Air Force Seeing Decline in Competition for Services Contracts
By: Jesse Ellman
Increasing competition for defense contracts has been a continuing effort for the Department of Defense’s (DoD) recent series of “Better Buying Power” acquisition reform initiatives. In prior work on competition trends within DoD, CSIS noted that the rate of effective competition (that is, competitively sourced contracts receiving at least two offers) for overall DoD contract obligations has remained near 50 percent in every year since 2008. Within those trends, however, there are significant differences in levels of competition both among the major DoD components (Army, Navy, Air Force, etc.) and in what is being contracted (products, services, and research and development). Most notably, there has been a significant decline in effective competition for services within the Air Force since 2011.
In the past four years, two-thirds of overall DoD services contract obligations have been awarded after effective competition in every year. But within the Air Force, just 52 percent of its services contract obligations were awarded after effective competition in 2011, and that share has declined sharply since, to 41 percent in 2014. CSIS initially hypothesized that the decline was a function of the Air Force buying more low-competition services rather than an actual decline in levels of competition. However, the data show that the Air Force achieves lower rates of effective competition for its major categories of services than does DoD overall. For professional, administrative, and management support (PAMS) services within the Air Force, effective competition declined from 44 percent in 2011 to 36 percent in 2014, compared to 58 percent for overall DoD in 2014. Similarly, for equipment-related services (ERS) within the Air Force, effective competition declined from 50 percent in 2011 to 27 percent in 2014, compared to 56 percent for overall DoD in 2014.
The study team then considered the possibility that, within PAMS and ERS, the Air Force was buying different types of services for which there were historically lower rates of competition. However, CSIS discovered that the Air Force consistently achieves lower rates of effective competition for many of the specific types of services toward which it obligates the most money. For example, the Air Force obligated $1.2 billion for logistics support services (which fall under PAMS) in 2014, and only 17 percent of those dollars were awarded after effective competition, compared to 65 percent for overall DoD logistics support services.
Given the difficulty DoD has had in raising overall effective competition rates, Air Force services contracting provides a potential opportunity to increase competition meaningfully. The CSIS study team plans to conduct a more detailed analysis of competition for Air Force services contracts in the coming months.