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OMB: Agencies will need to justify creating their own contracts

Jun. 30, 2010 - 06:00AM   |  
By TOM SPOTH   |   Comments
The Office of Management and Budget will issue guidance this summer requiring agencies to submit a business case before setting up multiple-award contracts (MACs), said Dan Gordon in congressional testimony Wednesday.
The Office of Management and Budget will issue guidance this summer requiring agencies to submit a business case before setting up multiple-award contracts (MACs), said Dan Gordon in congressional testimony Wednesday. ()

The Obama administration plans to make agencies justify decisions to create large multiple-award contracts as part of an effort to avoid duplication in federal acquisition.

The Office of Management and Budget will issue guidance this summer requiring agencies to submit a business case before setting up multiple-award contracts (MACs), said the Obama administration's top contracting policy official Dan Gordon in congressional testimony Wednesday. Gordon said his agency, the Office of Management and Budget, will do the same for enterprise-wide contracts, which are similar to MACs but are only used by a single agency.

"We shouldn't be creating confusing [contract] vehicles without justification," Gordon told the Senate Homeland Security and Governmental Affairs subcommittee on contracting oversight. Gordon is administrator of OMB's Office of Federal Procurement Policy.

Agencies will have to explain how proposed contracts differ from existing options and why they will offer greater value. Agencies will also have to compare the cost of awarding and managing contracts to the fees incurred if an agency uses another option, such as the General Services Administration federal supply schedules.

Congress' 2009 defense authorization bill directed OMB to take this step for MACs, but didn't address enterprise-wide contracts.

Agencies are already required to justify governmentwide acquisition contracts (GWACs), which are similar to MACs but focus solely on information technology. That mandate has helped reduce the number of GWACs from 16, managed by six agencies, to the current 10 GWACs managed by three agencies NASA, GSA and the National Institutes of Health.

All three types of contracts offer "indefinite delivery, indefinite quantity" deals with vendors, on which agencies can place task orders for goods and services.

The Government Accountability Office reported in May that it was unable to measure total spending using MACs and enterprise-wide contracts because of a lack of government oversight. GAO's report said at least $2.5 billion per year is spent using MACs, and at least $4.8 billion on just three enterprise-wide contracts set up by the Navy and the Department of Homeland Security.

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