oversight

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)

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