Tuesday, July 21, 2009

STIMULUS WATCH: No-bid contracts mean higher costs


WASHINGTON — The Defense Department frequently awards no-bid work to small contractors for repairs at military bases under the new economic stimulus law, costing taxpayers millions of dollars more than when businesses compete for the work, according to an Associated Press analysis of 570 such contracts.

The Pentagon saves more than three times as much money when companies compete, the AP analysis showed. Yet more than $242 million in federal contracts — representing more than one-fourth of the military's stimulus contract spending so far — has been awarded under the recovery program through no-bid contracts for repairs and maintenance.

President Barack Obama promised last month to save money through competition.

"By ending unnecessary no-bid contracts and reforming the way government contracts are awarded, we can save the American people up to $40 billion every year," Obama said, as he announced new procedures to increase competition.

In many of the cases, the military bases are eager to spend the stimulus money. Speed is an important element of the Obama administration's effort to jump-start the economy. Bidding and its delays can be avoided by federal rules that permit contract awards to small and disadvantaged businesses without competition, said Navy Cmdr. Darryn James, a Pentagon spokesman.

Across the government, more than $543 million in federal contracts have been awarded so far without competition under Obama's $787 billion stimulus program.


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