Newly restricted purchases made up more than half of contracting shop’s business, director says.
Officials with GovWorks, a fee-funded Interior Department contracting operation, said it can withstand the loss of much of its business in the face of a Defense Department suspension of large purchases.
"Can it survive? Yes," said Doug Bourgeois, director of Interior's National Business Center, parent of GovWorks. "The future will determine ultimately how successful we are in sustaining the business," he said, noting that large Defense awards currently make up between 50 percent and 60 percent of the contracting shop's work.
Defense officials have ordered that "no interagency agreement in excess of $100,000 be accepted by GovWorks Federal Acquisition Center … unless a determination has been made in writing" by the Defense undersecretary for acquisition, technology and logistics that the purchase is in the interest of the department.
Defense procurement chief Shay Assad, in a May 31 letter to an Interior official uncovered by Federal Computer Week, said funds already forwarded to GovWorks for contracts exceeding the threshold but not yet committed should be returned to the department.
In the letter, Assad expressed disappointment with GovWorks' poor response to criticism of its contracting practices in a January Defense inspector general report. "As requested previously, DoI must cease the practice of advanced funding and must comply with DoD's policy of 'no advance' payments with respect to all interagency agreements," Assad wrote.
Bourgeois said GovWorks is legally allowed to take payment when a customer makes the initial agreement to place a contract, before it begins the process of soliciting and then awarding a contract. But under Defense policy, funds cannot change hands until later in the process, to prevent a contract from being listed as an undelivered order, he said.
GovWorks has worked closely with Defense officials since February to address the problems identified in the report, Bourgeois said. He said he feels confident the changes already implemented will resolve Defense officials' concerns.
Assad was traveling Monday and could not respond to questions.
Bourgeois said the intent of the change was apparently to make it more difficult for Defense program managers to "park" funds at a contracting shop past the time when they would expire if left in Defense accounts. The department ran into trouble with that practice in a highly publicized case with the General Services Administration, which ultimately resulted in the return of between $1 billion and $2 billion in unspent funds to the Treasury.
Bourgeois said GovWorks has seen a steady decline in Defense business over the last two years, since the department began requiring an explicit justification for orders placed through outside contracts, but that the latest announcement would not devastate the office.
He said some flexibilities already had been used over the past two years to reduce costs, but that he has additional room to maneuver by cutting back on GovWorks contractor support or temporarily shifting resources from GovWorks to one of four other contracting operations.
"You can only go so far, though, so the future remains to be seen as to how much business and demand there is for this particular operation," Bourgeois said.
Asked about the trend at GovWorks and the embattled position of Treasury's FedSource, which officials have said they intend to relocate to a new host agency, Bourgeois said he does not think contracting shops will be shutting down entirely.
Rather, he expects to see them focus increasingly on core business areas important to their host agency or in which they have particular specialties. "What I'm seeing, and I think other contracting organizations will follow suit if they haven't already, is there's just not enough demand to be all things to all people," he said.
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