Agencies didn’t reinvent the wheel on stimulus contracts

More than two-thirds of all federal Recovery Act procurement spending was issued against contracts already in place before the enactment of the stimulus package, according to findings the Government Accountability Office released on Wednesday.

The 76-page report, which Senate Minority Leader Mitch McConnell, R-Ky., requested, provides the most in-depth look to date on how federal agencies have distributed billions of dollars in contracts intended to jump-start the economy.

GAO found that 68 percent of the $26 billion in federal Recovery Act contracts issued through May was spent through task orders for services, delivery orders for supplies, or contract modifications that added work or funds to existing awards.

Agency officials have defended the practice of using existing contracts to spend stimulus funds, noting it allows them to avoid holding new competitions, which can take up to one year to complete.

"Program and contracting staff identified programs, projects and contract vehicles that would allow them to obligate funds within short time frames," the report said.

For example, the Army Corps of Engineers selected construction projects that could be rapidly executed by issuing task orders under previously awarded contracts with companies in the Small Business Administration's 8(a) Business Development program.

But the strategy has its shortcomings. Companies that do not already hold federal contracts are unable to bid for new stimulus work. In addition, the decision about whether or not to make a contract competitive is taken out of the procurement officer's hands. Nonetheless, GAO found nearly 90 percent of all Recovery Act funds obligated against pre-existing contracts built off of deals that previously had been subject to competition.

New Recovery Act contracts, amounting to about $8 billion, also were subject to significant competition. GAO data indicates that just 11 percent of new contracts were issued without competition, with most of the funds going to small businesses in the 8(a) program.

Noncompetitive contracts also were awarded to other types of small businesses when only one source was available to perform the work, the report said.

The National Institutes of Health issued several new sole-source contracts for specialized medical equipment. According to documentation in NIH contract files, only one manufacturer could meet the acquisition requirements, investigators said. All the contract files GAO examined included the required justification and approval documentation for not using full and open competition, the report said.

Agency officials told investigators they generally were not concerned about whether a pre-existing contract had originally been competed. Rather, officials focused on "programmatic priorities and the availability of contracts with the capacity to absorb and effectively use additional funding," the report said.

Agencies also added more oversight procedures, internal reporting and coordination to boost oversight of Recovery Act contract spending. Inspectors general, however, have focused more on high-risk stimulus categories such as federal grants, GAO said.