Dear Madam Chairman: In accordance with your request of November 19, 1970, we have obtained information on thefie used byV~A,wtVh.e=c_f_fice of __,_- Education v*.-,-.-for p.*.*.,.. "c~-~s~.~~~"~g_~,~~~~~x~~~~.I-,a.s~~~~~~~c"-~~-~~~~it.~ve -se.*-"" j" a~-.I."s.__. ,_,_. " or noncompetitive. _~..i-~-.. I-. if Our findings were discussed with your of- fice on February 5, 1971, at which time we were asked to pro- vide you with a written summary of these findings. We understand that your concern stems from a conflict between information provided to you by the Office of Educa- tion and that provided by the Department of Health, Educa- tion, and Welfare. The information provided by the Office of Education shows that nearly all its contracts have been awarded on the basis of competition, but the information pro- vided by the Department shows that only a few Office of Edu- cation contracts have been awarded on this basis. The dif- ferences in classification have resulted primarily because the Office of Education uses a "brochure" system in its pro- curement process and classifies all contracts awarded under this system as competitive, whereas the Department classifies such contracts as noncompetitive. The Office of Education's procurement process under the brochure system, the reasons for using the system, and its effect on the classification of contracts are explained in the following paragraphs. Enclosed for your information are examples of brochures used by the Office of Education (encs. 1 and 2) and the Office of Education's official re- sponse to the questions raised in your request of November 19, 1970 (enc. 3). Under the brochure system, the Office of Education pre- pares documents (brochures) describing educational program areas in general terms, which it sends to educational insti- tutions, to profit and nonprofit organizations, and to in- dividuals for the purpose of obtaining project proposals. Usually, a variety of proposals for work within the general program areas described in the brochures are submitted to the Office of Education in response to this solicitation. The B-164031 (1) Office of Education evaluates the proposals and selects for funding those proposals considered to have the most merit. For example, 100 proposals might be received in reply to a brochure on a general program area such as educational re- search but perhaps only 50 would be selected. It should be noted that, although the 100 proposals would fall within the same general program area, they could all be for different projects. Office of Education officials have advised us that the brochure system provides the Office of Education with ideas for educational projects. One official stated that “many ideas for improvement and innovation in education are spawned in settings outside the OE [Office of Education] and are not susceptible to precise predetermination nor packaging by OE educational staff .‘I Officials of the Office of Education have informed us that they believe that most of the proposals received are in response to brochures or public announcements. Accordingly, even though the Office of Education does not always know whether an organization that submits a proposal has done so in response to a brochure, it assumes that all unsolicited pro- posals are submitted on this basis and classifies all resul- tant contracts as competitive awards. It is the Office of Education’s position that these awards are made on a competitive basis because brochures are sent to many organizations and individuals and there are some elements of competition in such an award. The Office of the Assistant Secretary for Administration has taken the position that contracts awarded under the bro- chure system are noncompetitive because the Office of Educa- tion does not prepare an Invitation for Bid or a Request for Proposal describing a specific project. In other words, un- less the organizations involved can compete for an identical project, the Office of the Assistant Secretary for Administra- tion does not consider the award to be competitive. 2 B-164031(1) The Federal Procurement Regulations, which govern pro- curement in civilian agencies, require the use of formally ad- vertised competitive procurement for all Government purchases, with certain exceptions. However, the Federal Procurement Regulations make clear that adequate competition requires that more than one vendor be solicited. The Department of Health, Education, and Welfare classi- fies formally advertised procurement as competitive. It also includes, as competitive procurement, situations in which Re- quests for Proposal are sent to, and proposals are received from, more than one prospective contractor and in which the best proposal is selected for the award. The Department clas- sifies this method of award as competitive negotiation. The Department, however, does not extend its definition of compe- tition to include contracts awarded under the brochure system because under this system not all potential contractors are proposing prices for comparable jobs; that is, the work to be done under each of the proposals is different. This accounts for the difference you noted in the information provided by the Office of Education and that provided by the Department. The Federal Procurement Regulations provide that all pur- chases and contracts, whether by advertising or negotiation, be made on a competitive basis to the maximum practicable ex- tent and that bids or proposals be solicited from enough quali- fied sources as are deemed necessary to ensure such full and free competition as is consistent with the procurement of the types of supplies and services necessary to meet the require- ments of the agency concerned. Competitive bidding contem- plates an equal opportunity for all prospective contractors to compete on an equal basis and to have their bids or pro- posals considered in competition with all other bids and pro- posals upon the same basis. OE’s brochure system of procure- ment does not appear to fit the designation competitive as that term is normally used in the regulations, since the edu- cational program areas are described in general terms and the variety of proposals received are so dissimilar that they are incapable of being evaluated on an equal basis. However, we recognize that, because of the unique nature of the end product 3 B-164031(1) involved, the brochure system of procurement may be necessary to meet the needs of the agency. Since the basis used by the Office of Education to clas- sify its contracts as competitive or noncompetitive differs from bases used by other Federal agencies, it seems desirable that any data that the Office of Education publishes on con- tract awards should clearly explain the basis for classifica- tion so that the classification would not be subject to mis- interpretation. According to a memorandum dated November 10, 1970, from the Department of Health, Education, and Welfare to the Com- missioner of Education, a complete study of the Office of Education procurement program is to be started early in 1971 under the direction of the Assistant Secretary for Administra- tion. We understand that this study will give consideration to the brochure system. If we can be of any further assistance, please let us know. Sincerely yours, of the United States Enclosures - 3 The Honorable Edith Green, Chairman Qz&& Subcommittee on Education I 4-- Committee on Education and Labor vi' - House of Representatives
Basis Used by the Office of Education for Classifying Contracts as Either Competitive or Noncompetitive
Published by the Government Accountability Office on 1971-03-30.
Below is a raw (and likely hideous) rendition of the original report. (PDF)