Agencies say most Iraq contracts competitively bid

A review of Iraq reconstruction contracts by government auditors found that agencies reported the vast majority of contract awards to be competitive, but could not always document the processes used.

A Government Accountability Office report released Friday (GAO-07-40) looked at contracts awarded through the Iraq Relief and Reconstruction Fund between October 2003 and March 2006 by the three agencies responsible for 98 percent of the fund's spending -- the Defense and State departments and the U.S. Agency for International Development.

The study, called for in the 2006 Defense authorization act, was a follow-up to a 2004 GAO report that found problems with agencies' adherence to competition requirements. The new review looked at the reported competition levels in $10 billion of the $11.6 billion obligated by the three agencies, and found that contracts totaling $9.1 billion were labeled as competitively awarded.

The reviewers examined only about 82 percent of Defense's Iraq contract obligations because they were unable to find competition data for the remainder. Of those contracts, 97 percent were marked as competitively awarded. They also found that USAID labeled 99 percent of its awards as competitive, while State put only 10 percent in that category.

In the analysis of Defense spending, auditors found reconstruction contracts worth $8.55 billion, of which they found no competition data for about $1.53 billion, or 18 percent. Competitive awards accounted for $6.83 billion, or 80 percent, and the remaining $189 million, or 2 percent, was in uncompetitive awards.

The review included a deeper analysis of 51 contracts representing about $1.55 billion, 29 of which were competitive and 22 uncompetitive. For those contracts, reviewers assessed whether the decision to forgo competition was adequately documented under federal acquisition regulations and agency rules.

In the deeper analysis, GAO found one State Department contract with insufficient documentation for a failure to use competitive practices. They also found four cases in which Defense claimed to have used competition, but could not document bids or price negotiations that would show the appropriate processes took place. For two high-dollar-value contracts awarded by State without competition, the department failed to notify Congress as required by law.

In a caveat to the deeper analysis, GAO noted that the selected contracts were not a random sample and the error rates found could not be generalized to all reconstruction contracts.

In response to GAO's findings, State said the congressional notification lapses occurred due to an oversight, when the two contracts in question were transferred from IRRF funding to another source. Under the new source, the contracts did not require notification, they said, attributing the mix-up to an "administrative error."

State officials did not address the agency's low level of competitive contracts, and USAID had no substantive comments on the report.