US GAO publishes report on urgency contracting (GAO-14-304)

The US Government Accountability Office has published an interesting report on the use of urgency contracting by the  Departments of Defense (DOD) and State and the U.S. Agency for International Development (USAID) in the period 2010-2012. The report is interesting in that it shows the relevance of having accurate data in order to carry out oversight efforts such as this one (in their research, they had access to rather poor and incorrect data) and, more importantly, because it clearly points out certain implementation problems that are similar to the ones that can be expected under the EU rules--and, looking at the future, under art 32(2)(c) of Directive 2014/24. It is interesting to read it ahead of its (re)transposition.

US GAO reports on test commercial items program for #publicprocurement

In a recently published report, the US Government Accountability Office (GAO) assessed the status of a test program for the acquisition of commercial items and services--i.e. are those that generally available in the commercial marketplace in contrast with items developed to meet specific governmental requirements.
The report is interesting, and it highlights that US federal agencies are conducting around 2% of their procurement through this program and that, overall, the "test program reduced contracting lead time and administrative burdens and generally did not incur additional risks above those on other federal acquisition efforts for those contracts GAO reviewed." Therefore, there seems to be scope for further use of the commercial items acquisition program.
Importantly too, GAO warns that, however, a significant number of these contracts were "awarded noncompetitively [and that, w]hile these awards were justified and approved in accordance with federal regulations when required, GAO and others have found that noncompetitive contracting poses risks of not getting the best value because these awards lack a direct market mechanism to help establish pricing." Consequently, GAO has recommended the interested federal agencies to look in more detail into the use of the program and to take measures to ensure that thorough market research is conducted before a commercial items contract is awarded noncompetitively.
In my view, the emphasis that GAO places on the collection and analysis of data in order to determine the benefits and success of the commercial items program offers valuable insights to procurement regulators in other jurisdictions--and, particularly, in the EU, where Member States should start considering procurement reform in view of the imminent publication of the new Directives in the Official Journal.

#GAO reports that there is scope for more competition in #US Defense #procurement

The US Government Accountability Office (GAO) has published an interesting report on Defense Contracting: Actions Needed to Increase Competition, where it finds that the proportion of defense contracts subject to competition "declined over the past five fiscal years, from 62.6 percent in fiscal year 2008 to 57.1 percent in fiscal year 2012". Moreover, GAO also found that "the competition rate in fiscal year 2012 varied by specific DOD component with the Air Force having the lowest at 37.1 percent and the Defense Logistics Agency the highest at 83.3 percent. The majority of the noncompetitive awards cited the availability of only one responsible source to meet the government’s needs as the reason for using noncompetitive procedures". 

This overall reduction of 5.5 points has been provoked by a number of factors. "For example, reliance on an original equipment manufacturer throughout the life cycle of a program has been a long-standing challenge for DOD competition, and budget uncertainty can also hinder DOD’s ability to compete. Noncompetitive purchases that DOD makes on behalf of foreign governments can also affect DOD’s competition rate".

In a deeper analysis, GAO points out that the justifications provided for noncompetitive procurement are not always sufficient, despite procurement officials ticking all the boxes and meeting the regulatory requirements to proceed with direct awards. "Many of the noncompetitive justifications GAO reviewed included the required elements as defined by the Federal Acquisition Regulation; however, the level of insight into the reasons for noncompetitive awards varied. For example, some justifications included clear descriptions of market environments where only one source was available to meet the government’s needs or described planned actions that could help improve competition in the future. However, other justifications provided limited insight into the reasons for the noncompetitive award or did not fully describe actions that the agency could take to increase future competition. Without this information, DOD may be missing opportunities to gain a fuller understanding of why past acquisitions were not competitive and may be unable to apply those lessons to effectively facilitate competition for future acquisitions".

Interestingly, GAO stresses that "these factors are not always considered when setting DOD’s annual competition goals" and recommends that "DOD identify, track, and consider the specific factors that affect competition when setting competition goals; develop guidance to apply lessons learned from past procurements to help achieve competition in the future; and collect reliable data on one-offer awards".

For European readers, the report is interesting not only because it raises issues that sound familiar (such as the 'abuse' of void justifications when resorting to negotiated procedures or direct awards of contracts), but also because it stresses the importance of developing solid tools of procurement statistics, monitoring and intelligence in order to develop a continuous appraisal of public procurement activities and foster their increasingly pro-competitive development. 

