Competition in Federal Contracting: An Overview of the Legal Requirements (PDF; 442 KB)
Source: Congressional Research Service (via OpenCRS)

This report describes the legal requirements pertaining to competition that presently apply to federal procurement contracts. Among other things, it discusses (1) what contracts are subject to competition requirements; (2) what constitutes full and open competition for government contracts; (3) what is meant by “full and open competition after exclusion of sources”; (4) circumstances permitting agencies to award contracts on the basis of other than full and open competition; (5) “special simplified procedures for small purchases”; and (6) competition requirements for task and delivery order (TO/DO) contracts.

Any procurement contract not entered into through the use of procurement procedures expressly authorized by a particular statute is subject to the Competition in Contracting Act (CICA). CICA requires that contracts be entered into after “full and open competition through the use of competitive procedures” unless certain circumstances exist that would permit agencies to use noncompetitive procedures. Full and open competition can be obtained through the use of sealed bids, competitive proposals, or other procures defined as competitive under CICA (e.g., procurement of architectural or engineering services under the Brooks Act, competitive selection of basic research proposals). Full and open competition under CICA also encompasses “full and open competition after exclusion of sources,” such as results when agencies engage in dual sourcing or set aside acquisitions for small businesses. Any contract entered into without full and open competition is noncompetitive, but noncompetitive contracts can still be in compliance with CICA when circumstances permitting other than full and open competition exist.

CICA recognizes seven such circumstances, including (1) single source for goods or services; (2) unusual and compelling urgency; (3) maintenance of the industrial base; (4) requirements of international agreements; (5) statutory authorization or acquisition of brand-name items for resale; (6) national security; and (7) contracts necessary in the public interest. CICA also allows agencies to use “special simplified procedures” when acquiring goods or services whose expected value is less than $100,000, or commercial goods or services whose expected value is less than $5.5 million ($11 million in emergencies).

Issuance of orders under task order and delivery order (TO/DO) contracts is not subject to CICA, although award of TO/DO contracts is. However, the Federal Acquisition Streamlining Act of 1994 establishes a preference for multiple-award TO/DO contracts and requires that agencies provide contractors “a fair opportunity” to compete for orders in excess of $2,500 under multiple- award contracts. The National Defense Authorization Act for FY2008 (P.L. 110-181) strengthened these requirements by limiting the use of single-award TO/DO contracts; specifying what constitutes a “fair opportunity to be considered” for orders in excess of $5 million under multiple- award TO/DO contracts; and granting the Government Accountability Office (GAO) temporary jurisdiction to hear protests alleging improprieties in agencies’ award of task and delivery orders in excess of $10 million.

Competition in federal procurement contracting has become a topic of increased congressional and public interest, in part because of high-profile incidents of alleged misconduct by contractors or agency officials involving noncompetitive contracts and reports that the number of noncompetitive contract actions by the federal government has increased. Legislation in the 111th Congress addressing competition requirements includes recently enacted P.L. 111-5, P.L. 111-8, and P.L. 111-23 and other bills, including H.R. 1665, H.R. 2200, H.R. 2269, H.R. 2892, H.R. 2998, H.R. 3310, H.R. 3326, S. 454, S. 1390, and S. 1420. The executive branch has also emphasized its commitment to competition in contracting and plans to issue guidance on noncompetitive awards.

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