Analysis of the Multiple Award Contracting Strategy on U.S. Government Husbanding Service Provider (HSP) Prices

Abstract

In 2016, the U.S. Navy transitioned from Single Award Contract (SAC) to Multiple-Award Contract (MAC) Indefinite-Delivery–Indefinite-Quantity (IDIQ) husbanding service contractsRecent port services pricing data suggests that some services or ports may cost more under a MAC compared to a SAC. The objective of this study is to identify whether there is a statistically significant difference in price for U.S. Navy husbanding port services and to estimate the relationship of price between these two competitive husbanding service provider (HSP) contracting strategies. A price comparison between the contract types was performed using three fixed-effects regression models. The results of the models showed a statistically significant difference in price between SAC and MAC. The model estimated that for a given port and given ship type, the average price for HSP services was less for a MAC than for a SAC. Additionally, the effect of the MAC on price changes based on the port and service category. However, the effect of contract strategy on price could be marginally under- or overstated based on the immeasurable effects of nonmonetary qualitative factors. Further research will be required to understand the true cost–benefit of MACs and the overall best value to the government.