GAO Reports On Government Contracting Trends

March 23, 2017

By Patrick T. Rothwell

On March 8, 2017, GAO issued a report on government contracting trends from fiscal year (“FY”) 2011 through FY 2015. FY 2015 was the latest year for which there was complete data available at the time of GAO’s review. Using data from the Federal Procurement Data System-Next Generation, GAO tabulated statistics which will be of interest to government contractors. Discussed below are some of GAO’s findings. 

First, in FY 2015, federal agencies procured $438 billion in products and services. This amount represented a 24 percent decrease from FY 2011. The bulk of the decline was in defense contracting; defense obligations declined from $399 billion to $274 billion from FY 2011 to FY 2015, representing a near 31 percent decline. Obligations by civilian agencies declined much less: only 7 percent. The largest declines took place in FY 2013, which was at the same time as sequestration. Sequestration hit defense contractors harder than civilian contractors. 26 percent of Department of Defense FY 2013 sequestration reductions came from procurement accounts, and the military awarded fewer contracts for planned military construction projects. 

The majority of federal contract obligations for the period FY 2011 to FY 2015 were for services. A little more than 50 percent of defense contract obligations were for services, while civilian agencies obligated nearly 80 percent for services, constituting a total of 60 percent of total government-wide contracting obligations over the 5 year period. For both defense and civilian agencies, the largest service types contracted were for professional support services, representing 16.9 percent and 18.5 percent of service obligations respectively. 

Contract obligations for products represented 40 percent of total federal contract obligations from FY 2011 to FY 2015. Defense agencies obligated almost half of their contract obligations for products, a large portion of which were for major weapons programs. 

For FY 2015, aerospace craft and structural components represented 23.6 percent and guided missiles represented 9.2 percent of defense product spending, respectively. For civilian agencies, medical, dental, veterinary equipment and supplies represented 38.8 percent and information technology equipment (including firmware), software, supplies, and equipment represented 15.8 percent of civilian product spending for the same fiscal year.

The Government-wide competition rate for procurements remained at just below two-thirds of all contract obligations from FY 2011 to 2015. $282 billion in contracts were obligated through competition in 2015. Civilian agencies competed for approximately 80 percent of total contract obligations in FY 2015, up from 76 percent in 2011. However, the competition rate for defense agencies decreased from approximately 58 percent in 2011 to 55 percent in 2015. 14 percent of all competed contracts were for contracts awarded in which the agency received only one offer.

From FY 2011 through FY 2015, federal agencies used fixed-price contracts for an average of 63 percent of total contract obligations each year. Cost-reimbursement and time & materials/labor hour (“T&M/LH”) contracts accounted for 37 percent of contract obligations over the same period. Noncompetitive cost-reimbursement and T&M/LH contracts represented 11 percent of total contract obligations in fiscal years 2011 through 2013 and 12 percent in fiscal years 2014 and 2015. 

Of interest to federal contractors, in general, is the high reliance of the federal government on indefinite delivery vehicles (“IDV”). From FY 2011 through 2015, federal agencies used IDVs for almost half of the government’s total contract obligations. This underscores the importance of federal contractors receiving awards of these contract vehicles, particularly indefinite quantity/indefinite delivery (“IDIQ”) contracts. GAO found that the category “Other IDVs, such as IDIQ contracts,” which excludes Federal Supply Schedules, Blanket Purchase Agreements, Basic Ordering Agreements, and Government-wide Acquisition Contracts, constituted 39 percent of total defense contract obligations and 36.7 percent of total civilian contract obligations.

Of particular interest to small businesses, GAO found that small businesses received almost $100 billion in contract obligations for FY 2015. Although this is not new news, citing the U.S. Small Business Administration’s scorecard, in FY 2015, GAO noted that the federal government achieved over 25 percent small business participation at the prime contractor level, exceeding the 23 percent goal. While contracting goals for small disadvantaged businesses (5 percent), women-owned small businesses (5 percent), and service-disabled-veteran-owned small business (3 percent) were met, the HUBZone goal of 3 percent was not met. However, small business participation at the prime contractor level increased from FY 2011 to FY 2015 in all categories.

The GAO report is entitled “CONTRACTING DATA ANALYSIS: Assessment of Government-wide Trends,” GAO-17-244SP (March 2017). It can be easily obtained on the GAO website or you can click here.

About the Author: Patrick Rothwell is an associate with PilieroMazza in the Government Contracts Group. He may be reached at prothwell@pilieromazza.com.

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