The Competition in Contracting Act of 1984 (CICA), 41 U.S.C. section 253, and the implementing FAR section 6.302 require full and open competition for government contracts except in a limited number of statutorily prescribed situations. One situation in which agencies may use other than full and open competition occurs when the agency’s need is of such unusual and compelling urgency that the government would be seriously injured unless the agency is permitted to limit the number of sources from which it solicits proposals. Even when an unusual and compelling urgency exists, the agency is required to request offers from as many potential sources as is practicable under the circumstances. 41 U.S.C. section 253(e); FAR section 6.302-2(c)(2). This means that an agency may limit a procurement to one firm only when the agency reasonably believes that only that firm can perform the work in the available time. Based on our investigation, we believe there was insufficient urgency to limit competition and that the sole-source contract to Sato & Associates was not proper. The Treasury OIG violated the applicable statute and regulation by failing to request offers from as many potential sources as was practical. Ms. Lau knew of three other former IGs who had performed similar management reviews. Indeed, Mr. Sato hired two of the former IGs to assist him with the Treasury OIG review. Further, the cost of that review, over $90,700, appears artificially high. After Mr. Sato submitted a similar-costing proposal to Interior and after a full and open competition, Interior awarded a similar contract to Mr. Sato at a final cost of about $28,900. Prior to being confirmed as Treasury IG on October 7, 1994, Ms. Lau decided that a management review of the OIG would help her meet a number of challenges in her new job. In November 1994, Ms. Lau contacted Mr. Sato to request that he conduct the management review. According to Ms. Lau, she first met Mr. Sato when she was a regional official and Mr. Sato a national official of the Association of Government Accountants; a professional relationship developed over the years through functions related to that association. Mr. Sato had written to the White House Personnel Office in May 1993 recommending Ms. Lau for an appointment to an IG position. In November 1994, Ms. Lau talked with senior OIG managers about a management review and advised them that she knew to whom she wanted to award a contract. In early December 1994, she contacted Treasury’s PSD to request assistance in awarding a management review contract. The contracting officer provided her with an explanation of the requirements to justify a sole-source contract. Thereafter, Ms. Lau told PSD that she wanted Sato & Associates to do the work. The Treasury contracting officer subsequently prepared a Justification for Other Than Full and Open Competition, also known as the justification and approval (J&A) document. On December 12, 1994, PSD approved the J&A, authorizing a sole-source award to Sato & Associates. When we asked the contracting officer why she did not attempt to identify other individuals or companies that could perform the contract, she stated that Ms. Lau had told her that Mr. Sato “had unique capabilities which would preclude the award of a management studies contract to anyone else.” On January 9, 1995, Treasury’s PSD awarded a contract at the request of the Treasury OIG to Sato & Associates to perform a management study of the Treasury OIG. The contract specified that the contractor was to produce a report within 13 weeks, which was to focus on the most efficient methods of improving the organization and functioning of the operations of the OIG. Specific areas to be reviewed included office management procedures and practice, staffing, correspondence, automation, and personnel management. The contract was awarded without full and open competition on the basis of unusual and compelling urgency. The J&A for the Sato contract provided that “he Government would be injured if the Inspector General is unable to quickly assess any needs for management reform and make any required changes that would ensure that she receives the appropriate staff support for the implementation of her policies.” According to the contracting officer, when she questioned Ms. Lau about the justification for the Sato contract and whether an urgent need existed, Ms. Lau stated that she did not want to divulge too much of “the internal goings-on” in the Inspector General’s Office to the contracting officer. Ms. Lau merely assured the contracting officer that the need was urgent. “I was aware that the office had some major challenges to meet, that we needed to marshal the resources to do the financial audits required by the Government Management Reform Act. That we had some major work to do in terms of identifying the resources to do so. In addition, as the newly appointed head of the Office of Inspector General, I had a 120 day period before I would be able to make any major changes or reassignments of senior executives, and that I wanted to do that as early as possible. I knew I was going into an office with some issues that were getting scrutiny from Congress as well as others. I believed that I needed to have a trusted and experienced group of professionals come in to assist me to do that. I definitely felt that there was a compelling and urgent need, if you want to use that terminology, because I wanted to ensure that I had, for example, some of the major changes that were necessary to meet the CFO audit by the time the next cycle came around, which in Government fiscal years, the cycle ends September 30th, and so the financial audits that would be required under that would have to be planned and conducted within that time frame.” Other than full and open competition is permitted when the agency has an unusual and compelling urgency such that full competition would seriously injure the government’s interest. We recognize that the challenges Ms. Lau believed she faced and her express desire to make management changes and develop strategies to deal with various audit requirements as soon as possible after taking office, provide some support for the OIG’s urgency determination. On the other hand, we are not aware of facts establishing that Ms. Lau’s ability to perform her duties would have been seriously impaired had the procurement of a consultant to perform the management study been delayed by a few months in order to obtain full and open competition. On balance, we believe that there was insufficient urgency to limit competition. It is clear, however, that irrespective of whether it would have been proper to limit competition, issuance of a sole-source contract to Sato & Associates was not proper. As discussed above, unusual and compelling urgency does not relieve an agency from the obligation to seek competition. An agency is required to request offers from as many potential sources as is practicable under the circumstances. It may limit the procurement to only one firm if it reasonably believes that only that firm can perform the work in the available time. 41 U.S.C. section 253(c)(1). The J&A stated that Sato & Associates had a predominate capability to meet the Department of Treasury’s needs. However, Ms. Lau stated to us that she knew at the time that former Inspectors General Charles Dempsey, Brian Hyland, and Richard Kusserow had been awarded contracts for management reviews. We interviewed two of the three former Inspectors General—Messrs. Dempsey and Hyland—that Ms. Lau knew had done management reviews. Both stated that they could have met the IG’s urgent time frame to perform the contract. In fact, they were hired by Mr. Sato to work on the Treasury OIG contract, performing as consultants. We are aware of no reason why it was impractical for the agency to have requested offers from at least the three other known sources for the work Ms. Lau needed. Nor are we aware of any reason why Sato & Associates was the only firm that could have performed that work in the available time. In fact, Mr. Sato reported to us that he had never performed a management review, while, as Ms. Lau knew, Messrs. Dempsey, Hyland, and Kusserow had done so. Consequently, we conclude that the agency acted in violation of 41 U.S.C. section 253(e) and FAR section 6.302-2(c)(2) by failing to request offers from other potential sources. The contract to Sato & Associates was awarded at a firm fixed price of $88,566, which included estimated travel and per diem costs of $15,296. The contract also contained an unpriced time-and-materials option to assist in implementing recommendations made in the contract’s final report. A second modification to the contract exercised that option and raised the projected cost an estimated $24,760, for a total estimated contract cost of $113,326. The actual amount billed to the government by Mr. Sato for the fixed-price contract and the time-and-materials option totaled $90,776. Federal procurement policy seeks to ensure that the government pays fair and reasonable prices for the supplies and services procured by relying on the competitive marketplace wherever practical. We believe that the lack of competition for the award of the Treasury OIG management study may have been the reason for an artificially high price on the Sato & Associates contract. On February 25, 1995, Mr. Sato submitted an unsolicited proposal for $91,012 to the Department of the Interior’s OIG for a contract similar to his Treasury contract. Rather than award a contract to Mr. Sato based on this proposal, the Department of the Interior conducted a full and open competition. In June 1995, Interior awarded a management study contract to Sato & Associates for approximately $62,000 less than the offer in Mr. Sato’s unsolicited proposal. The contract’s final cost was $28,920.