Forthcoming, revised EU rules on public procurement should indeed promote such tools, with a particular focus on data collection and analysis (which was promoted by the European Commission, but which may be significantly reduced with the proposed suppression of article 84 of the 2011 Commission's proposal by the Council and the European Parliament in the current negotiation of future revisions of EU procurement rules). 

As I already said, I think that the general transatlantic message to carry home in the current revision of the EU rules is that more planning and more oversight / analysis are required. Otherwise, EU public procurement rules will still fall short from ensuring the development of a dynamic and growingly competitive set of tools that can deliver value for money.

US GAO report on the use of small business and other preferences in the acquisition of goods

The US GAO has published an interesting report on the Army's and Defense Logistics Agency's Approach for Awarding Contracts for the Army Combat Shirt. 

The report details how the relevant agencies have moved from preferential emergency contracting towards more competitive preferential contracting for the supply of the increasing number of necessary army combat shirts. 

I think that the report is particularly interesting for non-US procurement lawyers, as it describes very clearly the decision-making procedures that need to be complied with in order to resort to preferential award of government contracts, with or without competition.

US GAO report on interagency contracting: A mirror for centralised purchasing strategies in the EU?

The US Government Accountability Office (GAO) has just published an interesting report and recommendations for executive action regarding interagency contracting.

In the US, interagency contracting refers to a strategy whereby 'one agency either places an order directly against another agency's contract or uses the contracting services of another agency to obtain supplies or services'. The EU rough equivalent is the use of centralised purchasing strategies and, in particular, the carrying out of cooperative procurement--most often through dedicated central purchasing bodies. 

In view of the importance given to these 'smart procurement' strategies in the revision of the current EU rules (see October 2012 compromise text for a 'state of play' on centralised procurement strategies), learning from the lessons offered by the experience in the US looks like a promising opportunity.

In my view, the relevance of the GAO interagency contracting report relies on its realism and practical approach. Indeed, GAO 'designated the management of interagency contracting as a high risk area in 2005, in part because of the need for stronger internal controls and clear definitions of agency roles and responsibilities'. 

Following a first assessment in 2010 and the implementation of important policy reforms aimed at strengthening the governance and oversight of interagency contracting, GAO now issues a series of additional recommendations that, basically, boil down to giving effect to the 2011 Policy developed by the Office of Federal Procurement Policy (OFPP) and to strengthening the collection and analysis of data on interagency contracting. Some of the most interesting extracts are, in my opinion, the following:
OFPP issued guidance in September 2011 that requires agencies to develop business cases for creating new governmentwide acquisition contracts and multi-agency contracts. The business cases must address three key elements: (1) the scope of the contract vehicle and potential duplication with existing contracts; (2) the value of the new contract vehicle, including expected benefits and costs of establishing a new contract; and (3) the administration and expected interagency use of the contract vehicle.
The guidance also requires senior agency officials to approve the business cases and post them on an OMB website to provide interested federal stakeholders an opportunity to review and provide feedback. Feedback is addressed through various channels, including posting written comments through the website and sending letters or memos to stakeholders. According to OFPP, it also conducts follow-up with sponsoring agencies when significant questions are raised during the interagency vetting process, including questions related to potential value or duplication.
OFPP and GSA have taken a number of steps to address the need for better data on interagency contract vehicles. We previously have reported that a lack of reliable information on interagency contracts hampers agencies’ ability to do market research as well as efforts to manage and leverage them effectively. To promote better and easier access to data on existing interagency contracts, OFPP has worked to improve the Interagency Contract Directory, a searchable online database of indefinite delivery vehicles for interagency use created in 2003. [...] Short-term improvements include enhancing the search function and simplifying the presentation of search results, which should aid market research. Potential long-term enhancements include the ability to access vendor past performance information and upload contract documents, such as statements of work, to the system. OFPP officials also noted that this information will be helpful in providing data on the use of interagency contract vehicles, as the database provides information on the amount of obligations against the contracts, and eventually may provide other information such as a notification when contracts not designated for interagency use are being used in that manner.
In my view, the practical recommendations and the policy objectives set out by the OFPP and now strongly endorsed / recommended by GAO make sense and should be carried to the regulation of centralised procurement bodies/strategies in the forthcoming EU rules, with a particular focus on data collection and analysis (which has been significantly reduced with the proposed suppression of article 84 of the 2011 Commission's proposal and, particularly, of its paragraph 3(1) that mandated special public oversight of central purchasing bodies). 

I think that the more general transatlantic message to carry home in the revision of the current of the EU rules is that, as procurement strategies become more complicated, more planning and more oversight / analysis are required. Maybe not an easy lesson to square with the aim of procurement simplification, but definitely an operative need if we want to avoid creating (or nurturing) a 'regulatory beast' we may be unable to tame.

