LEG 505: The Power Of Competition
The Power of Competition
Laura Walsh-Steinman
Strayer University
LEG 505
Dr. Drain
July 29, 2012
The Power of Competition
Introduction
Part 1 of the Federal Acquisition System (FAR) states that its purpose is to: ". . . deliver on a timely basis the best value product or service to the customer, while maintaining the public 's trust and fulfilling public policy objectives [FAR Part 1]." To meet that objective, application of the FAR System will maximize the use of commercial products and services, use contractors with successful past performance or demonstrate a current superior ability to perform, and promote competition as well as minimize administrative operating costs; conduct business with integrity; fairness and openness; …show more content…
and fulfill public policy objectives [FAR].
In 2008, the total government budget totaled approximately $500 billion with nearly $390 billion of it allotted to the Department of Defense [CM babcock, 2009]. Many see competition as a safeguard against collusion between government buyers and private sellers [perlman, 3187]
The Competition in Contracting Act of 1984 (CICA) envisioned: " . . . competitive bidding not only as a preventative measure against corruption, but also as a means to ensure that contracts were awarded to the bidder offering the best price for the best product. Moreover, not only would government be getting a better value, but the competitive process would also increase efficiency among the different contractors vying for the government’s business." [ p3196, perlman].
The Government Accountability Office (GAO) has stated that "Competition is a cornerstone of the acquisition system and a critical tool for achieving the best possible return on investment for taxpayers. The benefits of competition in acquiring goods and services from the private sector are well established. Competitive contracts can help save the taxpayer money, improve contractor performance, curb fraud, and promote accountability for results. While federal statute and acquisition regulations generally require that contracts be awarded on the basis of full and open competition, they also permit federal agencies to award noncompetitive contracts in certain circumstances, for example, when only one vendor can supply the requirements or when a sole source award is made under specified small business programs. The government obligates tens of billions of dollars every year under noncompetitive contracts. Further, the government obligates billions of dollars annually under contracts that are awarded competitively but for which the government receives only one offer—situations the Office of Management and Budget (OMB) has recently cited, along with noncompetitive contracts, as high risk. [ GAO-10-833 highlight]."
When Competition Is Required And When It Is Not
While federal agencies are generally required to award contracts on the basis of full and open competition, they are permitted to award noncompetitive contracts in certain situations. [ GAO-10-833 highlight]."
The Federal Acquisition Streamlining Act (FASA) of 1994, for example, establishes a
“preference” for the procurement of commercial items, which are generally not subject to full and open competition under CICA [Manual].
Under CICA, “full and open competition” results when “all responsible sources are permitted to submit sealed bids or competitive proposals.”32 A responsible source is a prospective contractor who (1) has adequate financial resources to perform the contract, or the ability to acquire such resources; (2) is able to comply with the required or proposed delivery or performance schedule; (3) has a satisfactory performance record; (4) has a satisfactory record of integrity and business ethics; (5) has the necessary organization, experience, technical skills, and accounting and operational controls, or the ability to obtain them; (6) has the necessary production, construction, and technical equipment and facilities, or the ability to obtain them; and (7) is otherwise qualified and eligible to receive an award under applicable laws and regulations.[manual] Agencies meet CICA’s requirement for full and open competition by using one of the “competitive procedures” recognized under the act.34 CICA recognizes the following procedures as competitive:
1. Sealed bids. Sealed bids are offers submitted in response to invitations for bids (IFBs); opened publicly at a specified time and place; and evaluated without discussions with the bidders, with the contract being awarded to the lowest priced responsible bidder.35 CICA requires that agencies solicit sealed bids if (1) time permits their solicitation, submission, and evaluation; (2) the award will be made on the basis of price and other price-related factors; (3) it is not necessary to conduct discussions with bidders about their bids; and (4) there is a reasonable expectation of receiving more than one sealed bid.
2. Competitive Proposals. Agencies are to use competitive proposals whenever “sealed bids are not appropriate” in light of the previous four factors. Competitive proposals are offers received in response to requests for proposals (RFPs). RFPs generally provide for discussion or negotiation between the government and at least those offerors within the “competitive range,” with the contract being awarded to the responsible offeror whose proposal represents the
“best value” for the government.
3. Combinations of competitive procedures. These include procedures like two-step sealed bidding. With two-step sealed bidding, the first step consists of the submission, evaluation and, potentially, discussion of technical proposals from each bidder with no pricing involved. In the second step, sealed bids are submitted only by those who submitted technically acceptable proposals during the first step.
4. Procurement of architectural or engineering services conducted in accordance with the requirements of the Brooks Act (40 U.S.C. §§541-559). The Brooks Act allows the selection of architects and engineers based upon their qualifications without consideration of the proposed price for the work. Awards must be made to the highest-ranked offeror unless a reasonable price cannot be agreed upon.
5. Competitive selection of basic research proposals resulting from a general solicitation and peer or scientific review of proposals, or from a solicitation conducted pursuant to 15 U.S.C. §638 (research and development contracts forsmall businesses). [manual]
6. Procedures established by the General Services Administration (GSA) for its multiple awards schedule program. Such procedures are recognized as competitive so long as participation in the GSA program is open to all responsible sources, and orders and contracts under GSA’s procedures result in the lowest overall cost alternative to meet the government’s needs.
