Defense bill mandates audit of GSA contracting procedures
Compliance with contracting rules is needed if agency wants Defense business, proposed law says.
The General Services Administration may have to demonstrate to government auditors that it complies with federal contracting rules if the agency wants to continue doing business with the Defense Department.
A provision in the fiscal 2005 Defense Authorization bill, passed by the Congress and awaiting President Bush's signature, says that the inspectors general of the GSA and the Defense Department must jointly "review the policies, procedures and internal controls" at some GSA regional offices.
The inspectors general will determine whether those offices, which manage billions of dollars in contracts for Defense agencies, are in line with federal laws and regulations. If they're not, the offices will be effectively banned from working for Defense for one year.
The offices also must show that their managers and other personnel are capable of ensuring compliance with contracting law. The move is a reaction to a series of contracting abuses committed by some employees of GSA's Federal Technology Service, which buys technology goods and services for other agencies.
Defense agencies are FTS' biggest customers. Investigations have shown that some of the 11 FTS regional offices have failed to follow procurement rules on their Defense work, often by using technology funds to buy unrelated items, such as construction services and interrogators for the Abu Ghraib prison in Iraq.
The inspectors general must complete their review by March 15 of next year. If they find that an FTS office doesn't comply with Defense standards, that location will have a year to correct the deficiencies and show that internal management practices "are adequate to ensure compliance…with the requirements of laws and regulations." The inspectors general must document their findings and give notice of any suspension in writing.
The measure is part of a last-minute compromise on Capitol Hill. Language pulled out of the Defense bill in recent days that might have put FTS offices out of business. The Senate version of the bill would have prohibited any Defense agency from doing business with an outside contracting agency that charged a fee greater than 1 percent of the total value of the procurement. FTS' fees, which it uses to sustain its operations, are well over 1 percent.
GSA managers have stressed that they take the contracting abuses at FTS seriously, and that they're changing policies across the agency. Giving the FTS offices a chance to prove they're abiding by procurement laws may reflect Congress' belief that GSA is getting its problems under control.
"The compromise is a reasonable one in that it highlights congressional concerns, yet gives GSA and [FTS] time to review their practices," said Stan Soloway, president of the Professional Services Council, a trade association that represents government contractors. "This provision gives them the time to ensure their houses are in order before any restrictions or punitive actions are taken," he said.
Some procurement experts speculated that Congress never intended to include the harsher measure that would have prohibited business with FTS. Rather, they said, the move was likely a signal to GSA that lawmakers' patience with contracting abuses was wearing out.
Soloway noted that GSA's new "Get it Right" campaign, a joint effort with Defense to more closely monitor contracting, shows that the agency has taken the initiative to clean up its operations.
The proposed law reflects those moves, said Larry Allen, the executive vice president of the Coalition for Government Procurement, another trade group. "It acknowledges that most, if not all, FTS [regional offices] have taken steps to ensure compliance," he said.
The law also provides some wiggle room for FTS offices that end up shut out of Defense work. They could still manage contracts worth less than $100,000. And the Defense undersecretary for acquisition, technology and logistics can issue a ruling "that it is necessary in the interest of" the Defense Department for an office to continue doing business above the threshold as well. The undersecretary can continue the exemption a year at a time.
A spokeswoman for GSA declined to discuss the legislation, citing the agency's policy of not commenting on pending bills.