Federal Manager's Daily Report

About 40 percent of DoD contracting obligations in terms of dollars are under indefinite delivery contracts, which may be limiting competition for some $100 billion in spending by the Pentagon each year, GAO has said.

Indefinite-delivery contracts are awarded to one or more contractors to acquire products and/or services when the government does not know at the time of award the exact times and/or exact quantities of future deliveries. The agency places orders through the contract when it knows the timing and quantity.

GAO was tasked in a DoD authorization law to assess the extent of their use and the potential implications.

Of such contracts that it reviewed, GAO said, “nearly all contained provisions that, while not explicitly limiting competition, may have the potential, under certain circumstances, to reduce the number of contractors who are eligible to compete for the orders. Generally these provisions were in service of some other goal, such as increasing federal contracting opportunities for small businesses by setting aside certain task or delivery order competitions among these firms.”

For example, six of the nine contracts contained provisions establishing that task or delivery order competitions would be set aside for small businesses under certain circumstances, such as a requirement below a certain dollar value or staffing threshold. “Competition may still occur between small businesses,” GAO added.

The report made no recommendations.