7. Procurements conducted in pursuant to 15 U.S.C. §644. Section 644 addresses set-asides for small businesses, among other things. Such set-asides are competitive so long as all responsible businesses entitled to submit offers under Section 644 are permitted to compete. The sixth of these provisions is particularly significant because it allows agencies to use the so called “Federal Supply Schedules” (FSS) or “GSA schedules.” These schedules enable agencies to take advantage of a “simplified process” for obtaining commercial supplies and services by issuing task or delivery orders directly to contractors listed on the schedules without issuing IFBs or RFPs.40 [manual]
Some competitions in which only certain contractors can compete nonetheless meet CICA’s requirement for full and open competition because CICA provides for “full and open competition after exclusion of sources.”41 “Full and open competition after exclusion of sources” occurs in two contexts: agencies’ “dual sourcing” initiatives and set-asides for small businesses.42 [manual p9
While federal agencies are generally required to award contracts on the basis of full and open competition, they are permitted to award noncompetitive contracts in certain situations.
[ GAO-10-833 highlight]." However, Congress, by enacting CICA, also recognized that there are situations that require or allow for contracts to be awarded noncompetitively—that is, contracts awarded without full and open competition.6 Some of the permitted exceptions to full and open competition include: 1 Supplies and services are only available from one responsible source, such as unique services from one supplier with unique capabilities, or limited rights to data that make certain services available from one source. 2 The government is under unusual and compelling urgency to procure a good or service, and delaying the award of a contract would result in serious injury, financial or other, to the …show more content…
government. 3 A statute expressly authorizes or requires that the acquisition be made from a specific source or through another agency, such as sole source awards under the SBA’s 8(a) program—one of the federal government’s primary means for developing small businesses owned by socially and economically disadvantaged individuals. 4 The terms of an international agreement between the United States and a foreign government, or written directions of a foreign government reimbursing a federal agency for the cost of an acquisition, preclude competition. 5 The disclosure of the agency’s needs would compromise national security. This exception, however, is not to be used merely because the acquisition is classified or because access to classified matter is necessary.
In general, contracts expected to exceed $100,000 in value are required to be competitively awarded. Consequently, purchases at the micro-purchase level or under the Simplified Acquisition ceiling ($25,000) are an exception.
Also, noncompetitive contracts are not permitted in situations in which the requiring agency has failed to adequately plan for the procurement or in which there are concerns related to availability of funding for the agency, such as funds expiring at the end of the year.
Generally, noncompetitive contracts must be supported by written justifications and approvals that contain sufficient facts and rationale to justify the use of the specific exception to full and open competition that is being applied to the procurement. These justifications must include, at a minimum, 12 elements specified by the FAR, for example, a description of the supplies or services required to meet the agency’s needs and their estimated value; identification of the specific statutory authority permitting other than full and open competition; a determination by the contracting officer that the anticipated cost to the government will be fair and reasonable; a description of market research conducted, if any; and a statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisitions for the supplies or services required.
The approval level for these types of noncompetitive contracts varies according to the dollar value of the procurement. Some contracts do not require written justifications, including those awarded on a sole source basis through the 8(a) program under the “authorized or required by statute” exception.
Although full and open competition is the preferred method to award a contract, agencies can competitively award contracts after limiting the pool of available contractors—a process called “full and open competition after exclusion of sources.” An example of this is when agencies set aside procurements for small businesses. In fact, agencies are required to set aside procurements for competition among qualified small businesses if there is a reasonable expectation that two or more responsible small businesses will compete for the work.7
[Hutton, GAO]
Full and open competition can be obtained through the use of sealed bids, competitive proposals, or other procures defined as competitive under CICA (e.g., procurement of architectural or engineering services under the Brooks Act). Full and open competition under CICA also encompasses “full and open competition after exclusion of sources,” such as results when agencies engage in dual sourcing or set aside acquisitions for small businesses. [Manual, Kate]
Non-procurement
contracts, such as those resulting from agencies’ use of other transaction authority (OTA) or similar authorities, are not subject to CICA because they are not procurement contracts, and CICA only applies to “procurement procedures. [manual]
By definition, under CICA, any procurement contract entered into without full and open competition is noncompetitive.49 This is not to say, however, that every procurement contract entered into without using competitive procedures is in violation of CICA. This is because CICA recognizes seven circumstances wherein agencies can use other than competitive procedures without violating the act’s competition requirements.50 Such circumstances involve the following:
1. Single source for goods or services: The property or services needed by the agency are available from only one responsible source and no other type of property or service satisfies the agency’s needs.
2. Unusual and compelling circumstances: The agency’s need for property or services is of such an unusual and compelling urgency that the government would be seriously injured unless the agency is permitted to limit the number of sources from which it solicits bids or proposals. Maintenance of the industrial base: It is necessary to award the contract to a particular source or sources in order (1) to maintain a facility, producer, manufacturer, or other supplier so that the maintained entity will be available to furnish property or services in the case of a national emergency or to achieve industrial mobilization, or (2) to establish or maintain an essential engineering, research, or development capability to be provided by an educational or other nonprofit institution or a federally funded research and development center.
4. Requirements of international agreements: The terms of an international agreement or treaty between the United States and a foreign government or international organization, or the written directions of a foreign government reimbursing a federal agency for the cost of procuring property or services, effectively require the use of procedures other than competitive procedures.
