Title 48 of the Code of Federal Regulations contains the primary documents that govern procurement in the Department of Defense (DoD); the Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS). The FAR and DFARS are further broken down into parts that cover each aspect of the procurement process. One of these parts describes alternate procedures for low-dollar contracts.
A common criticism of the federal acquisition system is that it is too slow. These procedures for low-dollar contracts allow for an expedited acquisition process to fill requirements faster than normal, but there are some specific steps that can be taken to make them better serve the American warfighter and taxpayer.
First, the simplified acquisition threshold should be increased from $250,000 to $1 million so these streamlined procedures can be used more often. The threshold was last increased in 2018 by $100K to the current level. For an organization that obligates $320B for contracts annually and considering how thorough even the simplified acquisition procedures are, a $1M simplified threshold is reasonable.1
Increases for related thresholds should also be enacted. For example, the threshold for the use of simplified procedures when acquiring commercial items should be raised from $7M to $15M.
Second, simplified acquisition procedures should be removed from the FAR and be put in a simplified acquisition handbook. The FAR states that simplified procedures and innovative approaches using simplified procedures shall be used to the maximum extent practicable.2,3 However, due to the interconnected nature of the FAR, rules and requirements that do not apply to simplified acquisitions are often used in simplified acquisitions either by mistake or because they are wrongly required by government auditors. Use of these more burdensome procedures delays acquisitions and places an unnecessary burden on requiring activities, contracting officers, and contractors alike.
The handbook should clearly state that any rules found in the FAR are not required in any simplified acquisition. Doing so would make clear the distinction between orders using simplified acquisition procedures and contracts awarded using more restrictive procedures and would ensure that contracting officers use simplified procedures to the maximum extent practicable, as the FAR requires. Creating this simplified acquisition handbook would eliminate a substantial amount of unnecessary bureaucratic process currently being performed by contracting offices that award simplified acquisitions.
Finally, protests to the Government Accountability Office (GAO) should be eliminated for DoD contract requirements using simplified acquisition procedures.
Protests are written objections by interested party contractors to an aspect of a solicitation document or a decision on contract award. There are three avenues for these contractors to submit protests on government procurements: the agency conducting the acquisition, the GAO, and the U.S. Court of Federal Claims. Protests to the procuring agency are a way for contractors to communicate their concerns directly to the contracting officer. GAO protests do not cost the contractor much more than the time spent drafting and submitting the protest documents, but their decisions are not necessarily binding for the contracting officer. Protests to the U.S. Court of Federal Claims will cause the contractor to incur significantly more cost than a GAO protest, but their decisions require contracting officer compliance.
Contractors often protest to GAO because doing so is an economical way to increase their chances of winning a contract. They can protest any number of aspects of the contracting process, ranging from the contracting officer’s selection of quotation evaluation criteria to the performance of the evaluation once all quotations have been received. In fact, contractors may protest even when they do not believe they have a chance at winning a contract, either to try to extend the performance period of a contract they are actively performing or to sway a contracting officer’s decision on future requirements.
The protest was created to ensure fairness in the acquisition process. But its costs outweigh its benefits to the taxpayer and the warfighter, and especially so for simplified acquisitions. The costs from excessive delays and the use of overly conservative contracting methods implemented to prevent protests are not worth the amount of fairness that protests encourage.
Some will say that GAO protests are essential to the process and they will point to GAO’s protest effectiveness rate of 44 percent in 2018, a measure of the portion of contractors who receive some relief as a result of their protest, either by voluntary action of the contracting officer or as a result of GAO sustaining a protest.4 However, to say that the protest process is working simply because the government is changing its contract terms as a result of protests is a false equivalency; the government is not necessarily adding value to the process by doing so. These protests are likely taking value away from the contracting process by causing unnecessary delays in performance as a result of protests on inconsequential aspects of a solicitation document or contract award.
More importantly, a restriction of GAO protests for DoD simplified acquisitions could act as a test case for broader acquisition overhaul. It may prove to be most effective to eliminate all protests for all DoD acquisitions. By removing the opportunity for protest, DoD would certainly increase the risk of favoritism in the contracting process. But this risk could be mitigated in other ways. For instance, an added layer of approval from an independent body, not affiliated with the contracting office awarding the contract, could be added to the front end of each acquisition exceeding a certain cost threshold. This added layer of approval would increase the amount of time required to award a contract, but at least would do so in a more predictable manner, unlike that of protests. There is already a template for how this review could be performed. Currently, a Small Business Administration representative must review each unrestricted procurement below the simplified acquisition threshold to ensure that contracting officers are properly setting aside contracts for small businesses. In the absence of protests, a GAO representative could perform a similar service but instead review for fairness.
Other steps could also be taken to encourage accountability in the contracting process, such as adding a comments section for postings to the central site for public contracts at fbo.gov. This opportunity for public comment could act as a spotlight for proposed and awarded contracts to further encourage fairness in acquisitions.
Since our country’s founding, our government has relied on industry for the security of our country and that trend will not change anytime soon. In an era of rapid technological innovation, DoD is smart to outsource as much as is necessary. But an overly bureaucratic acquisition system acts as a barrier to entry for potential defense contractors and wastes taxpayer dollars. The defense acquisition regulations need to be continuously streamlined to open up the defense market and maximize the utility of our tax dollars spent. By taking the actions described here, our leaders can do so and make our country more secure as a result.
1. Moshe Schwartz et al, “Defense Acquisitions: How and Where DOD Spends and Reports Its Contracting Dollars,” p. 3, Congressional Research Service, (2 July 2018), https://fas.org/sgp/crs/natsec/R44010.pdf.
2. FAR 13.003(a)
3. FAR 13.003(h)(4)
4. Government Accountability Office, “GAO Bid Protest Annual Report to Congress for Fiscal Year 2018,” (27 November 2018), www.gao.gov/assets/700/695707.pdf