August 11, 1983

The President today directed that Federal procurement policies be changed to curtail noncompetitive contracting practices, stating that "Competition is fundamental to our free enterprise system."

The President urged that competitive procurement practices be given preference in agency buying programs. He directed the Administrator for Federal Procurement Policy in the Office of Management and Budget to issue a formal policy directive restricting use of noncompetitive procurement practices. That directive will be issued later this week.

The Presidential action followed a discussion of the nature and extent of noncompetitive procurement practices by the Cabinet Council on Management and Administration on August 4. In his memorandum to the departments and agencies, the President characterized free competition as ". . . the single most important source of innovation, efficiency, and growth in our economy.''

He pointed out that "far too often the benefits of competition have been excluded from the Federal procurement process -- a process which now results in expenditures of over $160 billion annually.'' `"While such congressionally mandated programs as contracting with minority firms and handicapped persons will not be affected, the unwarranted use of noncompetitive practices must and will be curtailed.'' At least a third of all Federal contract dollars are spent without benefit of competition. Under the new policies being proposed, it is estimated that up to $10 billion can be saved annually.

On March 17, 1982, the President issued Executive Order 12352, directing agencies to develop criteria to enhance competition and limit noncompetitive actions. Noting that while the administration had made efforts to correct the longstanding problem of too little competition, the President stated that he was ". . . convinced that more needs to be done.''

The action announced today is part of the President's Management Improvement Initiative: Reform 88 -- a 6-year program to modernize the management practices and administrative systems of government, reducing costs of doing business while maintaining essential public services. Procurement is one of the primary areas targeted for simplification and cost reduction, as reflected in the administration's intention to reduce the number of government procurement regulations by half, through issuance of a single, comprehensive Federal acquisition regulation, expected to be issued next month.