5. Statutory authorization or acquisition of brand-name items for resale: A statute expressly authorizes or requires that the procurement be made through another executive agency or from a specified source, or the agency’s need is for brand name commercial items for authorized resale. 6. National security: Disclosure of the agency’s procurement needs would compromise national security unless the agency is permitted to limit the number of sources from which it solicits bids or proposals.
7.
Necessary in the public interest: The head of an executive agency determines that it is necessary in the public interest to use other than competitive procedures 49 10 U.S.C. § 2304(c) & 41 U.S.C. § 253(c). 50 10 U.S.C. § 2304(c) & 41 U.S.C. § 253(c). 51 An amendment made to CICA by Section 862 of the Duncan Hunter National Defense Authorization Act for FY2009 limits the duration of contracts awarded in reliance on this exception. The term of such contracts may not exceed the time necessary (1) to meet the unusual and compelling requirements of the work to be performed under the contract and (2) for the executive agency to enter into another contract for the required goods and services through the use of competitive procedures. Such contracts may not last longer than one year unless the head of the agency entering into the contract determines that exceptional circumstances apply. P.L. 110-417, § 862, 122 Stat. 4546 (Oct. 14, 2008).
Competition in Federal Contracting: An Overview of the Legal Requirements Congressional Research Service 12 in the procurement and notifies Congress in writing of this determination no less than 30 days before the award of the contract.52
[manual]
Justifications & Approvals
CICA’s requirement that contracting officers provide justifications of, and obtain approvals for, all noncompetitive procurements conducted in reliance on a CICA exception further checks agencies’ discretion in using noncompetitive procedures.60 Agencies can rely on the CICA exceptions only when contracting officers justify the use of other than competitive procedures in writing and certify the accuracy and completeness of their justifications.61 These justifications must then be approved by agency officials of a higher rank than the contracting officer, with the identity of the approving official determined by the expected value of the contract,62 as Table 1 illustrates.
Table 1. Approving Officials for Noncompetitive Contracts in General
Contract Value Approving Official
Under $650,000 Contracting officer’s certification suffices unless higher approval is required under agency procedures
Over $650,000 and below $12.5 million Competition advocate for the procuring activity or another official as provided under 48 C.F.R. §6.304(a)(3) or (4)
(authority cannot be delegated)
Over $12.5 million and below $62.5 million (all agencies other than DOD,
NASA, and the Coast Guard)
Over $12.5 million and below $85.5 million (DOD, NASA, and the Coast
Guard)
Head of the procuring activity or a delegate who, if a member of the armed services, is a general or flag officer or, if a civilian, is serving in a GS-16 or higher position or a comparable position under another schedule
Over $62.5 million (all agencies other than DOD, NASA, and the Coast Guard)
Over $85.5 million (DOD, NASA, and the Coast Guard)
Senior procurement executive of the agency designated pursuant to Section 16(3) of the Office of Federal
Procurement Policy Act (cannot be delegated, other than in the case of the Undersecretary of Defense for Acquisition,
Technology & Logistics acting as the senior procurement executive of DOD)
Justifications must include (1) a description of agency needs; (2) an identification of the statutory exception upon which the agency relied and a demonstration of the reasons for using the exception that is based upon the proposed contractor’s qualifications or the nature of the procurement; (3) a determination that the anticipated cost will be fair and reasonable; (4) a description of any market survey conducted, or a statement of the reasons for not conducting a market survey; (5) a listing of any sources that expressed interest in the procurement in writing; and (6) a statement of any actions that the agency may take to remove or overcome barriers to competition before subsequent procurements.69 [manual]
Source: Congressional Research Service, based on 48 C.F.R. §6.304 [manual]
Three major problems/issues with Full and Open Competition in Federal Contracting
Time it takes to compete
Such commentators have pointed out that agency operations can be delayed by the time it takes to solicit and evaluate offers from eligible suppliers. These delays are reportedly especially harmful when agencies are contracting for goods or services for disaster responses or military operations. Moreover, because there are costs involved in agencies’ soliciting and evaluating offers, these commentators note that there comes a point when the government’s costs in competing contracts are greater than the savings it realizes from the lower price, higher quality goods it obtains through competition. It was, in part, for this reason that the drafters of the Competition in Contracting Act (CICA) of 198411 opted to require full and open competition rather than maximum competition. They reportedly considered language calling for “maximum competition,”12 but rejected it, in part, because “there is a point of diminishing return” with competition.13 Proponents of limits on competition further note that competition can increase the risk that government contractors will be unable to perform by allowing new contractors—who do not have experience meeting agencies’ needs or complying with the accounting and paperwork requirements imposed on federal contractors—to win government contracts. Agencies reportedly would prefer to deal with their incumbent contractors, assuming these contractors are competent, because they represent “known quantities” for the agencies.1
[kate manual]
Cost
