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Contractors say upsurge in MACs leads to duplication, added costs
Friday - 11/16/2012, 8:50pm EST
The Coalition for Government Procurement has called on senior administration leaders to take more action to combat increasing contract duplication, largely from the spread of multiple-award contracts (MACs).
Member companies say they are seeing more duplicated contracts and that has added to their costs, according to a CGP survey.
The group's president, Roger Waldron, summarized the survey results in a letter to Joe Jordan, the administrator of the Office of Federal Procurement Policy; Richard Ginman, the director of the Defense Department's Defense Procurement and Acquisition Policy (DPAP); and Anne Rung, the chief acquisition adviser at the General Services Administration.
The prevalence of MACs, in which companies are awarded a spot on a contract and then compete for individual task orders, has increasingly led to duplication — a multitude of contracts all offering the same or very similar products and services.
That spells inefficiency, redundancy and, ultimately, drives up costs across the board, according to the group.
"When both the government and private companies invest in duplicative contracts, the result is increased government and contractor administrative, bid and proposal costs without added value for the American taxpayer," Waldron wrote in the letter. "Overlapping, redundant contracts also have to be managed by both the public and private sectors causing inefficiencies within and across federal agencies and in companies for the life of these contracts."
MACs have proliferated
It's no secret, MACS are spreading. A 2010 Federal News Radio special report identified the problem at a tipping point even then.
But agencies have continued to use the vehicles. In fiscal 2011, agencies spent $83.2 billion using 1,182 MACs, nearly double what agencies spent on 427 such contracts in 2006, according to Bloomberg Government.
The companies CGP surveyed have noticed the trend. According to the group's survey, 77 percent of respondents said in the last 12 months alone, they have noticed an increase in contract duplication regarding the products and services they provide. Meanwhile, 40 percent of respondents said they manage at least 15 such duplicative contracts.
Costs to the companies
Participating in duplicative contracts comes at a price, according to 88.5 percent of the survey respondents. For example, contractors must become acquainted with multiple systems and varying reporting and management requirements.
Duplicated efforts also stem from marketing materials supporting the various contracts and maintaining multiple e-commerce sites and sales efforts.
Total costs vary by company size, according to the group. But large companies reported spending more than $2 million for each contract that duplicated similar ones under the regular GSA schedules.
Aside from the added costs to companies, the group also said the benefits to the government are less than clear.
"Duplicative contracts add no real value to the federal market since, by their very nature, these contracts provide for products and services already available under governmentwide contracts such as the GSA schedules, the IT GWACs and other pre-existing, multi-agency contracts," the report stated.
OFPP has long sought to get a better grip on MACs. In September 2011, OFPP admonished agencies to slow down the growth of governmentwide contracts and instituted new business-case mandates on contracts projected to exceed $250 million in spending.
But it's not entirely clear the new approval process has been effective.
In an interview with Bloomberg Government in June, OFPP Administrator Joe Jordan said no proposed MACs have been rejected because of the new review process.
CGP called on the administration to strengthen its business-case directive, in part, by lowering the threshold for review to $150,000 — the simplified acquisition threshold.
For procurements exceeding that amount, "contracting officers should be required to document and explain why existing contract vehicles do not meet the agency's needs prior to establishing new contracts," the letter stated. "This explanation should specifically address why creating a new contract is the best procurement method to meet the government's needs."
Waldron hosts a weekly show, "Off the Shelf," on Federal News Radio.