Interagency contract use expected to decline

The use of interagency contracting vehicles may decline in the coming months as many large federal agencies, including the Defense Department, look inward for their major procurement needs, several top acquisition executives said earlier this week.

Speaking Wednesday at a panel discussion hosted by the Government Electronics and Information Technology Association, Shay Assad, director of Defense procurement and acquisition policy, said the Pentagon is taking a more strategic approach to acquisition and will, at least in the short term, rely more on in-house contracts.

"We've gotten over 'Can we do it correctly?' We're past that now," Assad said. "Strategically, we're now asking, 'What should we be buying and why?'"

Of the roughly $300 billion Defense spends on contracts annually, 2 percent is directed to interagency-assisted acquisitions while another 5 percent is spent on GSA's Multiple Awards Schedule and NASA's Solutions for Enterprise-Wide Procurement.

The Pentagon will look to devote about 3 percent of contract spending to such arrangements in the short term, Assad said, to provide a ballpark estimate. But, he noted, that figure could increase in the longer term as the department completes an analysis of its acquisition needs and workforce capabilities. Ultimately, Assad said, the Defense Department will use whatever vehicle best suits its needs.

"If that's GSA, fine. And if it's SEWP, we'll use them," Assad said.

The Pentagon is not alone in curbing its dependence on interagency contracts. The Homeland Security Department, which has relied heavily on outside contracts since its creation four years ago, now has the staffing and expertise to begin letting more of its own procurements, said Dominic Cipicchio, DHS' director of contract operations.

He pointed to the recent $45 billion IT consolidation vehicle, the Enterprise Acquisition Gateway for Leading Edge Solutions, or EAGLE, as a sign of DHS' newfound capacity to manage its own contracts, particularly for core capabilities.

"You need to look at the entire picture and figure out what works for you," Cipicchio said. "It's not a default decision."

Deidre Lee, chief acquisition officer at the Federal Emergency Management Agency, said agencies initially turned to interagency contracts for five reasons: a lack of in-house staffing, the need to award contracts in a hurry, the flexibility afforded programs financially, the lack of protests and the ability to generate new revenue. With a few exceptions, Lee said, those fundamental demands generally have not changed.

"And, we are still missing the most important thing -- execution," Lee said. "We can now buy the wrong thing very fast."

FEMA now employs nearly 200 contracting officers -- up from 36 before Hurricane Katrina. The agency also will begin to bring more contracts back in house, Lee said.

Meanwhile, Molly Wilkinson, GSA's chief acquisition officer, said the agency remains committed to interagency contracts. "It's what we do and we do it very well," she said.

The future of such contracts probably will remain in flux as the Office of Management and Budget's procurement policy branch prepares to release a comprehensive guidance document before the end of the year.

The 40-plus page document will spell out the transfer of money for such arrangements, illustrate the kinds of analysis agencies should undertake before deciding to use a governmentwide acquisition contract or multiple agency contracts, and define clear roles and responsibilities of all parties, according to Robert Burton, deputy administrator of OMB's Office of Federal Procurement Policy.

The document, which Burton said he hopes will help get interagency contracting off the Government Accountability Office's high-risk list, also will focus on elements of a model interagency contract, shaped in part after the recent Defense-GSA memorandum of agreement on contracting.

"This is a step forward for the entire acquisition community," Burton said.

While not yet mandatory, the regulations will be highly recommended as the basic elements that should be found in all interagency contracts, Burton said. In time, the guidance could be inserted into the Federal Acquisition Regulation, he said.

OMB also is weighing whether to develop a governance structure for creating and renewing interagency contracts. If adopted, such a governing body could determine whether "it's in government's best interests too keep all of its interagency vehicles," Burton said.

According to recent data, there are 54 multiple award contracts and 13 governmentwide acquisition contracts.

"Our concern is that we may have too many interagency contracts," Burton said. "It defeats our purpose [of lowering prices through leveraging the government's buying power] if we have too many vehicles."

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