In addition to authorizing the use of noncompetitive procedures in certain circumstances, CICA authorizes the use of “special simplified procedures” when agencies make “small purchases.” CICA’s drafters included this provision because they recognized that the costs of conducting competitions can exceed the savings resulting from competition when agencies procure items with low prices.75 CICA itself defined a “small purchase” as one whose expected value was less than $25,000,76 but was later amended to include purchases whose expected value was below the simplified acquisition threshold (currently, $150,000).77 Moreover, since 1996, under an amendment to CICA, agencies have also had authority to use simplified acquisition procedures in purchasing commercial items whose expected value exceeds the simplified acquisition threshold but is below $6.5 million (or $12 million in the case of goods or services purchased in support of contingency operations, or for defense against or recovery from nuclear, biological, chemical, or radiological attack).78 Agencies can rely on this latter authority only when their contracting officers reasonably expect, based upon market research and the nature of the goods or services sought, that offers will include only commercial items.79 This authority to use simplified procedures in purchases of commercial items valued at between $150,000 and $6.5 million is temporary, under what the Federal Acquisition Regulation (FAR) calls a “test program,” and will expire on January 1, 2012, unless renewed.80 CICA prohibits agencies from dividing proposed purchases in excess of the “small purchase” threshold into several purchases in order to take advantage of the simplified procedures, and it requires agencies to promote competition “to the maximum extent practicable” when using simplified procedures. CICA otherwise leaves the articulation of the simplified acquisition procedures to the FAR, which prescribes somewhat different regulations for acquiring different prices and types of goods and services (i.e., commercial or noncommercial). See Figure 2. Under the FAR, purchases whose expected value is below the simplified acquisition threshold ($150,000) are further subdivided into (1) those below the micropurchase threshold (generally $3,000) and (2) those above it.82 When making “micropurchases,” or purchases at or below $3,000, agencies are to promote competition, to at least a limited degree, by distributing their purchases “equitably” among qualified suppliers “[t]o the extent practicable.”83 They may make micropurchases without soliciting competitive quotations only if the contracting officer, or other duly appointed official, considers the price to be reasonable.84 When purchases are above the micropurchase threshold but below the simplified acquisition threshold, agencies “shall use simplified acquisition procedures to the maximum extent practicable.”85 These purchases are set aside for small businesses, making them “full and open competitions after the exclusion of sources” under CICA. In such purchases, and in purchases of commercial items whose expected value exceeds the simplified acquisition threshold but is below $6.5 million (or $12 million in emergencies), agencies “must promote competition to the maximum extent practicable to obtain supplies and services from the source whose offer is the most advantageous to the Government considering the administrative cost of the purchase.”87 This generally means that agencies “must consider solicitation of at least three sources,” two of which were not included in the previous solicitation. Contracting officers are prohibited from soliciting quotations based on personal preferences or restricting solicitations to suppliers of well-known and widely distributed makes or brands[manual]
[manual has charts]
Ambiguous language
Interpretation of Intent
Source Selection/Protest
Contracting for R&D or prototypes can be difficult because the uncertainties inherent in the development of new technologies make it hard to establish contract prices. Additionally, the companies best able to perform such contracts are often not regular government vendors and may be unwilling or unable to comply with the government’s procurement regulations [manual,6]
Complexity
The difficulty of defining goals for government contracting is exacerbated by the complexity of any given government task beyond simple efficacy of service or product delivery. As James Q. Wilson explains, “[G]overnment has many valued outputs, including a reputation for integrity, the confidence of the people, and the support of important interest groups,” as well as service delivery.12 The legal structures overseeing government tasks variously demand “openness, fairness, participation, consistency, rationality and impartiality” to name a few not-so-simple goals.13 To further complicate the problem, Wilson notes, “[w]e cannot measure these things nor do we agree about their relative importance [hansen2469 ”
Soliciting using other than full and open competition
Statutory Requirement. Nutsheel 64 - 104
Generally, noncompetitive contracts must be supported by written justifications and approvals that contain sufficient facts and rationale to justify the use of the specific exception to full and open competition that is being applied to the procurement. These justifications must include, at a minimum, 12 elements specified by the FAR, for example, a description of the supplies or services required to meet the agency’s needs and their estimated value; identification of the specific statutory authority permitting other than full and open competition; a determination by the contracting officer that the anticipated cost to the government will be fair and reasonable; a description of market research conducted, if any; and
1 a statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisitions for the supplies or services required.
The approval level for these types of noncompetitive contracts varies according to the dollar value of the procurement. Some contracts do not require written justifications, including those awarded on a sole source basis through the 8(a) program under the “authorized or required by statute” exception.
Although full and open competition is the preferred method to award a contract, agencies can competitively award contracts after limiting the pool of available contractors—a process called “full and open competition after exclusion of sources.” An example of this is when agencies set aside procurements for small businesses. In fact, agencies are required to set aside procurements for competition among qualified small businesses if there is a reasonable expectation that two or more responsible small businesses will compete for the work.7
[Hutton]
Any contract entered into without full and open competition is noncompetitive, but noncompetitive contracts can still be in compliance with CICA when circumstances permitting other than full and open competition exist. CICA recognizes seven such circumstances, including (1) single source for goods or services; (2) unusual and compelling urgency; (3) maintenance of the industrial base; (4) requirements of international agreements; (5) statutory authorization or acquisition of brand-name items for resale; (6) national security; and (7) contracts necessary in the public interest. CICA also allows agencies to use “special simplified procedures” when acquiring goods or services whose expected value is less than $150,000, or commercial goods or services whose expected value is less than $6.5 million ($12 million in emergencies). [Manual, Kate]
Should there be a step-by-step process for conducting source selection
No. Complexity of procurement determins the eval factors and subfactors and what is needed. Already have a model.
References
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Wilson, J. B. (1999). Book title. Place of publication: Publisher.
