New Study Shows Federal Government Moving Rapidly Toward Non-Competitive Contracts

Most people know that government contracting is a big deal, but they have little appreciation for just how big a deal it is. And there is not a lot of good information available on the subject. The General Services Administration has been directed by law to maintain accessible online data on all federal contracts. Yet the GSA has contracted out that responsibility and the product that has resulted is neither complete nor entirely accurate. Even worse, the Federal Procurement Data System—as GSA has labeled this effort—uses software so arcane and complex that an individual must almost literally devote his or her career to its use in order to get meaningful information.

That is why efforts in recent years by Rep. Henry Waxman (D-CA) and his staff on the Oversight and Government Reform Committee to access and analyze the information within this database have been so critical to expanding what is known about federal contracting. Previously reports from Waxman provided much of the information I used in writing “A Return to Competitive Contracting: Congress Needs to Clean Up the Procurement Process Mess,” which was published by the Center for American Progress in May. Now, Waxman has completed his analysis of another year of federal procurement and the picture that is emerging is even more disturbing than reported earlier.

The new analysis examines contracting activities for Fiscal Year 2006 and compares them with data from earlier periods beginning in 2000. The amount of money the federal government spent on contracts grew between 2000 and 2005 from $203 billion to $377 billion. In 2006 alone, government contract expenditures grew by an additional $35 billion, or by more than 9 percent—a rate of growth nearly twice that of overall discretionary spending during the period.

As a consequence, contract expenditures now account for more than 40 percent of all discretionary spending. By comparison, the $35 billion one year growth in federal contracting activities exceeded total federal education grants to states local school districts in 2006 by almost 50 percent.

But the most extraordinary aspect of the new Waxman analysis is the growth of non-competitive contracts. As I noted in the report published in May, non-competitive contracting has been increasing at a much faster pace than competitive contracting. Between 2000 and 2005 the value of competitively bid contracts grew at an annual pace of about 11 percent a year while non-competitive contracts were growing at an annual pace of almost 17 percent a year.

But between 2005 and 2006 the value of competitively bid contracts actually declined by 12 percent while the value non competitive contracts exploded by 42 percent. As a result, non-competitive contracts now make up more than half of all contracts.

Anyone who is concerned about the excessive powers of the executive branch and the potential of this or future administrations to abuse that excess of power should examine this new data very carefully. The wide latitude that program managers, political appointees, cabinet members, and White House staff now have in writing federal checks to whomever they deem to be the “best” provider is not only questionable from the standpoint of fiscal prudence. It is also a fundamental change in the power of the executive and the system of checks and balances upon which our system is built.