US GAO report on streamlined use of strategic sourcing: Again, on exercising public buyer power

The US Government Accountability Office has issued the "Strategic Procurement: Improved and Expanded Use Could Save Billions in Annual Procurement Costs" report (Sept 2012,, where it analyses the procurement activities of the Departments of Defense (DoD), Homeland Security (DHS), Energy, and Veterans Affairs (VA) during 2011 and finds that US Federal Agencies are not reaping the benefits of a more strategic exercise of their buyer power.

According to GAO, the federal agencies included in the report leveraged only a fraction of their buying power through strategic sourcing (a process that moves an agency away from numerous individual procurements to a broader aggregate approach) and achieved limited savings. "In fiscal year 2011, the four largest federal departments accounted for 80 percent of the $537 billion in federal procurement spending, but reported managing about 5% or $25.8 billion through strategic sourcing efforts. These agencies reported savings of $1.8 billion—less than one-half of one percent of procurement spending."

GAO considers this situation unsatisfactory because "While strategic sourcing may not be suitable for all procurement spending, leading companies strategically manage about 90 percent of their procurements and report annual savings of 10 percent or more. Further, most agencies’ efforts do not address their highest spending areas such as services, which may provide opportunities for additional savings."

Therefore, GAO issues a series of recommendations for a more strategic use of the leverage that the high volume of expenditure provides to the largest federal agencies. In particular, GAO refers to the DoD Office of the Undersecretary of Defense's 2010 "Better Buying Power" Guidelines ( which are designed in pro-competitive terms and indicate to procurement officials that they have to promote real competition if they truly want to achieve savings and obtain long-term superior procurement results.

I find these guidelines interesting and worth reading, particularly as regards this:
Real competition is the single most powerful tool available to the Department to drive productivity. Real competition is to be distinguished from a series of directed buys or other contrived two-source situations which do not harness the full energy of competition. Competition is not always available, but evidence suggests that the government is not availing itself of all possible competitive situations.[...]
Remove obstacles to competition. In recent years, the Department has achieved the highest rates of competition in its history. Having said that, the fact is that a significant fraction of those competitive procurements have involved what is termed “ineffective competition,” since only one offer to a solicitation was received even when publicized under full and open competition. This occurs in about $55 billion of Department contracts annually. One step the Department can take is to mitigate this loss of savings from the absence of competition. A common practice has been to conclude that either a bid or proposal submitted by a single offeror in response to a full and open competition met the standard for adequate price competition because the bid or proposal was submitted with the expectation of competition. As a result, no certified cost or pricing data was requested, no cost or price analysis was undertaken, and often, no negotiations were conducted with that single offeror. Henceforth I expect contracting officers to conduct negotiations with all single bid offerors and that the basis of that negotiation shall be cost or price analysis, as the case may be, using non-certified data. 
A more important approach is to remove obstacles to competitive bidding. For example, the Air Force’s PEO for Services reviewed the Air Force's Design and Engineering Support Program (DESP) for effective competition. She found 39 percent of the task order competitions under the Indefinite Delivery/Indefinite Quantity (IDIQ) contract resulted in one bid. The Air Force team undertook an analysis to determine why they were getting the one bid and made two changes. First, they amended their source selection methodology so that technical, cost, and past performance factors were more equally weighted. No one factor can be less than 25 percent or more than 50 percent. This served to lessen the advantage of the incumbent contractor since the technical factor could not overshadow past performance and cost. Second, the team provided a monthly report to all DESP IDIQ holders listing all known requirements in the pipeline. The report includes sufficient information to allow contractors to evaluate whether or not to bid and to start to prepare a bid package. The team has effectively added an additional 45 days to the time a requirement is made known to the potential offerors and the bid due date. These two changes have reduced the percentage of task orders receiving one bid by 50 percent. The team continues to evaluate its processes to further reduce the percentage. 
Each service component and agency has a competition advocate. I am directing each competition advocate to develop a plan to improve both the overall rate of competition and the rate of effective competition. Those plans should establish an improvement rate of at least 2 percent per year for overall competition and an improvement rate of at least 10 percent per year for effective competition. Those plans are to be approved by the CAEs. The Department’s competition advocate shall brief me on the overall progress being made to achieve those goals.