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Laura Walsh-Steinman
Strayer University
LEG 505
Dr. Drain
July 29, 2012
The Power of Competition
Introduction
Part 1 of the Federal Acquisition System (FAR) states that its purpose is to: ". . . deliver on a timely basis the best value product or service to the customer, while maintaining the public 's trust and fulfilling public policy objectives [FAR Part 1]." To meet that objective, application of the FAR System will maximize the use of commercial products and services, use contractors with successful past performance or demonstrate a current superior ability to perform, and promote competition as well as minimize administrative operating costs; conduct business with integrity; fairness and openness; …show more content…
and fulfill public policy objectives [FAR].
In 2008, the total government budget totaled approximately $500 billion with nearly $390 billion of it allotted to the Department of Defense [CM babcock, 2009]. Many see competition as a safeguard against collusion between government buyers and private sellers [perlman, 3187]
The Competition in Contracting Act of 1984 (CICA) envisioned: " . . . competitive bidding not only as a preventative measure against corruption, but also as a means to ensure that contracts were awarded to the bidder offering the best price for the best product. Moreover, not only would government be getting a better value, but the competitive process would also increase efficiency among the different contractors vying for the government’s business." [ p3196, perlman].
The Government Accountability Office (GAO) has stated that "Competition is a cornerstone of the acquisition system and a critical tool for achieving the best possible return on investment for taxpayers. The benefits of competition in acquiring goods and services from the private sector are well established. Competitive contracts can help save the taxpayer money, improve contractor performance, curb fraud, and promote accountability for results. While federal statute and acquisition regulations generally require that contracts be awarded on the basis of full and open competition, they also permit federal agencies to award noncompetitive contracts in certain circumstances, for example, when only one vendor can supply the requirements or when a sole source award is made under specified small business programs. The government obligates tens of billions of dollars every year under noncompetitive contracts. Further, the government obligates billions of dollars annually under contracts that are awarded competitively but for which the government receives only one offer—situations the Office of Management and Budget (OMB) has recently cited, along with noncompetitive contracts, as high risk. [ GAO-10-833 highlight]."
When Competition Is Required And When It Is Not
While federal agencies are generally required to award contracts on the basis of full and open competition, they are permitted to award noncompetitive contracts in certain situations. [ GAO-10-833 highlight]."
The Federal Acquisition Streamlining Act (FASA) of 1994, for example, establishes a
“preference” for the procurement of commercial items, which are generally not subject to full and open competition under CICA [Manual].
Under CICA, “full and open competition” results when “all responsible sources are permitted to submit sealed bids or competitive proposals.”32 A responsible source is a prospective contractor who (1) has adequate financial resources to perform the contract, or the ability to acquire such resources; (2) is able to comply with the required or proposed delivery or performance schedule; (3) has a satisfactory performance record; (4) has a satisfactory record of integrity and business ethics; (5) has the necessary organization, experience, technical skills, and accounting and operational controls, or the ability to obtain them; (6) has the necessary production, construction, and technical equipment and facilities, or the ability to obtain them; and (7) is otherwise qualified and eligible to receive an award under applicable laws and regulations.[manual] Agencies meet CICA’s requirement for full and open competition by using one of the “competitive procedures” recognized under the act.34 CICA recognizes the following procedures as competitive:
1. Sealed bids. Sealed bids are offers submitted in response to invitations for bids (IFBs); opened publicly at a specified time and place; and evaluated without discussions with the bidders, with the contract being awarded to the lowest priced responsible bidder.35 CICA requires that agencies solicit sealed bids if (1) time permits their solicitation, submission, and evaluation; (2) the award will be made on the basis of price and other price-related factors; (3) it is not necessary to conduct discussions with bidders about their bids; and (4) there is a reasonable expectation of receiving more than one sealed bid.
2. Competitive Proposals. Agencies are to use competitive proposals whenever “sealed bids are not appropriate” in light of the previous four factors. Competitive proposals are offers received in response to requests for proposals (RFPs). RFPs generally provide for discussion or negotiation between the government and at least those offerors within the “competitive range,” with the contract being awarded to the responsible offeror whose proposal represents the
“best value” for the government.
3. Combinations of competitive procedures. These include procedures like two-step sealed bidding. With two-step sealed bidding, the first step consists of the submission, evaluation and, potentially, discussion of technical proposals from each bidder with no pricing involved. In the second step, sealed bids are submitted only by those who submitted technically acceptable proposals during the first step.
4. Procurement of architectural or engineering services conducted in accordance with the requirements of the Brooks Act (40 U.S.C. §§541-559). The Brooks Act allows the selection of architects and engineers based upon their qualifications without consideration of the proposed price for the work. Awards must be made to the highest-ranked offeror unless a reasonable price cannot be agreed upon.
5. Competitive selection of basic research proposals resulting from a general solicitation and peer or scientific review of proposals, or from a solicitation conducted pursuant to 15 U.S.C. §638 (research and development contracts forsmall businesses). [manual]
6. Procedures established by the General Services Administration (GSA) for its multiple awards schedule program. Such procedures are recognized as competitive so long as participation in the GSA program is open to all responsible sources, and orders and contracts under GSA’s procedures result in the lowest overall cost alternative to meet the government’s needs.
