Market research has been a statutory requirement for over 10 years, since the passage of the Competition in Contracting Act of 1984, which required the use of market research and procurement planning to promote the use of competitive procedures in federal contracting. The FAR implemented those market research provisions and essentially established market research as a tool for identifying (1) sources to ensure competition and (2) commercial products to meet an agency’s needs. Emphasis on the use of market research to identify commercial items has evolved, however, since the 1984 act was enacted. For example, in November 1990, Congress reemphasized market research for the Department of Defense (DOD) in the National Defense Authorization Act for Fiscal Year 1991 (P.L. 101-510). This act sought to encourage DOD to save money and reduce acquisition cycle time by buying products that were commercially available or had already been developed. FASA, which was enacted on October 13, 1994, reiterated some existing requirements and stipulated additional ones for market research for all federal executive agencies. It requires federal executive agencies to conduct market research before developing new specifications for a procurement and before soliciting bids or proposals for a contract exceeding $100,000. FASA also requires agencies to use market research results to determine whether commercial items/NDI could meet their needs if either the item or the requirement were modified to some extent. These provisions seek to ensure that agencies’ requirements definition and contracting communities are involved in market research and that cost/performance tradeoffs are evaluated up front to encourage the use of commercial items or NDI. All FASA provisions were to apply no later than October 1, 1995. The officials responsible for incorporating FASA’s market research provisions into the FAR, however, made such revisions optional for solicitations issued from October 1 through November 30, 1995, and mandatory for solicitations issued on or after December 1, 1995. The officials explained that the 2-month delay allowed more time for agency officials to be trained and familiarize themselves with the changes in the regulations. Such regulatory changes included (1) the use of note 26 in Commerce Business Daily (CBD) preaward notices as a final check on the government’s market research effort and (2) the requirement to identify, via market research, customary commercial practices regarding customizing, modifying, or tailoring of items to meet customer needs and associated costs. The FAR lists some market research techniques, including (1) contacting knowledgeable individuals in the government and industry regarding market capabilities to meet the acquisition requirements, (2) publishing formal requests for information in appropriate technical journals or business publications, and (3) involving potential offerors in interchange meetings or holding presolicitation conferences early in the acquisition process. In general, existing market research efforts and practices relating to commercial items and NDI varied greatly. For example, we found variances in the emphasis DOD and civilian agencies placed on pre-FASA market research. Additionally, our review of selected acquisition requirements and contract awards showed variances in the type and extent of existing market research practices, primarily due to the circumstances surrounding the buy. Such circumstances included the dollar value; nature of the buy (whether it was a new or recurring requirement); and the industry sector or pace of technology changes for the item involved. Variances were also apparent in the use of the results of such research. Efforts to implement FASA’s market research changes are underway. Government and industry officials stated, however, that it will probably take well over a year after the December 1, 1995, implementation of FASA in governmentwide regulations for significant effects of these changes to be apparent. For example, our review of the use of CBD note 26—the government’s final check on their market research—showed that it is early in the implementation phase. Specifically, due to a lack of awareness of the FAR requirement, federal agencies and procuring activities were generally not using note 26. DOD emphasized market research for commercial items and NDI more than the civilian agency locations we visited. Such emphasis is partly due to additional statutory requirements related to commercial items/NDI and associated market research that have applied to DOD for several years—before FASA made them applicable governmentwide. These included the National Defense Authorization Act for Fiscal Year 1991 (P.L. 101-510). Section 810 of this act required DOD to conduct market research to determine whether an NDI, including a commercial item, was available or could be modified to meet the agency’s need before developing a new specification for a developmental item. As a result of such statutory requirements, DOD, before FASA, had (1) written guidance for its market research process; (2) conducted market research training for specification writers and program managers and their staffs (but not necessarily including contracting officials); (3) established NDI advocates to promote the acquisition of more commercial items and NDI through, among other things, the use of market research; and (4) collected data to measure trends in the