Metropolitan Washington Airports Authority: Information on Contracting at
Washington Dulles International Airport and Ronald Reagan Washington
National Airport Between 1992 and 1999 (Correspondence, 11/17/2000,
GAO/GAO-01-185R).

As required by the Metropolitan Washington Airports Act of 1986, GAO
must periodically determine whether the Metropolitan Washington Airports
Authority (MWAA) uses fair practices in determining which vendors win
contracts. This correspondence provides information on MWAA's uses
contracting practices between 1992 and 1999. GAO found that 2,843
contracts for supplies and services were awarded during this period. The
initial award of these contracts was $1.43 billion. Between 1998 and
1999, GAO found that 95 out of 124 large contracts had been awarded
using full and open competition. The remaining contracts were awarded on
a sole-source basis or by using limited competition.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GAO-01-185R
     TITLE:  Metropolitan Washington Airports Authority: Information on
	     Contracting at Washington Dulles International
	     Airport and Ronald Reagan Washington National Airport
	     Between 1992 and 1999
      DATE:  11/17/2000
   SUBJECT:  Airports
	     Competitive procurement
	     Procurement practices
	     Service contracts
	     Sole source procurement
	     Construction contracts
IDENTIFIER:  Dulles International Airport (VA)
	     Ronald Reagan Washington National Airport (DC)

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GAO-01-185R

Contracting by the Metropolitan Washington Airports Authority
United States General Accounting Office

Washington, DC 20548

November 17, 2000 The Honorable John McCain Chairman The Honorable Ernest F.
Hollings Ranking Minority Member Committee on Commerce, Science,

and Transportation United States Senate

The Honorable Bud Shuster Chairman The Honorable James L. Oberstar Ranking
Democratic Member Committee on Transportation

and Infrastructure House of Representatives

Subject: Metropolitan Washington Airports Authority: Information on
Contracting at Washington Dulles International Airport and Ronald Reagan
Washington National Airport Between 1992 and 1999

The Metropolitan Washington Airports Act of 1986 provided for the lease of
Washington Dulles International Airport (Dulles) and Ronald Reagan
Washington National Airport (National) and the transfer of operating
responsibility from the federal government to the Metropolitan Washington
Airports Authority (MWAA). MWAA has operated the airports since June 7,
1987, under a 50- year lease with the U. S. Department of Transportation.
Under the statutory terms of its lease, MWAA is charged with the protection,
promotion, operation, and maintenance of Dulles and National airports in
Virginia. To carry out this mandate, MWAA enters into a wide range of
contractual relationships for the acquisition of goods, supplies, and
construction and other services. Acquisitions range from office supplies to
heavy mobile equipment, from fuel oil and gasoline to replacement parts for
airconditioning systems, and from minor repairs to major construction, as
well as various professional consulting services. MWAA also contracts for a
variety of revenue- generating concessions that provide rental cars, food
and beverages, newspapers and gifts, public parking, and other goods and
services needed by the airports' users. Because MWAA does not maintain a
centralized database on its

GAO- 01- 185R Contracting by the Metropolitan Washington Airports Authority
2 award of concession contracts, the information in this letter is limited
to MWAA's

award of contracts for supplies and services, including construction. The
1986 act, as amended, requires us to periodically review MWAA's contracting
practices. 1 In consultation with your offices, we agreed to determine (1)
the extent of MWAA's contracting activities between 1992 and 1999; (2)
whether MWAA maximizes the use of full and open competition for contracts
estimated to exceed $200,000, as required by the act and MWAA's lease with
the federal government; and (3) whether MWAA follows sound government
contracting principles. This letter provides information on the extent of
MWAA's contracting for supplies and services between 1992 and 1999,
including information on its contract awards in excess of $200,000. We are
continuing our review on the other two objectives and will report separately
on these issues when our work is completed.

In summary, MWAA awarded 2,843 contracts for supplies and services,
including construction, at an initial award amount (in constant 1999
dollars) of about $1.43 billion from January 1, 1992, through December 31,
1999. On average, MWAA awarded about 355 contracts annually over the 8- year
period. The average value of the contracts when awarded was approximately
$504,000. MWAA's contracting peaked in 1994, when it awarded about $410
million in contracts. (See fig. 1.)

