Bloomberg Government, Washington Post report troubling rise in sole-source contracts

by Ben Vernia | March 18th, 2013

On March 17, Bloomberg Government reporter Danielle Ivory wrote a news story, reprinted in the Washington Post on March 18, reporting on the rise in sole-source contracting under the Obama Administration:

Federal agencies awarded $115.2 billion in no-bid contracts in fiscal year 2012, an 8.9 increase from $105.8 billion from 2009, according to government data. The jump unfolded even as total contract spending decreased by about 5 percent. Lockheed Martin, Boeing and Raytheon were top recipients of sole-source contracts.

As the article notes, sole-source contracting is widely viewed as prone to abuse, because large contractors who develop friendly relationships with agency procurement officials can obtain more favorable terms than in competitively-bid contracts. They are sometimes defended as a necessary evil in certain contracts, involving sophisticated weapons systems, for example, because of the absence of viable competitors.
The Obama Administration told the Bloomberg reporter via email that the Administration “believes in taking maximum advantage of competition, including efforts to reduce sole-source contracting, and this is an important component of our overall efforts to achieve the best value for the taxpayer,” but the official neither responded to requests for an explanation of the rise of sole-source contracting, nor detailed steps the government is taking to curb the practice.
The article notes that President Obama issued a memo to federal agencies in March 2009 (shortly after he took office), discouraging the use of sole-source contracts.
Comment: The term “no-bid” is misleading when it comes to sole-source contracts. Typically, agencies require contractors to provide detailed cost and pricing data upon which a contract price can be computed. Misrepresentation of such information can give rise to “defective pricing” allegations under the False Claims Act.

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