procurement of such items. We did not find as much pre-FASA emphasis on market research within the civilian agencies we visited as in DOD. For example, most did not have separate guidance for commercial/NDI market research, or provide training to their acquisition officials that focused on market research. However, post-FASA, some of the civilian agencies have written market research guidance, developed market research training, and adopted many of DOD’s procedures. Market research was performed for 18 of the 21 contracts we reviewed. The three contracts for which such research was not performed were awarded under exceptions to full and open competition. The market research performed in the 18 remaining contracts varied, primarily based on the complexity of the buy; its nature (whether the buy was to fulfill a new or recurring requirement); the dollar value of the buy; and the industry sector involved. For example, the Air Force Electronic Systems Center used a number of market research techniques before finalizing the specification and soliciting offers for one contract totaling $7.6 million. This contract is for a handheld thermal imager to assist security personnel in assessing the cause of alarms emanating from intrusion detection sensors deployed under the Tactical Automated Security System. Specifically, the Air Force tasked the Sandia National Laboratory to conduct a market survey, which was completed in January 1992. Also, the system program office performed an acquisition requirements tradeoff study in 1993 before establishing the requirement. In addition, program officials regularly used industry trade shows, DOD association meetings, and joint service briefings to assess improvements in handheld thermal imagers. They said that the concentration of industry equipment demonstrations and technical personnel at these meetings afforded ideal conditions to determine the state of the art of thermal imagers and identify industry research and development efforts to address this new operational requirement. Notices seeking sources for the thermal imagers were published in the CBD in April and August 1995, and face-to-face meetings were held with several of the vendors who responded to these notices. A solicitation was issued in September 1995 and a contract was awarded in March 1996 for a modified commercial item. On the other hand, less complex market research was performed for a new requirement that involved a simpler, lower dollar value procurement. Specifically, this Army Communications and Electronic Command contract was for a commercially available off-the-shelf Asynchronous Transfer Mode Network Analyzer that would be used to test computer network operations. According to program officials, the users were aware of what was available commercially and contacted a number of companies to determine prices and capabilities. The list of companies was provided to the contracting officer, who published a CBD notice for additional sources. The requirement was identified in November 1994 and a $118,900-contract was awarded for a commercial item in March 1996. Table II.1 in appendix II presents the results of our review of the 21 contracts by agency or military service command, including a description of the item bought, the dollar value of the contract, the type of requirement (or the nature of the buy), and the types of market research conducted before requirements development and solicitation of offers. DOD and industry officials have repeatedly stated that DOD’s acquisition system must evolve not only to meet national security needs, but also to take advantage of rapid technological changes in industry. Critical items such as computers and electronic components are examples of such rapidly changing technology. Officials from the Army’s Communications and Electronic Command and the Air Force’s Electronic Systems Center stated that they keep abreast of such changes by holding frequent briefings with industry representatives to exchange information on new developments. At such meetings, industry participants inform participants from the military activities what they are developing and the military services tell industry what they may need. The Electronic Systems Center officials told us that their market research efforts for specific buys do not have to be—and are not—that extensive now because they have kept up with changes in industry and are relying primarily on industry to supply electronic solutions to their needs since most of what they buy are integrated commercial items. They also stated that their solicitations and awards for new items require contractors to use commercial items and components to the maximum extent practical. Regarding the use of the results of market research in the contracts reviewed, we found evidence that such research was used in 13 of the 21 contracts to obtain commercial items and NDI and in 5 of the 21 contracts to obtain government-unique items or services. In 6 of the 13 contracts, market research identified commercial items/NDI, which ultimately were bought as is. In the other seven contracts, the agencies bought a modified commercial item/NDI. In addition, cost and/or performance tradeoffs were made and acquisition requirements were modified in 6 of the 13 contracts. Table II.2 in appendix II presents the results of the use of market research in these contracts and information regarding tradeoffs on acquisition requirements for the 21 contract actions.