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GAO Report Highlights Recent Trends In Government Contracting

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Koprince Law LLC

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Earlier this month, the GAO  released a comprehensive report detailing the trends in government contracting over a five-year period (from fiscal year 2011 through 2015). The entire report is available here. If you have a few hours to spare, it’s worth a read; if not, this post will summarize a few of its most eye-catching nuggets.

Off the bat, the report noted the massive amount of money spent on government contracts. In 2015, federal agencies procured over $430 billion in products and services—nearly 40 percent of the government’s discretionary spending. However, this amount represents a substantial decrease in government-wide contracting expenditures since 2011. Defense obligations decreased by nearly 31 percent over this time (dropping from $399 billion to $274 billion), while civilian obligations remained comparatively steady (nearly $176 billion in 2011 to $164 billion in 2015).

Interestingly, the report noted that approximately 2/3 of federal contracts were procured via competitive means during this time. Civilian agencies averaged higher competition rates (nearly 80 percent of solicitations, in 2015) than did defense agencies (only about 56 percent). Even still, a surprising number of competed contracts were effectively sole source awards—in 2015, 14 percent of competed solicitations were awarded to the sole offeror.

GAO further found that fixed-price contracts were the primary purchasing vehicle during this time frame. Nearly 2/3 of total contract obligations during this five-year time period were fixed-price awards. Defense agencies relied more on cost-type contracts—which GAO considers to be “high risk,” as they “do not directly incentivize contractors to control costs and thus carry significant potential risk of overspending”—than did civilian agencies. (As we wrote earlier on SmallGovCon, the 2017 National Defense Authorization Act establishes a preference for the DoD to use fixed-price contracts, although such a preference is already contained in the FAR). Contracts were about split between awards issued under indefinite delivery vehicles (like IDIQs and government-wide acquisition contracts) and definitive contracts.

Finally, the report discussed the government’s progress toward reaching its small business contracting goals. Government-wide, GAO found that small businesses received over $97 billion in prime contract awards in 2015. According to the SBA, the government met its goal for contracting to small businesses—achieving about 25 percent small business participation in 2015 (versus the 23 percent goal). On the whole, more agencies met their socioeconomic contracting goals in 2015 than did in 2011.

For all the positive news, the report revealed a downward trend in small business contracting. Defense awards to small businesses fell about $10 billion over this time period, while civilian awards decreased by about $5 billion.

GAO’s report is an interesting look into the state of federal contracting and, in particular, the government’s focus on austerity since 2011 (including sequestration). We’ll see how changes to the political landscape affect the next five years.


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