- The Washington Times - Thursday, May 15, 2014

Near the end of March, the Pentagon’s Defense Logistics Agency put in an order for 1,656 wristwatches. And while the purchase itself went through a limited competition, officials knew they wanted watches from a single source: electronics manufacturer Casio.

The Pentagon often pursues items from lone suppliers for a host of reasons, such as the Casio wristwatches that officials said met their specific needs. But watchdogs are concerned the practice of awarding contracts to single companies and for single items could be wasting taxpayer funds.

Federal agencies often award contracts without competition to a single company. Known as sole-sourced contracts, taxpayers can sometimes have difficulty tracking down just how much the government paid for items like these. And at some agencies, the practice has been growing so much it’s attracted the attention of Congressional investigators.

The government hands out billions of dollars in contracts each year for goods and services. Most are only awarded after competition between companies allows the government to pick the best proposal at the lowest price.

“Competition is the cornerstone of a sound acquisition process and a critical tool for achieving the best return on investment for taxpayers,” the Government Accountability Office said in a report released last week. “Competitive contracts can help save money, improve contractor performance, curb fraud and promote accountability for results.”

But an increasing amount of business at the Department of Defense isn’t subject to competitive bidding. Instead, these sole-source contracts are awarded to a single company. Some in the government are concerned about the awarding of contracts to a lone business, which often comes with a higher price-tag for taxpayers than those that go through a bidding process.

Competition at the DOD has been on the decline since 2008, and as of last year, only 57 percent of all contracts were awarded through competition, said the GAO, Congress’ top watchdog. That’s why the Pentagon wins this week’s Golden Hammer, a distinction given by The Washington Times to federal programs that risk waste, fraud and abuse with taxpayer funds.

Pentagon officials said they have been trying to cut down on sole-source contracting, and officials told the GAO they were taking steps to alert more businesses of federal needs, in hopes of attracting more offers from more companies.

The department’s procurement office told federal investigators it is issuing “guidance to contracting activities reminding acquisition planners to ensure adequate time is provided for vendors to review requirements and interact with government personnel,” thereby allowing the companies more time and knowledge to submit a bid proposal for competition.

As for the Casio wristwatches, procurement officials told The Washington Times they cost $45.00 a piece, bringing the order total to just more than $416,700. Three companies offered bids to supply the watches. But according to government forms the order went through a process “other than full and open competition” because officials wanted wristwatches specifically from Casio.

The purchase announcement from the Pentagon said that the data needed to acquire the watches through competitive bidding was “not economically available.”

There are often many valid reasons the government uses sole-source contracts. For the DOD, it’s usually security reasons. Giving information to a single business on a new weapons system, for example, helps reduce the number of people given access to military secrets.

Likewise, sometimes only a single business can produce an item. The military will often contract with specialized businesses that focus on a particular area. The Pentagon has a single-source contract for F-22 Raptors with Lockheed-Martin because the aerospace giant is the only one that produces the plane. And even that came only after military officials held a competition between several different jet designs from various companies.

“Using a ‘sole-source’ mechanism shouldn’t be conflated with ‘lack of oversight.’ Whenever the government spends taxpayer money there is always some type of auditable trail that ‘oversight’ can access to track money from appropriation to execution,” said Dakota Wood, a senior research fellow for defense programs at the Heritage Foundation.

“That said, it doesn’t prevent mischief along the way which is what occurs in cases of fraud, abuse or negligence in exercising oversight,” he said.

With the DOD spending more than $300 billion on contracts in 2013, the potential for waste is high.

DOD should be looking for every method to save money and get the best results, and noncompetitive contracting doesn’t achieve those results,” said Scott Amey, general counsel for the Project on Government Oversight. “I bet if you ask a company or the head of a household if they are willing to spend their money without shopping around or getting multiple estimates, the answer would be a resounding ‘no.’”

 

This story was updated with new information from the Defense Department.

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