Before the airports’ transfer to the Metropolitan Washington Airports Authority (MWAA), Dulles and Reagan National were operated by the Federal Aviation Administration and financed with federally appropriated funds. MWAA’s funding now comes from operational revenues (rents, payments from concessionaires, landing fees, utility sales, and passenger fees). MWAA also receives federal grant funds from the Airport Improvement Program as well as proceeds from bonds issued to finance its capital development program, which began in 1988. MWAA is governed by a board of directors which, by law, consists of 13 members, including 5 members appointed by the governor of Virginia, 3 members appointed by the mayor of the District of Columbia, 2 members appointed by the governor of Maryland, and 3 members appointed by the president of the United States with the advice and consent of the Senate.The board establishes policies pertaining to the airports’ operation. The board and its five committees generally meet on a monthly basis. The committees, comprising 4 to 5 board members, execute delegated responsibilities in areas such as business administration, finance, and planning. A chief executive officer appointed by the board performs day- to-day management. Program offices, such as MWAA’s Office of Engineering, identify procurement needs and forward them to MWAA’s Procurement and Contracts Department (its contracting office) for action. Procurement requests contain an estimate of the cost of obtaining the required goods or services. Thereafter, the contracting office develops a solicitation to seek contractors’ interest in supplying the goods and services and subsequently awards a contract to fill the procurement need. The contracting office is also responsible for making any changes to the contract after it is awarded. According to its contracting database, MWAA awarded 2,843 contracts for supplies and services, including construction, at an initial award amount (in constant 1999 dollars) of about $1.43 billion from January 1, 1992, through December 31, 1999. On average, MWAA awarded about 355 contracts annually over the 8-year period. The average value of the contracts when awarded was approximately $504,000. Contract modifications increased the cost of MWAA’s initial contract awards, however. Specifically, the amount authorized for the 2,843 contracts that MWAA awarded between 1992 and 1999 grew by about 38 percent—from about $1.43 billion at award to about $1.98 billion through December 31, 1999 (in constant 1999 dollars). This cost growth most likely resulted from MWAA’s modification of contracts to extend the period of their performance and to purchase additional supplies and services. MWAA’s lease with the federal government requires it to award contracts for supplies and services exceeding $200,000 and all concession contracts “through the use of published competitive procedures.” MWAA is aware of this obligation and, in 1993, issued a contracting manual that it believes satisfied the requirement. While the 1993 guidance was announced publicly and is available to prospective contractors upon request, the guidance is inadequate in numerous respects. Thus, in our view, it does not satisfy MWAA’s obligation to contract using published competitive procedures. The clear intent of the statutory lease provision is to ensure that MWAA develops, publishes, and follows an orderly set of procedures for awarding contracts and concession franchises. Such procedures are meant to enhance competition and, when published, provide the means for contractors to understand MWAA’s contracting processes. Likewise, the requirement to publish MWAA’s contracting procedures is intended to provide assurance to prospective contractors that MWAA will actually follow its published procedures. Thus, in our opinion, to satisfy its obligation under the statutory lease provision, MWAA must ensure that its published procedures adequately explain its contracting practices to prospective contractors, are current, and are those that it actually uses to award contracts and concession franchises. None of these requirements has been met. First, the manual that MWAA published in 1993 offers prospective contractors only limited information about its contracting processes. Instead of issuing a clear and well-defined set of procurement procedures governing its contracting processes, the 1993 guidance simply summarizes MWAA’s contracting policies. The detail that one would expect in a manual intended to familiarize potential contractors with MWAA’s contracting processes and to foster full and open competition is lacking. For example, the entire discussion of how MWAA solicits bids and proposals and makes awards—the heart of the contracting process insofar as prospective contractors are concerned— consists of only a brief description of the various procurement methods that MWAA could elect to use. “The Authority will select the proposal which offers the greatest overall benefit to the Authority in terms of the evaluation criteria listed in the Request for Proposals. If the determination is made to negotiate, negotiations generally will be open to all offerors with a realistic chance of being awarded the contract (those in the competitive range) as