Even if some of the recommendations are hinting towards potential exploitation of suppliers (such as the mandate to negotiate when a single offer is received), the particularities of the defense industry (where supplier concentration is high and increasing over time) may justify them as an exercise of countervailing seller and buyer power. In any case, in my view, the importance of the message particularly lies in the need to find creative ways of lifting barriers to effective participation (particularly by revising tender requirements) and the existence and key role of the competition advocates within each of the federal agencies conducting major procurement activities. 

In my opinion, the creation of a similar position within main domestic procurement agencies would be desirable [see Sanchez Graells, Public Procurement and the EU Competition Rules (Oxford, Hart Publishing, 2011) 387-388], but this is an issue that, unfortunately, has not found space in the current revision of the EU public procurement Directives (where the more general proposal to create oversight bodies under Art 87 of the 2011 Proposal has been scrapped from the July 2012 Compromise text, most likely due to lack of funding and/or to concerns about the Member States organisational autonomy). 

However, in view of the evidence reported at the other side of the Atlantic, maybe we will at some point realize the relevance of having dedicated officials overseeing the competitiveness of public procurement processes (whether we call them competition advocates, auditors or something else is a discussion for another day). As GAO points out, the potential economic benefits should act as a strong incentive to move in that direction. Particularly in times of economic crisis, it seems clear that you need to invest (in human capital) if you want to save and, ultimately, to grow.

Nuevas recomendaciones de la US GAO sobre suspensión y exclusión de oferentes en contratación pública: hagámoslas nuestras

La United States Government Accountability Office (el equivalente aproximado de nuestro Tribunal de Cuentas) ha publicado recientemente nuevas recomendaciones para la potenciación de los mecanismos de suspensión y exclusión de oferentes en procesos de contratación pública ('Suspension and Debarment: Some Agency Programs Need Greater Attention, and Governmentwide Oversight Could Be Improved',  November 16, 2011, disponible en

Conviene resaltar que el sistema de suspension and debarment contenido en la US Federal Acquisitions Regulation (US FAR, Subpart 9.4—Debarment, Suspension, and Ineligibility) es aproximadamente equivalente a nuestras normas sobre prohibiciones de contratar del art 49 Ley Contratos del Sector Público--aunque mucho más desarrollado y sofisticado. Destaca, por ejemplo, el tratamiento específico de las violaciones de la normativa de defensa de la competencia como causa de suspensión y/o exclusión de licitadores [US FAR 9.406-2 Causes for debarment. "(2) Violation of Federal or State antitrust statutes relating to the submission of offers"; también considerada como causa de suspension en US FAR 9.407-2], que ha venido aplicándose de forma continuada desde, al menos, 1980 (véase 'Debarment of Firms for Anti-Trust Violations', September 29, 1980, disponible en En EEUU prestan mucha atención a esta conexión entre la normativa de defensa de la competencia y de contratación pública como mecanismo para proteger el interés público en la contratación y como refuerzo de las normas antitrust [que, como ya dije, considero posible "importar" sin dificultades a través del art 49.1.c) LCSP: /howtocrackanut/2011/10/colusion-y-contratacion-publica-para.html].

En su último informe, en concreto, la US GAO orienta sus recomendaciones, fundamentalmente, en dos direcciones. De una parte, a la adopción de criterios claros para la aplicación de las normas correspondientes (tanto a nivel de entidad contratante, como con carácter horizontal a nivel federal), de modo que tanto los funcionarios encargados de tramitar los procedimientos como las empresas participantes sean conscientes y tengan claras las reglas del juego. Y, de otra parte, a la dotación de los recursos humanos necesarios para una aplicación efectiva de estas normas. En palabras de la US GAO:

In summary, we recommend that several agencies take steps to improve their suspension and debarment programs ensuring that they incorporate the characteristics we identified as common among agencies with more active programs, including
assigning dedicated staff resources,
developing detailed implementing guidance, and
promoting the use of a case referral process. 
We also recommend that the Administrator of the Office of Federal Procurement Policy issue governmentwide guidance to ensure that agencies are aware of the elements of an active suspension and debarment program and the importance of cooperating with ISDC.

Creo que merece la pena prestar atención a estas recomendaciones y hacerlas nuestras, promoviendo desde la Junta Consultiva de Contratación Administrativa o la Comisión Nacional de Competencia la implantación efectiva: 1) por una parte, de criterios de exclusión de licitadores incumplidores de la normativa de competencia conforme al art 49.1.c) LCSP; y 2) de otra parte, de mecanismos efectivos de aplicación de nuestras normas de competencia en el ámbito de la contratación pública (superando las recomendaciones de la Guía sobre Competencia y Contratación Pública de la CNC).