continuing Appropriations Act of 2015  contained a provision for us to assess the impact of the justification and  approval for sole-source 8(a) contracts over $20 million, which we refer to  as 8(a) justification. The mandate also contained a provision for us to  evaluate a DOD report—also mandated in this law—on the effect of the  8(a) justification on sole-source 8(a) contracts awarded over $20 million.  To do so, we reviewed DOD’s March 2015 report on sole-source 8(a)  contracts over $20 million and compared the number of contracts DOD  reported that met this criterion to the number of contracts we identified.
To determine the trends among DOD sole-source and competitive 8(a)  awards over $20 million, we analyzed contract data from Federal  Procurement Data System-Next Generation (FPDS-NG) for contracts  awarded from October 1, 2005 through September 30, 2015. We used  the Base & All Options and obligations values to identify contracts over  $20 million, as well as contracts between $19 and $20 million. We took  several measures to assess the reliability of the FPDS-NG data:
We found that many of the competed 8(a) contracts in our dataset  were multiple award contracts in which more than one vendor was  awarded a contract for a single solicitation. We rolled up the multiple  award indefinite-delivery indefinite-quantity contracts in the FPDS-NG  dataset into a single entry per requirement to avoid double counting  Base & All Options values in the summations of total contract values.
Because we have not previously reported on the contract value data  for competed 8(a) contracts, we took additional steps to assess the  reliability of these data. We reviewed 36 8(a) contracts over $20  million that were coded as competed—which represents  approximately 3 percent of the total number of competed contracts for  fiscal years 2006 through 2015—for data reliability purposes and  found 1 sole-source contract that was miscoded as competed. We  also confirmed contract values for 15 competed 8(a) contracts that  were part of the same solicitation but had different contract values.  We obtained these contracts using DOD’s Electronic Document  Access website, a repository for DOD contracts and related  documents.
We also compared the data reported in FPDS-NG to the information  in the contract files we reviewed.
We determined that the data for this period were sufficiently reliable to  identify competed and sole-source 8(a) contracts over $20 million and  describe trends in these contracts. To identify what is being purchased  with 8(a) contracts over $20 million, we identified common products and  services using North American Industry Classification System (NAICS)  codes. The NAICS assigns codes to all economic activity within 20 broad  sectors, and the codes reflect the industry in which the firm operates, e.g.,  wireless telecommunication carriers or industrial building construction.  Our analysis of FPDS-NG data for trends among tribal 8(a) firms included  firms owned by Alaska Native Corporations, Indian Tribes, and Native  Hawaiian Organizations.
To determine the factors to which DOD officials attribute these trends, we  interviewed officials and reviewed contract files from 14 DOD contracting  offices that met the following criteria:
The 10 contracting offices that awarded the most sole-source 8(a)  contracts over $20 million from fiscal years 2006 through 2015. We  identified these offices using FPDS-NG data and confirmed that the  offices with the most contract awards also had a high total value of  sole-source 8(a) contract awards, either in obligations or Base & All  Options value.
We selected two offices that had large requirements previously met by  sole-source 8(a) contracts. These contracts were identified in our past  work on this topic. We wanted to determine how these requirements  are currently being met. We selected an Air Force base operations  support services requirement and a U.S. Special Operations  Command translation services requirement.
The two offices that awarded sole-source 8(a) contracts over $20  million in fiscal year 2015.
Our final sample of DOD contracting offices included in our review were  as follows:
Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania
Kirtland Air Force Base, New Mexico
Marine Corps Logistics Command, Albany, Georgia
Marine Corps Systems Command, Quantico, Virginia
National Guard Bureau, Arlington, Virginia
Space and Naval Warfare Systems Center Atlantic, North Charleston,
U.S. Army Contracting Command, Natick, Massachusetts
U.S. Army Contracting Command, Redstone Arsenal, Alabama
U.S. Army Contracting Command – Aberdeen Proving Ground,
U.S. Army Corps of Engineers, Fort Worth District
U.S. Army Corps of Engineers, Philadelphia District
U.S. Army Corps of Engineers, Savannah District
U.S. Army Mission and Installation Contracting Command, Fort
U.S. Special Operations Command, MacDill Air Force Base, Florida  For each of the 14 offices, we judgmentally selected one sole-source 8(a)  contract over $20 million for review, and, where applicable, we reviewed  subsequently awarded contracts for the same requirement, which we  refer to as follow-on contracts. Specifically, we reviewed:
Nine sole-source 8(a) contracts that had follow-on contracts. We  confirmed with agency officials that a contract had a follow-on  procurement. We interviewed the contracting officials responsible for  each contract and reviewed relevant paperwork from the contract file.  Our contract file review included looking at follow-on contracts, 8(a)  justifications, acquisition plans, and other contract documents to  compare old and new contracting approaches and determine any  effects of the 8(a) justification. We also met with small business  officials to discuss general trends and their contracting offices’ use of  the 8(a) program.
Two sole-source 8(a) contracts over $20 million that did not have  follow-on contracts. We selected these contracts because they were  awarded by offices that were top users of sole-source 8(a) contracts  over $20 million from fiscal years 2006 through 2015. The offices  confirmed that the two selected contracts, in addition to the other sole- source 8(a) contracts over $20 million awarded by the office, were for  construction services and would not have follow-on contracts. We  interviewed contracting officials about their experiences with the 8(a)  justification requirement more generally and sole-source 8(a)  contracts over $20 million.
Two sole-source 8(a) contracts awarded in fiscal year 2015.
One sole-source 8(a) contract that did not have a follow-on contract  because the contracting officials were in the process of awarding the  follow-on; we looked at the solicitation to confirm their acquisition  strategy.
We conducted this performance audit from August 2015 to June 2016 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: Analysis of Trends in Tribal 8(a) Awards over $20 Million Since 2011 When the 8(a) Justification Went into Effect
paragraphs: Appendix II: Analysis of Trends in  Tribal 8(a) Awards over $20 Million  Since 2011 When the 8(a)  Justification Went into Effect  33 (24%)
104 (76%)
33 (34%)
63 (66%)
36 (31%)
82 (69%)
48 (32%)
101 (68%)
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: Michele Mackin, (202) 512-4841 or MackinM@gao.gov.
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Tatiana Winger (Assistant  Director), Peter Anderson, Miranda Berry, Kurt Gurka, Julia Kennon,  Roxanna Sun, and Jocelyn Yin made key contributions to this report.