DoD now awarding more than half its contract spending without competitive bids

Editor’s note: An earlier version of this post incorrectly indicated that DoD had missed its competition goals in each year since 2010. The department did achieve its goal in fiscal 2014. 

This week marks the two-year point since the Defense Department — worried that only 56.5 percent of its contracted dollars involved a meaningful competition between two or more vendors — issued a series of corrective actions to reverse a downward slide that’s been ongoing for nearly a decade.

So far, the results are not encouraging.

Data published by the Office of Defense Procurement and Acquisition Policy shows things have gotten worse, not better since those orders were signed. In each quarter of fiscal 2016 thus far, DoD’s overall competition rate has been below 50 percent, meaning something dramatic would have to happen in the fourth quarter for the department to meet its goal of 57 percent for the year.

Otherwise, 2016 will be the eighth consecutive year in which the percentage of Defense contract dollars with more than one bidder has declined compared to the year before. It will also be the fifth time out of the last six years in which the department will have missed its annual competition goals even as the goalposts have moved back.

Advertisement

In 2015, DoD set a target of garnering competitive bids for 59 percent of its $659 billion in contracts for that year, but never managed better than 55.1 percent in any quarter (the worst quarter — the first — was 46.9 percent). For 2016, each quarter was worse than the year before: the rate dropped by between two and three percentage points compared to their 2016 equivalents.

Competition has been headed downward for nearly a decade, which is what caused Frank Kendall, the undersecretary of Defense for acquisition, technology and logistics, to issue an August 2014 policy memo telling contracting officers that they’d face extra scrutiny if they continued to issue more than one sole-source contract for the same work to the same vendor. The same memo ordered DoD’s acquisition community to scour the marketplace for the goods and services they wished to buy before settling on a noncompetitive contract.

Will the upcoming presidential transition impact your decision to retire? Take our online survey.

DoD is a big place, and accordingly, DPAP’s competition scorecards are broken out by each Defense component, accounting for the fact that some organizations are buying most of their products or services from global supply chains that are highly competitive; others are restricted by the number of companies who operate domestic shipyards or are capable of building multi-billion dollar aircraft or missile defense systems.

But even adjusted for those factors, the largest spenders: the Army, Navy and Air Force, which also spend tens of billions of contracted dollars on things that aren’t weapons platforms missed their own goals in each quarter of this year.

On the other hand, a few DoD elements are routinely getting close to or beating the benchmarks DoD has set for them: among others, they include the Joint Improvised-Threat Defeat Organization, U.S. Special Operations Command, the Defense Finance and Accounting Service and the Uniformed Services University of the Health Sciences.

Read more of the DoD Reporter’s Notebook.