What Is The Meaning Of Competition?

A story about a contract at the DHS Office of Counternarcotics this week stimulated a lot of interest from readers.

The story spelled out how officials in the office, under pressure to produce a report about how to measure the effectiveness of drug interdiction efforts, took a procurement shortcut outlined by the consultant who was eventually hired last year. The consultant and his subcontractors were colleagues at the consulting firm (one of them actually owned the firm) where the government official leading the effort worked before joining the office.

Reaction was mixed. Some readers expressing outrage about details showing the government spends more than half of procurement spending (some $200 billion now) on deals involving less than full and open competition. Others expressed disdain. One DHS official, R. Leigh Gillette, a senior contract specialist in FEMA's Gulf Coast Recovery Section, wrote this:

"I have been a contract specialist for over 20 years and have been very active in a professional organization supporting developing professionals in this area. No one I have talked to has ever seen a 'No-Bid' contract.
What planet are you from?"

I even got a call from the White House Office of Management and Budget. A spokesperson wondered why I hadn't called for their input. He explained how the proportion of spending by the government that was spent on contracts that have been competed hasn't changed during the Bush Administration.

According to a fact sheet and chart that he sent along, the proportion of dollars spent on competed contracts has been steady for a decade at almost 64 percent. Fair enough.

But the story is far more nuanced, at least according to a memo he also sent along by Paul A. Denett, the adminsitrator of the Office of Federal Procurement Policy.

Denett begins the memo by saying: "Competition is the cornerstone of our acquisition system. The benefits of competition are well established. Competition saves money for the taxpayer, improves contractor performances, curbs fraud, and promotes accountability for results."

Denett cites the chart showing "the overall percentage of dollars competed has remained relatively constant." But he quickly digs deeper, showing that there's much more to it all.

"The lack of meaningful competiton for orders has taken on increased significance in recent years with the growth of obligations through task and delivery orders," he wrote in the May 31 memo.

That is to say, the government buys billions of dollars worth of goods and services through open-ended contracts that initially were "competed" but evolve into something less than "full and open competition" as the government grants more and more work to the same contractor. Anyway, check out the memo for yourself.

Almost everybody agrees that in general competition has many salutary effects. It's also clear that "meaningful competition" appears to be waning for contracts worth many billions of dollars. The question that Denett and others are addressing -- and a question that has been vexing officials for decades -- is how to ensure that government regularly secures the benefits of competition in the best sense of the word.


By Robert O'Harrow |  August 23, 2007; 11:03 AM ET competition
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Comments

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As a small business federal contractor, I have watched the government change from simply asking for bids via IFB (Invitation for Bid) where you fill in the lines with your price and then the bids are opened and whoever is the lowest price wins. Past Performance in of less importance. Then the low bidder can't do the job and the government has to go to the expense of putting the work back on the street for bid and the process repeats itself. The last few years have seen a major change in that the work is now open to contractors by RFP (Request for Proposal). The contractor must provide details on how he/she will operate the program, staffing, materials, supplies, management, etc., as well as detailed pricing to substantiate the details. And, past performance has played a major role in the evaluation. In the last couple of years, however, many of the experienced contracting officers are retiring or going into other arenas leaving inexperienced and untrained contracting officials who are given more than they can handle. In addition, the individuals who have been members of the evaluation team have also left leaving no one to perform the evaluations. So....we see a return to the IFBs. This is going to cost the government more in the long run. What is seen as a quick fix will not be and we will see a return to inexperienced contractors who low ball the work in order to get the job and then cannot perform. I can understand a tendency to find ways to get around this extensive problem. I fail to see discussion on these real issues of no $ for training and no incentive to retain expertise. I would guess the $ is going to the middle east.

Posted by: Carole Metour | August 24, 2007 10:47 AM

I was a contract specialist for a short time because of this very reason. I saw that there was the attitude of "just get someone in here to start working on it." I was not comfortable sending out solicitations as IFB's that I felt should have been RFP's and thus, I left that organization because I did not want to be around with the Inspector General finally decides to audit that branch of the agency. I hope that this is not the attitude of all procurement agents across the board. I would attribute it to lack of training and the lack of desire to understand the FAR and contract regulations set by Congress to promote fair competition among government contractors.

Posted by: KRH | August 24, 2007 12:08 PM

it is generally accepted that Competition in Government Contracting is a Myth although as a nation we keep trying, as we should. The article above by Mr. O'Harrow certainly shouldn't surprise anyone inside or outside of government. It's a documented fact that the largest 35 Federal Contractors control more than half the contracting dollars spent by the Federal Government and that's a very conservative statement. Congressional oversight committees are constantly addressing and investigatinig whether taxpayers get a good deal from acquiring agencies such as GSA, DOD and others. Read most IG reports and the answer is always a resounding no, however statements like the one from Mr. Denett at OMB are common. The devil is in the detail. The U.S. Senate in 2006 ratified and the President signed SB2590 to create a portal to give the common citizen a view into how the Government was spending their hard earned tax dollar, the cornerstone of SB2590 was the fact that while the Senate spoke about competition, fair play and passed laws to that effect, there was never really any way for lawmakers or the average American to access information that document competition and fair play, consequently even as lawmkers certified competition, true competitive acquisition across the board never happened and some,like Mr. O'Harrow doubt it happens even now.

Some say that true competition would occur if the government scraps Omnibus Contracts similar to those referred to by Mr.Denett, however, that assumption may be a bit naive. Omnibus contracts have their place in the Government's acquisition tool box and can in fact deliver on the promise of fair and reasonable rapid acquisition, yet, when most omnibus contracts that are effective are controlled by the same 35 largest contractors there obviously is a problem. When contracts are awarded solely on the basis of acquaintance and familiarity, one can understand the elements that are at the root of the confusion that has dogged competition in Government Contracting since well before World War II and which stil persists with no signinficant sign of ever changing, but change the system we must, and forums like these are a great start.

Posted by: Tom Graham | August 27, 2007 11:21 PM

I have been in the industrial supply business for 30 years. Over the last 15 years, tax supported manufacturers have followed Jack Welch's principle of lean manufacturing. Laying off the people in procurement departments and awarding (often without bid)
sole source exclusive contracts to large,
national supply houses, excluding small supply house which have competed successfully for decades at these manufacturers.
By eliminating competition, manufacturers have allowed monopolies to flurish with little or no oversight, ignoring the one basic human instinct.....greed!!
As the sole source supplier gets imbedded in the manufacturer's system, unhealthy relationships develop between employees in the manufacturer and employees at the supply houses, resulting in kickbacks that are funded by inflated prices.(guess who pays?..............the tax payer!)
In the mean time,the excluded supply houses
with decades of experience selling into these manufacturers, are forced to close
eliminating further competition.
Only competiton can expose inflated pricing and hold greed in check.
Like an iceburg, only a small percentage of corruption is ever exposed to the public.

Posted by: robert spencer | August 28, 2007 11:03 AM

I NEED ADDITIONAL INFORMATION ON HOW THE EMOPLOMENT WORK FOR NON-EXPERMENT WORKERS.

Posted by: HOWARD | August 28, 2007 07:01 PM

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