7. Procurements conducted in pursuant to 15 U.S.C. §644. Section 644 addresses set-asides for small businesses, among other things. Such set-asides are competitive so long as all responsible businesses entitled to submit offers under Section 644 are permitted to compete. The sixth of these provisions is particularly significant because it allows agencies to use the so called “Federal Supply Schedules” (FSS) or “GSA schedules.” These schedules enable agencies to take advantage of a “simplified process” for obtaining commercial supplies and services by issuing task or delivery orders directly to contractors listed on the schedules without issuing IFBs or RFPs.40 [manual]
Some competitions in which only certain contractors can compete nonetheless meet CICA’s requirement for full and open competition because CICA provides for “full and open competition after exclusion of sources.”41 “Full and open competition after exclusion of sources” occurs in two contexts: agencies’ “dual sourcing” initiatives and set-asides for small businesses.42 [manual p9
While federal agencies are generally required to award contracts on the basis of full and open competition, they are permitted to award noncompetitive contracts in certain situations.
[ GAO-10-833 highlight]." However, Congress, by enacting CICA, also recognized that there are situations that require or allow for contracts to be awarded noncompetitively—that is, contracts awarded without full and open competition.6 Some of the permitted exceptions to full and open competition include: 1 Supplies and services are only available from one responsible source, such as unique services from one supplier with unique capabilities, or limited rights to data that make certain services available from one source. 2 The government is under unusual and compelling urgency to procure a good or service, and delaying the award of a contract would result in serious injury, financial or other, to the …show more content…
government. 3 A statute expressly authorizes or requires that the acquisition be made from a specific source or through another agency, such as sole source awards under the SBA’s 8(a) program—one of the federal government’s primary means for developing small businesses owned by socially and economically disadvantaged individuals. 4 The terms of an international agreement between the United States and a foreign government, or written directions of a foreign government reimbursing a federal agency for the cost of an acquisition, preclude competition. 5 The disclosure of the agency’s needs would compromise national security. This exception, however, is not to be used merely because the acquisition is classified or because access to classified matter is necessary.
In general, contracts expected to exceed $100,000 in value are required to be competitively awarded. Consequently, purchases at the micro-purchase level or under the Simplified Acquisition ceiling ($25,000) are an exception.
Also, noncompetitive contracts are not permitted in situations in which the requiring agency has failed to adequately plan for the procurement or in which there are concerns related to availability of funding for the agency, such as funds expiring at the end of the year.
Generally, noncompetitive contracts must be supported by written justifications and approvals that contain sufficient facts and rationale to justify the use of the specific exception to full and open competition that is being applied to the procurement. These justifications must include, at a minimum, 12 elements specified by the FAR, for example, a description of the supplies or services required to meet the agency’s needs and their estimated value; identification of the specific statutory authority permitting other than full and open competition; a determination by the contracting officer that the anticipated cost to the government will be fair and reasonable; a description of market research conducted, if any; and a statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisitions for the supplies or services required.
The approval level for these types of noncompetitive contracts varies according to the dollar value of the procurement. Some contracts do not require written justifications, including those awarded on a sole source basis through the 8(a) program under the “authorized or required by statute” exception.
Although full and open competition is the preferred method to award a contract, agencies can competitively award contracts after limiting the pool of available contractors—a process called “full and open competition after exclusion of sources.” An example of this is when agencies set aside procurements for small businesses. In fact, agencies are required to set aside procurements for competition among qualified small businesses if there is a reasonable expectation that two or more responsible small businesses will compete for the work.7
[Hutton, GAO]
Full and open competition can be obtained through the use of sealed bids, competitive proposals, or other procures defined as competitive under CICA (e.g., procurement of architectural or engineering services under the Brooks Act). Full and open competition under CICA also encompasses “full and open competition after exclusion of sources,” such as results when agencies engage in dual sourcing or set aside acquisitions for small businesses. [Manual, Kate]
Non-procurement
contracts, such as those resulting from agencies’ use of other transaction authority (OTA) or similar authorities, are not subject to CICA because they are not procurement contracts, and CICA only applies to “procurement procedures. [manual]
By definition, under CICA, any procurement contract entered into without full and open competition is noncompetitive.49 This is not to say, however, that every procurement contract entered into without using competitive procedures is in violation of CICA. This is because CICA recognizes seven circumstances wherein agencies can use other than competitive procedures without violating the act’s competition requirements.50 Such circumstances involve the following:
1. Single source for goods or services: The property or services needed by the agency are available from only one responsible source and no other type of property or service satisfies the agency’s needs.
2. Unusual and compelling circumstances: The agency’s need for property or services is of such an unusual and compelling urgency that the government would be seriously injured unless the agency is permitted to limit the number of sources from which it solicits bids or proposals. Maintenance of the industrial base: It is necessary to award the contract to a particular source or sources in order (1) to maintain a facility, producer, manufacturer, or other supplier so that the maintained entity will be available to furnish property or services in the case of a national emergency or to achieve industrial mobilization, or (2) to establish or maintain an essential engineering, research, or development capability to be provided by an educational or other nonprofit institution or a federally funded research and development center.
4. Requirements of international agreements: The terms of an international agreement or treaty between the United States and a foreign government or international organization, or the written directions of a foreign government reimbursing a federal agency for the cost of procuring property or services, effectively require the use of procedures other than competitive procedures.
