A recent Bloomberg Government study reminds us that Federal Government spending on multiple-award contracts (MACs) rose 49 percent to $121 billion over the last four years, more than double the growth rate of all other contracting programs within the Federal Government.
These contracts often go overlooked outside the federal contracting community, but are intended to reduce costs by simplifying the procurement process for agencies in the federal space. Agencies (such as the DoD) will hold competitions to pick multiple suppliers, as opposed to one single provider. Once chosen for the pool, these contractors will bid against each other for orders as specific needs come up.
The rapid growth of multiple-award contracts has raised the stakes for the largest of Government suppliers. Prime contractors know it is the opportunity for millions or billions in revenue for the term of the agreement, which is frequently five years or even longer.
To top it all off, the Government’s fiscal 2010 spending on MACs was 33 percent more than the Government Accountability Office’s estimate of $91 billion, according to the Bloomberg study. Revenue rose to $121 billion in fiscal year 2010 from $81 billion in fiscal year 2006.
Officials are taking notice and putting new measures in place to oversee Multiple-Award Contracts. President Barack Obama’s top acquisition official recently ordered more oversight of agencies seeking to set up new MACs in the future.