1 Our first report responding to this requirement, Contract Award Practices:
Metropolitan Washington Airports Authority Generally Observes Competitive
Principles( GAO/ RCED- 93- 63), was issued on Feb. 8, 1993.

GAO- 01- 185R Contracting by the Metropolitan Washington Airports Authority
3

Figure 1: Number and Value of Contract Awards, Calendar Years 1992- 99

Note: Amounts are in constant 1999 dollars. Source: GAO's compilation of
data from MWAA. MWAA's data are as of Dec. 31, 1999.

About 74 percent of the contract awards were for non- construction- related
supplies and services. However, these contracts accounted for only about 17
percent of the total amount of MWAA's awards during the period. As shown in
figure 2, the bulk of MWAA's contract award dollars were for construction-
related activities, including the design of airport facilities.

Number of contracts Dollars in millions

Award amount Number of contracts

GAO- 01- 185R Contracting by the Metropolitan Washington Airports Authority
4

Figure 2: Number and Value of Contract Awards, by Contract Type, 1992- 99

Notes: 1. Amounts are in constant 1999 dollars. 2. Non- construction-
related supplies and services are grouped together because, prior to 1997,
MWAA's database did not

differentiate between contracts for supplies and services. 3. Construction
includes the design and construction of new projects and the design and
rehabilitation of airport facilities.

MWAA's database includes five categories for construction contracts. For our
analyses, we combined these categories into one category- construction.

Source: GAO's compilation of data from MWAA. MWAA's data are as of Dec. 31,
1999.

Contract modifications have increased the cost of MWAA's initial contract
awards. Specifically, the amount authorized through December 31, 1999, for
the 2,843 contracts MWAA awarded between 1992 and 1999 grew by about 38
percent- from about $1.43 billion at award to about $1.98 billion. This
growth resulted from, among other things, MWAA's modification of contracts
to extend the period of performance or to otherwise purchase additional
supplies or services.

The statute establishing the terms of MWAA's lease with the federal
government requires MWAA to use full and open competition- to the maximum
extent practicable- in contracting for supplies and services, including
concession services, whose value is “estimated to be more than
$200,000.” Our analysis of MWAA's database indicates that 461 of the
2,843 contracts awarded between 1992 and 1999 for supplies and services,
including construction, were estimated to exceed $200,000. The 461 contracts
had an award value of about $1.31 billion and accounted for about 91 percent
of the amount of MWAA's contract awards during the period. (See fig. 3.)

Construction Other

Number of contracts Value of contract awards (in billions)

GAO- 01- 185R Contracting by the Metropolitan Washington Airports Authority
5

Figure 3: Number and Value (in Billions) of Contract Awards Estimated to
Exceed $200, 000, Calendar Years 1992- 99

Note: Amounts are in constant 1999 dollars. Source: GAO's compilation of
data from MWAA. MWAA's data are as of Dec. 31, 1999.

Construction contracts accounted for 62 percent (286) of the 461 contracts.
The remaining 175 contracts were for other goods and services. In total, the
amount authorized for the 461 contracts increased by about 35 percent- from
about $1.31 billion at award to about $1.76 billion as of December 31, 1999.
2 The average increase was approximately $980,000 for construction contracts
and about $1.01 million for other contracts.

MWAA's database does not indicate to what extent MWAA used full and open
competition for the entire period between 1992 and 1999, in part because
MWAA did not begin recording this information in its database until mid-
1997. According to MWAA's database for 1998 and 1999, however, 95 of the 124
contracts that MWAA estimated would cost more than $200,000 were awarded
using full and open competition. The remaining 29 contracts were identified
as having been awarded either using limited competition or on a sole- source
basis. Our discussions with MWAA officials and our review of the contracts'
documentation indicated that 4 of the 29 contracts were miscoded. After
being corrected for this miscoding, the database indicates that MWAA awarded
99 contracts using full and open competition in 1998 and 1999. According to
MWAA's database, the remaining 25 contracts were awarded using less than
full and open competition. The 25 contracts constituted

2 All amounts are in constant 1999 dollars.

Award value of contracts estimated to cost more than $200,000

Award value of contracts estimated to cost $200, 000 or less Number of
contracts estimated to

cost more than $200,000 Number of contracts estimated to cost $200, 000 or
less

GAO- 01- 185R Contracting by the Metropolitan Washington Airports Authority
6 about 20 percent of the 124 contracts awarded during the 2- year period
and about 15

percent of the contracts' award value. Fourteen of the 25 were awarded on a
solesource basis, and 11 were awarded using limited competition. (See fig.
4.)

