No-bid contracts in US mean higher costs

WASHINGTON -- The Defense Department frequently awards no-bid work to small contractors for repairs at military bases under a new economic stimulus law, costing American 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 spending of its share of the government's massive stimulus package to boost the economy -- 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.

Much of the spending is for common construction work at a time when contractors crippled by the recession are offering steep discounts. State governments are taking advantage, reporting millions in savings as road and construction contracts come in under budget after making companies bid for the work.

The Defense Department can do that, too, and "ensure that we're getting the best deal possible," said Scott Amey of the Project on Government Oversight, a watchdog group that tracks government spending and waste.

Obama's recovery program includes about $7.4 billion for military construction, repairs and improvements at bases put off in recent years because of wartime expenses. The Defense Department also is seeing big savings in its construction contracts, but it is saving far more money when making businesses compete.

The AP reviewed project estimates and actual contract amounts for $420 million in stimulus projects given to contractors hired by military bases. Military bases have awarded about 1,445 contracts totaling $955 million for maintenance and repairs, but only $420 million could be readily compared to earlier Defense project estimates sent to Congress.

The 570 projects reviewed by the AP included $284.4 million in competitively bid contracts and $135.5 million in no-bid contracts.

The work that was competitively bid saved $34 million, with contract costs coming in about 11 percent less than budget estimates. The no-bid work saved $4.4 million, with contract costs coming in about 3 percent less than estimates, the AP's analysis shows.