Economically savvy shoppers do two things before shopping for groceries: They decide what they need for the week and then compare store ads to make sure they are getting the best value. After all, it is ridiculous to overpay when it is so easily avoidable.
But common sense so apparent to consumers has evidently evaded the U.S. government. According to an Associated Press analysis of contracting records, the government bought more than half its products and services last year without bidding or with practices that did not efficiently shop the market. Basically, the government bought what it wanted with no regard to cost, often causing the treasury to be overcharged.
In 1984, Congress enacted legislation requiring full and open competition for all government purchases, except in cases of utilities with one supplier, or weapons systems made by one company. However, reforms in the 1990s aimed at cutting the red tape and streamlining purchases made avoiding bidding easier for the government, and reduced spending on auditors and contracting officers contributed to single-source government shopping. Although these reforms and cutbacks had admirable aims, money wasted in bypassing competition far exceeds the benefits.
Government agencies also avoid competition through multiple-award contracts – when agencies qualify a list of contractors and are allowed to choose any contractor from the list. They are expected to shop for the best deal but rarely adhere to this practice. In fact, when the Defense Department inspector general analyzed 423 orders under multiple-award contracts, he found 304 were awarded without competition. Further compounding money-wasting trends, regulations on sole-source contracting have also become lax. Previously, companies had to certify costs and prices to ensure they were not overcharging, but now companies are not required to do so if the government initially offered the contract for competition. Cost and pricing data, which safeguard against overcharging, are also not required if the product is considered commercial, a definition expanded so much in the 1990s that it now includes C-130J military transport planes.
The government has long been mocked for overspending with accusations of spending “$50 on a hammer and $30 on a nail.” But the overpayment revealed through the rise in single-bid contracts is no joke. One inspector found Boeing charged the government $5 million for parts that were worth $3.2 million in the competitive market, and Allied Signal marked up prices on gear shafts, wheels and other spare parts more than 50 percent after these items were listed as commercial and freed from competition. The government’s blatant disregard for economizing is particularly offensive in the current atmosphere of budget shortfalls and spending cuts, and if they cannot responsibly spend money without stringent regulations and red tape, the previous restrictions must be restored.