GSA probe of regional contracting shops finds few problems

The General Services Administration's regional technology procurement centers generally follow federal acquisition rules, a recent review by the agency's inspector general found.

But the auditors' Sept. 29 report acknowledged that GSA and the Defense Department continue to disagree over some interagency contracting policies and procedures.

The IG found "minor procurement compliance deficiencies" in several of the regional assisted service technology contracting shops, but auditors said centers generally fulfilled regulation requirements. Deficiencies "were isolated cases, were not pervasive, and did not indicate a pattern of noncompliance," auditors said.

In a response to the report, Lurita Doan, the agency's administrator, acknowledged "there is always room for improvement," but said it could be accomplished "with minor actions."

The review, conducted from May 2005 to October 2005, encompassed $866 million in task orders. The regions conducted about $3.6 billion worth of business in fiscal 2005. Revenue in the regional technology shops peaked in fiscal 2003 at $5.8 billion; since then the agency has faced declines.

The regional centers, like most of GSA, are meant to be self-sustaining, paying for their operating costs out of fees assessed on customers such as the Defense Department.

The GSA auditors' report was gentler in tone than a recent draft Defense Department inspector general report, which, even though it recommended against restricting Defense business with GSA, cited numerous contracting irregularities.

The Pentagon and GSA disagree about when appropriations law requires the clock to start counting the time remaining on contracts for services purchased on an annual basis -- so-called "severable services" contracts. Defense regulations require interagency contracting shops to follow the Pentagon's interpretation. The Defense Department provides more than 82 percent of regional GSA technology shops' business, according to the GSA inspector general.

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 within 90 days," according to GSA auditors.

Defense adheres to a stricter interpretation of the law, arguing that the contract must be awarded within the fiscal year in which the money was appropriated. The department's previous consent to follow a looser, GSA-approved interpretation of fiscal law resulted in Defense losing between $1 billion and $2 billion in program funds.