Defense auditors issue review of GSA contracting operations

Final report is mostly good news for regional shops, concluding that Defense organizations should continue to use them.

A recently released final Defense Department audit of the General Services Administration's assisted services regional contracting shops is similar in substance to an earlier draft report, despite challenges to some of its conclusions by GSA officials.

Like the draft report, the final audit of Defense purchases made through GSA regions during fiscal 2005 identified four that did not fully comply with Pentagon procurement and funding regulations. The violations included potential breaches of the Antideficiency Act, which prohibits agencies from spending money they don't have, and a lack of "adequate interagency agreements," the report stated.

The final version, released Oct. 30, is nonetheless mostly good news for GSA, because auditors concluded that despite procurement process flaws, the Defense Department should continue to do business with GSA. A more stringent ruling by the Pentagon inspector general on any of GSA's 11 regional customer service centers would have severely restricted the Defense Department's ability to do business with blackballed regions.

Pentagon orders constituted more than 83 percent of the $3.6 billion in business the GSA regions conducted in fiscal 2005, according to the audit.

The report also found internal Defense problems, noting that department organizations mostly failed to properly justify use of GSA service centers rather than internal procurement organizations. The department also mostly failed to develop and implement quality assurance plans.

However, auditors stated that they "do not believe that [GSA] is blameless in the flawed acquisitions identified in this report and that DoD should shoulder all the blame."

GSA officials mounted a campaign against the draft report, through a letter contesting auditors' findings and in talks with some members of the media. "GSA recommended the wording be changed to show that DOD officials were responsible for acquisition errors and mismanagement," the IG stated in the final audit.

More recently, Jim Williams, commissioner of GSA's Federal Acquisition Service, said the newly established organization was "tarnished" by the draft report. Many of the flaws identified by Pentagon auditors "happen within DoD," he said, speaking before an industry audience Oct. 30.

The report also noted that Defense and GSA continue to disagree about whether appropriations law allows GSA to carry over from one fiscal year to another funds obligated to it by customer agencies. GSA's position is that money from one fiscal year can be used to award a contract in another fiscal year, provided that GSA accepts the money within the fiscal year in which it was appropriated and that a vendor contract is awarded within a reasonable amount of time, such as 90 days.

Also speaking before an industry audience on Oct. 30, Paul Denett, the new administrator of the Office of Management and Budget's procurement policy shop, said it's likely Defense will get its way. When "the money has to [be] spent a certain way with certain checks and balances," he said, "then that's what GSA will adhere to, in case they're the customer."