In a recent report to the House Committee on Oversight and Government Reform, the Government Accountability Office (GAO) found systemic hurdles to reducing the dollars spent on contracts not competed or those that are competed but only receive one bid. The reasons provided to GAO for the use of these contract vehicles reveal the difficulties that the Obama administration and Congress will face in instituting further reforms; they range from technical hegemony or general expertise by contractors to institutional indolence.

Noncompetitive contracts represent 31 percent of obligations, while competed contracts that receive only one bid make up 13 percent. The Office of Management and Budget (OMB) recently cited the latter as high risk because the lack of responses deprives "agencies of the ability to consider alternative solutions in a reasoned and structured manner."

While GAO identified few "contracts or orders that did not reflect sound procurement or management practices," they found that agencies often could not compete a contract because of the expertise or monopoly on proprietary data of one contractor. This was especially true of Department of Defense (DOD) contracts for services supporting a weapons program. Over half of the noncompetitive DOD contracts that GAO reviewed used "lack of access to proprietary technical data" as a justification.

In almost all of those contracts, the government forwent purchase of the rights to the technical data based on short-term budgetary considerations. As the contractor tasked with creating the weapons system gains expertise over the course of development, the government essentially becomes "stuck" with the contractor, which can end up costing the government much more down the road in noncompetitive contract costs compared to the price of purchasing the technical data at the beginning of program development.

Congress has begun to address the issue of access to technical data. Most recently, Congress near-unanimously passed in 2009 the Weapon Systems Acquisition Reform Act that, along with other competition-enhancing elements, "requires acquisition strategies for major defense acquisition programs to include measures to ensure competition throughout the life cycle of the program," which "includes considering the acquisition of complete technical data packages." There is no evidence yet that the legislation will produce the desired results.

Purchase of proprietary data at the start of a weapons program, however, is not a panacea to DOD noncompetitive contracts. GAO also found that, because of the ever-shrinking pool of defense contractors (which ironically is partly the result of the peace dividend Washington urged contractors to take part in at the end of the Cold War), the government often has "little choice other than to rely on the contractors that were the original equipment manufacturers."

GAO also found that a federal agency could become too comfortable with a contractor and thus limit the use of competition to favor a certain company. Contracting officials told GAO that it is not unusual for a federal agency's program office, which dictates the requirements of a contract, to lean on a contracting office, which carries through with the award of the contract, to award a contract to a favored incumbent contractor. Sometimes the program office will go further and produce overly restrictive requirements that could only lead to an offer from the incumbent contractor.

The Obama administration has attempted to correct these deficiencies in competition. In its FY 2010 budget guidance, "OMB instructed agencies to reduce dollars obligated to high-risk contracts – including noncompetitively awarded contracts and contracts competed with only one offer received – by 10 percent." The required reductions, according to OMB, have already produced results with a reduction in contracts awarded without competition in the first six months of FY 2010. The Office of Federal Procurement Policy (OFPP), following up in October 2009, released "guidelines for agencies to evaluate, in part, the effectiveness of their ... competition practices."

GAO recognizes these advancements but concludes that the federal government could do more. One of the most often heard complaints during the GAO study was the lack of well-trained staff, and thus GAO recommends "establishing an effective, adequately trained team of contracting and program staff working together, starting early in the acquisition process." GAO appreciates that this may "challenge conventional thinking," but it stresses that it is "key" to taking full advantage of targets of opportunity.

GAO also recommends that OFPP investigate amending the Federal Acquisition Regulation (FAR), the government's contracting code, to require federal agencies to "regularly review and critically evaluate the circumstances leading to only one" contractor offering a bid on a contract. GAO adopted this solution straight from several agencies that have attempted to boost competition on their own by instituting in-house reforms. GAO acknowledges, "Some degree of noncompetitive contracting is unavoidable," but, "Given the nation's fiscal constraints," lack of competition within contracting just because a contractor "is doing a good job," or the agency is comfortable with the company, is unacceptable.