A Bloomberg Government study has found that U.S. government spending on multiple-award contracts (MACs) grew twice as fast as total contract spending between 2006 and 2010, with MAC spending increasing 49 percent to $121 billion over the period.
“Multiple-award contracts are starting to become the center of the universe,” Jaime Garcia, president of Washington-based Seville Government Consulting told the Washington Post. “These vehicles have exploded across government.”
Bloomberg’s study found the government spent 33 percent more on MAC orders in fiscal 2010 than the Government Accountability Office had estimated.
The government awards positions on a MAC to multiple vendors, rather than one firm. The firms on the contract then compete for orders for services or products when the government needs them.
For some companies, MACs are a huge driver of revenue. Bloomberg found that $1.98 billion, or 72 percent, of CACI International‘s fiscal year 2010 government contract revenue came from MAC orders, while Computer Sciences Corp. took in $2.8 billion, or 65 percent, of its contract total from MACs.
The Post piece also lists SAIC Inc., Booz Allen Hamilton and ManTech International as contractors with MAC-heavy award totals. SAIC took home more revenue than any other company on the Navy’s SeaPort-e MAC in FY 2010. That year, the vehicle housed $5.6 billion in total orders.
Nick Taborek writes that the U.S. government is increasingly awarding work through MACs as they look to simplify the contracting process and lower costs.
“These contracts give the government access to a top-tier pool of qualified vendors, with the added benefit of another round of competition on individual task order requirements,” Jim Cuff, SAIC’s executive vice president of corporate development, told the Post.
Others say there are downsides as MACs might give firms less time to prepare competitive proposals for individual orders as they cannot tell when orders will be handed out.
This is not as pronounced an issue on supply schedules, the first MACs Congress authorized the General Services Administration and the Department of Veterans Affairs to oversee beginning in 1949. But, the growth rate of government spending on newer MACs that legislators approved for government and military use in the 1990s has exploded.
On newer MACs in use between 2006 and 2010, Bloomberg found spending increased 90 percent to $72 billion over the four years, six times faster than spending on supply-schedule contracts.
Small businesses won a higher percentage of newer MACs than government contracts in total, 21.6 percent to 20.1 percent, respectively.