5. Statutory authorization or acquisition of brand-name items for resale: A statute expressly authorizes or requires that the procurement be made through another executive agency or from a specified source, or the agency’s need is for brand name commercial items for authorized resale. 6. National security: Disclosure of the agency’s procurement needs would compromise national security unless the agency is permitted to limit the number of sources from which it solicits bids or proposals.
7.
Necessary in the public interest: The head of an executive agency determines that it is necessary in the public interest to use other than competitive procedures 49 10 U.S.C. § 2304(c) & 41 U.S.C. § 253(c). 50 10 U.S.C. § 2304(c) & 41 U.S.C. § 253(c). 51 An amendment made to CICA by Section 862 of the Duncan Hunter National Defense Authorization Act for FY2009 limits the duration of contracts awarded in reliance on this exception. The term of such contracts may not exceed the time necessary (1) to meet the unusual and compelling requirements of the work to be performed under the contract and (2) for the executive agency to enter into another contract for the required goods and services through the use of competitive procedures. Such contracts may not last longer than one year unless the head of the agency entering into the contract determines that exceptional circumstances apply. P.L. 110-417, § 862, 122 Stat. 4546 (Oct. 14, 2008).
Competition in Federal Contracting: An Overview of the Legal Requirements Congressional Research Service 12 in the procurement and notifies Congress in writing of this determination no less than 30 days before the award of the contract.52
[manual]
Justifications & Approvals
CICA’s requirement that contracting officers provide justifications of, and obtain approvals for, all noncompetitive procurements conducted in reliance on a CICA exception further checks agencies’ discretion in using noncompetitive procedures.60 Agencies can rely on the CICA exceptions only when contracting officers justify the use of other than competitive procedures in writing and certify the accuracy and completeness of their justifications.61 These justifications must then be approved by agency officials of a higher rank than the contracting officer, with the identity of the approving official determined by the expected value of the contract,62 as Table 1 illustrates.
Table 1. Approving Officials for Noncompetitive Contracts in General
Contract Value Approving Official
Under $650,000 Contracting officer’s certification suffices unless higher approval is required under agency procedures
Over $650,000 and below $12.5 million Competition advocate for the procuring activity or another official as provided under 48 C.F.R. §6.304(a)(3) or (4)
(authority cannot be delegated)
Over $12.5 million and below $62.5 million (all agencies other than DOD,
NASA, and the Coast Guard)
Over $12.5 million and below $85.5 million (DOD, NASA, and the Coast
Guard)
Head of the procuring activity or a delegate who, if a member of the armed services, is a general or flag officer or, if a civilian, is serving in a GS-16 or higher position or a comparable position under another schedule
Over $62.5 million (all agencies other than DOD, NASA, and the Coast Guard)
Over $85.5 million (DOD, NASA, and the Coast Guard)
Senior procurement executive of the agency designated pursuant to Section 16(3) of the Office of Federal
Procurement Policy Act (cannot be delegated, other than in the case of the Undersecretary of Defense for Acquisition,
Technology & Logistics acting as the senior procurement executive of DOD)
Justifications must include (1) a description of agency needs; (2) an identification of the statutory exception upon which the agency relied and a demonstration of the reasons for using the exception that is based upon the proposed contractor’s qualifications or the nature of the procurement; (3) a determination that the anticipated cost will be fair and reasonable; (4) a description of any market survey conducted, or a statement of the reasons for not conducting a market survey; (5) a listing of any sources that expressed interest in the procurement in writing; and (6) a statement of any actions that the agency may take to remove or overcome barriers to competition before subsequent procurements.69 [manual]
Source: Congressional Research Service, based on 48 C.F.R. §6.304 [manual]
Three major problems/issues with Full and Open Competition in Federal Contracting
Time it takes to compete
Such commentators have pointed out that agency operations can be delayed by the time it takes to solicit and evaluate offers from eligible suppliers. These delays are reportedly especially harmful when agencies are contracting for goods or services for disaster responses or military operations. Moreover, because there are costs involved in agencies’ soliciting and evaluating offers, these commentators note that there comes a point when the government’s costs in competing contracts are greater than the savings it realizes from the lower price, higher quality goods it obtains through competition. It was, in part, for this reason that the drafters of the Competition in Contracting Act (CICA) of 198411 opted to require full and open competition rather than maximum competition. They reportedly considered language calling for “maximum competition,”12 but rejected it, in part, because “there is a point of diminishing return” with competition.13 Proponents of limits on competition further note that competition can increase the risk that government contractors will be unable to perform by allowing new contractors—who do not have experience meeting agencies’ needs or complying with the accounting and paperwork requirements imposed on federal contractors—to win government contracts. Agencies reportedly would prefer to deal with their incumbent contractors, assuming these contractors are competent, because they represent “known quantities” for the agencies.1
[kate manual]
Cost