Figure 4: Number and Value (in Millions) of Contracts Awarded in 1998 and
1999 That MWAA Estimated Would Cost More Than $200,000

Note: Amounts are in constant 1999 dollars. Source: GAO's compilation of
data from MWAA. MWAA's data are as of Dec. 31, 1999.

Scope and Methodology

To determine the extent of MWAA's contracting activities, we obtained,
reviewed, and analyzed MWAA's database on supply and service contracts,
including construction contracts, and identified contracts MWAA awarded
between January 1, 1992, and December 31, 1999. We performed limited work to
evaluate the integrity and reliability of MWAA's database. This included the
identification and elimination of duplicate contract entries and the
reconciliation of contracts identified in MWAA's database as having been
awarded using limited competition or on a sole- source basis (less than full
and open competition). We did not, however, review contracts identified as
having been awarded using full and open competition to determine whether the
contracts were properly coded in MWAA's database. We analyzed the database
by year, number, amount, contract type, and solicitation method- full and
open competition, limited competition, or sole- source award. 3 We discussed
database limitations and the results of our analyses with MWAA contracting

3 “Amount” includes the estimated amount, award amount, and
current amount as indicated in MWAA's database as of Dec. 31, 1999.
“Contract type” indicates whether a contract was for supplies,
services, or construction.

Number of contracts awarded using full and open competition

Number of contracts awarded using less than full and open competition

Award value of contracts awarded using full and open competition

Award value of contracts awarded using less than full and open competition

GAO- 01- 185R Contracting by the Metropolitan Washington Airports Authority
7 personnel. We performed our work from October 1999 through November 2000
in

accordance with generally accepted government auditing standards.

Agency Comments

We provided copies of a draft of this letter to MWAA for its review and
comment. MWAA commented that it fully appreciates its statutory obligation
to secure, to the maximum extent practicable, full and open competition on
its contract awards and that, in its view, it has achieved that objective.
MWAA took exception to our inclusion of 12 of the 14 contracts identified as
sole- source awards in this letter. According to MWAA, six of these
contracts were to reimburse individual airlines for work the airlines had
performed and were therefore not subject to the statutory terms of MWAA's
lease (statutory lease provision). MWAA also maintained that three other
contracts, which it had initially expected to cost more than $200,000, were
not subject to the statutory lease provision because their value, when
awarded, was less than $200,000 each. Finally, MWAA commented that the
remaining three contracts were for follow- on work to contracts that had
previously been awarded using full and open competition. According to MWAA,
these contracts were misclassified in its database as sole- source awards.
MWAA's comments are included in enclosure I.

We do not assess in this letter whether MWAA has complied with its statutory
obligation to secure full and open competition to the maximum extent
practicable in contracting for supplies and services whose value is
estimated to exceed $200,000. Such an assessment cannot be made on the basis
of the information in MWAA's database. Our purpose was solely to describe
the scope of MWAA's contracting activity. To determine the number of sole-
source awards, we used contracts identified in MWAA's database as having
been awarded without competition and as having an initial estimated value in
excess of $200,000. This approach is consistent with the language of MWAA's
statutory lease provision. Since the 12 contracts that MWAA would exclude
were, in fact, awarded without competition, we did not adjust the number of
sole- source contracts identified in this letter. We did, however, revise
the letter to more clearly indicate that the contracts were classified as
sole- source awards in MWAA's database. Our assessment of MWAA's compliance
with the statutory lease provision will be the subject of a subsequent
report.

---- We are sending copies of this letter to the Honorable David T. Ralston,
Jr., Chairman, Board of Directors, MWAA, and to others upon request. Please
contact me or Kathleen Turner at (202) 512- 2834 if you or your staff have
any questions. In addition, David Bryant, Jr.; Etana Finkler; Arthur James,
Jr.; and Larry Turman made key contributions to this letter.

Phyllis F. Scheinberg Director, Physical Infrastructure Issues

Enclosure

Enclosure I

GAO- 01- 185R Contracting by the Metropolitan Washington Airports Authority
8

Comments From the Metropolitan Washington Airports Authority

Enclosure I

GAO- 01- 185R Contracting by the Metropolitan Washington Airports Authority
9 (348197)

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