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Study: 36% of Pentagon contracts competitive

The Center for Public Integrity, a private watchdog group reported Wednesday that 36 percent of the $900 billion in Pentagon contract grants over the past six years were awarded after full and open competitive bidding.
/ Source: The Associated Press

Only a little more than one-third of the $900 billion in Pentagon contract grants over the past six years were awarded after full and open competitive bidding, a private watchdog group reported Wednesday.

The Center for Public Integrity found that a majority of Defense Department contracts were awarded either to single bidders on a sole-source basis or to a contractor that had prevailed over a set of competitors limited by government regulations.

The study examined Defense Department records of more than 2.2 million contract actions between Oct. 1, 1997, and Sept. 30, 2003. During that period, more than half the Pentagon’s budget was given to contractors.

Pentagon contracting has become an issue in the presidential election as a result of the experience of Halliburton, a Houston-based energy and construction company formerly headed by Vice President Dick Cheney.

The Halliburton question
Democrat John Kerry has said the Bush administration showed favoritism in giving Halliburton noncompetitive contracts in Iraq and elsewhere. Cheney has denied any involvement in the Halliburton contract decisions.

Halliburton has won more than $7 billion in Iraq contract work that involves oil field restoration work as well as feeding and housing U.S. troops. The study found that of the $4.3 billion in all types of defense contracts that Halliburton was awarded in the 2003 budget year, only about one-half were based on competitive bidding.

The study did not examine the propriety of those awards.

The report found that Pentagon records designated only 40 percent of Defense Department contracts during the six years as resulting from “full and open competition.” But even that figure overstated the competition. It dropped to 36 percent of all Pentagon contracts after deducting the competitive contracts that drew only a single bidder.

Some 44 percent of contracts were given under “other than full and open competition” — usually as sole source contracts. An additional 7 percent fell under other categories (most often as small business set-asides), and 8 percent gave no competition information at all, the study found. The total comes to only 99 percent because of rounding.

A message left with a Pentagon spokesman Wednesday was not immediately returned.

Raytheon explains
Dave Shea, a spokesman for Raytheon, the third largest Pentagon contractor and the third largest recipient of no bid contracts, told the center that Raytheon’s sole source contracts “are for systems that are unique, where Raytheon is the only one capable of providing those systems to the Department of Defense.”

The study’s manager, Larry Makinson, said that some contracts awarded under set-asides for small businesses and other types of companies “are very competitive, but not fully competitive” because larger or other types of companies cannot bid.

Makinson said most of the contracts that had no information about competition were purchases from what is known as the federal schedule. “The Pentagon would say these were competitive because maybe 15 years ago somebody bid on it, but these purchases often aren’t competitive now,” Makinson said.

From office supplies to contractors
Originally designed to allow the government to buy commodities such as paper and pens without seeking bids, the federal schedule maintained by the General Services Administration is a catalog or price list from approved suppliers who went through a competition at some point to demonstrate the government was getting a good price.

Government officials can buy from one company off this schedule without seeking bids. But the study found that this process designed for goods has grown to encompass services such as guards, dentists, translators, interrogators and even contractors to evaluate contract bids. The study said it was much harder to evaluate in advance what would be the best price for such services.

The study found that most contracts awarded to the biggest defense contractors were won without “full and open” competition. Of the Pentagon’s 10 biggest contractors, which received 38 percent of its contract dollars, only one — Science Applications International Corp. — won more than half its dollars through an open bidding process. Three of the top 10 — United Technologies, General Electric and Newport News Shipbuilding (now owned by Northrop Grumman) — collected less than 10 percent of their contract dollars through open bidding.