In addition to authorizing the use of noncompetitive procedures in certain circumstances, CICA authorizes the use of “special simplified procedures” when agencies make “small purchases.” CICA’s drafters included this provision because they recognized that the costs of conducting competitions can exceed the savings resulting from competition when agencies procure items with low prices.75 CICA itself defined a “small purchase” as one whose expected value was less than $25,000,76 but was later amended to include purchases whose expected value was below the simplified acquisition threshold (currently, $150,000).77 Moreover, since 1996, under an amendment to CICA, agencies have also had authority to use simplified acquisition procedures in purchasing commercial items whose expected value exceeds the simplified acquisition threshold but is below $6.5 million (or $12 million in the case of goods or services purchased in support of contingency operations, or for defense against or recovery from nuclear, biological, chemical, or radiological attack).78 Agencies can rely on this latter authority only when their contracting officers reasonably expect, based upon market research and the nature of the goods or services sought, that offers will include only commercial items.79 This authority to use simplified procedures in purchases of commercial items valued at between $150,000 and $6.5 million is temporary, under what the Federal Acquisition Regulation (FAR) calls a “test program,” and will expire on January 1, 2012, unless renewed.80 CICA prohibits agencies from dividing proposed purchases in excess of the “small purchase” threshold into several purchases in order to take advantage of the simplified procedures, and it requires agencies to promote competition “to the maximum extent practicable” when using simplified procedures. CICA otherwise leaves the articulation of the simplified acquisition procedures to the FAR, which prescribes somewhat different regulations for acquiring different prices and types of goods and services (i.e., commercial or noncommercial). See Figure 2. Under the FAR, purchases whose expected value is below the simplified acquisition threshold ($150,000) are further subdivided into (1) those below the micropurchase threshold (generally $3,000) and (2) those above it.82 When making “micropurchases,” or purchases at or below $3,000, agencies are to promote competition, to at least a limited degree, by distributing their purchases “equitably” among qualified suppliers “[t]o the extent practicable.”83 They may make micropurchases without soliciting competitive quotations only if the contracting officer, or other duly appointed official, considers the price to be reasonable.84 When purchases are above the micropurchase threshold but below the simplified acquisition threshold, agencies “shall use simplified acquisition procedures to the maximum extent practicable.”85 These purchases are set aside for small businesses, making them “full and open competitions after the exclusion of sources” under CICA. In such purchases, and in purchases of commercial items whose expected value exceeds the simplified acquisition threshold but is below $6.5 million (or $12 million in emergencies), agencies “must promote competition to the maximum extent practicable to obtain supplies and services from the source whose offer is the most advantageous to the Government considering the administrative cost of the purchase.”87 This generally means that agencies “must consider solicitation of at least three sources,” two of which were not included in the previous solicitation. Contracting officers are prohibited from soliciting quotations based on personal preferences or restricting solicitations to suppliers of well-known and widely distributed makes or brands[manual]
[manual has charts]
Ambiguous language
Interpretation of Intent
Source Selection/Protest
Contracting for R&D or prototypes can be difficult because the uncertainties inherent in the development of new technologies make it hard to establish contract prices. Additionally, the companies best able to perform such contracts are often not regular government vendors and may be unwilling or unable to comply with the government’s procurement regulations [manual,6]
Complexity
The difficulty of defining goals for government contracting is exacerbated by the complexity of any given government task beyond simple efficacy of service or product delivery. As James Q. Wilson explains, “[G]overnment has many valued outputs, including a reputation for integrity, the confidence of the people, and the support of important interest groups,” as well as service delivery.12 The legal structures overseeing government tasks variously demand “openness, fairness, participation, consistency, rationality and impartiality” to name a few not-so-simple goals.13 To further complicate the problem, Wilson notes, “[w]e cannot measure these things nor do we agree about their relative importance [hansen2469 ”
Soliciting using other than full and open competition
Statutory Requirement. Nutsheel 64 - 104
Generally, noncompetitive contracts must be supported by written justifications and approvals that contain sufficient facts and rationale to justify the use of the specific exception to full and open competition that is being applied to the procurement. These justifications must include, at a minimum, 12 elements specified by the FAR, for example, a description of the supplies or services required to meet the agency’s needs and their estimated value; identification of the specific statutory authority permitting other than full and open competition; a determination by the contracting officer that the anticipated cost to the government will be fair and reasonable; a description of market research conducted, if any; and
1 a statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisitions for the supplies or services required.
The approval level for these types of noncompetitive contracts varies according to the dollar value of the procurement. Some contracts do not require written justifications, including those awarded on a sole source basis through the 8(a) program under the “authorized or required by statute” exception.
Although full and open competition is the preferred method to award a contract, agencies can competitively award contracts after limiting the pool of available contractors—a process called “full and open competition after exclusion of sources.” An example of this is when agencies set aside procurements for small businesses. In fact, agencies are required to set aside procurements for competition among qualified small businesses if there is a reasonable expectation that two or more responsible small businesses will compete for the work.7
[Hutton]
Any contract entered into without full and open competition is noncompetitive, but noncompetitive contracts can still be in compliance with CICA when circumstances permitting other than full and open competition exist. CICA recognizes seven such circumstances, including (1) single source for goods or services; (2) unusual and compelling urgency; (3) maintenance of the industrial base; (4) requirements of international agreements; (5) statutory authorization or acquisition of brand-name items for resale; (6) national security; and (7) contracts necessary in the public interest. CICA also allows agencies to use “special simplified procedures” when acquiring goods or services whose expected value is less than $150,000, or commercial goods or services whose expected value is less than $6.5 million ($12 million in emergencies). [Manual, Kate]
Should there be a step-by-step process for conducting source selection
No. Complexity of procurement determins the eval factors and subfactors and what is needed. Already have a model.
References
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Wilson, J. B. (1999). Book title. Place of publication: Publisher.
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