determined by preliminary technical and economic evaluation. Best and final offers may be solicited from one or more offerors as appropriate.” The 1993 guidance states that, in certain circumstances, contractors with competitive proposals will be included in negotiations. The guidance does not, however, explain when such circumstances will arise. Furthermore, the 1993 guidance does not specify who will be invited to submit best and final offers, only that offers may be solicited when MWAA deems such an action “appropriate.” Second, MWAA has not updated its 1993 guidance to ensure that it is current. For example, the guidance states that MWAA’s board of review must review all contract awards. This board, however, was abolished in 1996. Moreover, MWAA has not updated the guidance to reflect, among other things, long-standing changes in (1) how its board of directors has delegated contracting authority, (2) the names and addresses of personnel currently responsible for MWAA’s contracting activities, or (3) revisions to MWAA’s ethics requirements. Finally, MWAA does not use the 1993 guidance to award contracts involving non-concession-related goods and services. Instead, MWAA uses an unpublished manual that it developed in September 1998. The 1998 manual is far more detailed, substantive, and prescriptive than MWAA’s 1993 manual. For example, in contrast to the guidance in the 1993 manual, MWAA’s unpublished 1998 manual specifies that prospective contractors must be included in the competitive range for purposes of negotiations if their proposals have a reasonable chance of being selected for award. Furthermore, unlike the 1993 guidance, the unpublished 1998 manual provides specific rules governing MWAA’s decision to dispense with negotiations. MWAA views the 1998 manual as internal guidance and, as a result, has not published it, posted it to its contracting Web site, or otherwise made it routinely available to prospective contractors. In January 2002, when we concluded our review, MWAA was in the process of updating its 1993 contracting guidance. When the update is approved, MWAA anticipates (1) posting the guidance on its contracting Web site and (2) placing a notice in The Washington Post to announce its availability. MWAA was also updating its detailed 1998 internal contracting guidance for awarding contracts for non-concession-related goods and services. According to MWAA, the revision will include information about its procedures for awarding concession franchises. Acknowledging that its detailed internal contracting procedures should be made widely available to interested parties, MWAA indicated that it would take steps to disseminate the updated guidance, including establishing a link to the guidance through its contracting Web site. Despite its obligation under the statutory lease provision, MWAA did not obtain, to the maximum extent practicable, full and open competition for 15 of the 35 contracts that we reviewed. MWAA’s actions on 12 of the 13 contracts that MWAA identified as awarded using full and open competition did not comply with one or more of the recognized principles underlying full and open competition. Furthermore, while the use of less than full and open competition for 19 of the remaining 22 contracts appeared acceptable given the contracts’ circumstances, we believe that MWAA missed opportunities to obtain, to the maximum extent practicable, full and open competition on 3 of the 22 contracts. The 3 awards as well as 2 others that we did not otherwise question were not approved by MWAA’s board, as required for sole-source awards. We discussed these findings with officials from MWAA, and, by letters dated June 29, 2001, and July 9, 2001, MWAA disagreed with many of the problems that we identified. As a result, we incorporated additional information about MWAA’s views and about our rationale for the concerns that we identified in our draft report. MWAA also disagreed with our analyses of its contracting actions in its January 4, 2002, comments on our draft report. (Our discussion of these comments appears at the end of this letter and in app. IV.) The use of full and open competition has long been recognized as promoting several important objectives. It saves money by obtaining lower prices and encouraging prospective contractors to focus on ways to provide more value to their customers. It also promotes fairness and equity through the use of open, impartial, and objective selection processes. Finally, full and open competition promotes innovative solutions and approaches and technical improvements by encouraging individual incentive. Such competition is achieved when all prospective contractors are provided an equal opportunity to compete successfully for a contract. MWAA’s guidance recognizes the importance of full and open competition. Its 1993 contracting manual, for example, states that full and open competition is the “cornerstone” of MWAA’s contracting process and indicates that it is to be used “whenever practicable.” Similarly, MWAA’s unpublished 1998 contracting guidance emphasizes the use of full and open competition “to the maximum extent practicable.” As discussed in appendix I, the concept of full and open competition embodies a number of fundamental principles.