Competition Works for Pentagon, Taxpayers – Sometimes

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http://breakingdefense.com/2014/07/competition-works-for-pentagon-taxpayers-sometimes/

Competition Works for Pentagon, Taxpayers – Sometimes
By Greg Sanders on July 29, 2014 at 1:14 PM

As the Defense Department’s budget goes down, the number of contracts awarded without competitive bids is going up. The share of contracts awarded without competition has risen from 39 percent in 2009 to 42 percent in 2012, according to a report I co-authored with Jesse Ellman and Rhys McCormick on DoD Contracting Trends.

The news for competition in 2013 is not much better. The non-compete rate has crept up again despite a decrease of more than $20 billion in contracts awarded without competition.

So are reformers’ efforts for naught? No. Even in the midst of cutbacks and fears of a declining industrial base, the percentage of contract dollars awarded after competition with multiple offers has begun to rise. While the 2013 rate of 49.3 percent is still below the 50 percent mark achieved in 2009, it is higher than the years in between. This seemingly contradictory result was made possible by a drop in obligations for contracts that were nominally competed but only one company responded. The share of competed contracts that were awarded after receiving only one offer dropped to 7 percent, the lowest level this century. Moreover, contract competitiveness varies by major DoD component. The most notable change was in the Air Force, which had been the least competitive service. The service reduced its non-compete rate by four percentage points; the Navy moved four percentage points in the opposite direction, with both services now awarding nearly three-fifths of their contract dollars without competition.

Does this matter? Maybe. While competition is a touchstone in our larger economy, the defense sector is in many ways not a free market. Jacques Gansler (former head of Pentagon acquisition) recently argued in the New York Times that in times of budget cuts “we need to turn to one of the commercial world’s most basic cost-control weapons — competition.” Yet a report by the consulting firm Technomics found “no definitive evidence that competition has consistently reduced program technical, schedule, or cost risk” for the Defense Department and taxpayers. Both sides agree that competition can work; the controversy regards how challenging it is to build a competition so it garners efficiencies.