GSA works to restore contracting relationship with Pentagon

The General Services Administration and the Defense Department are making steady progress toward resolving differences that have created a rocky relationship between their contracting arms, GSA officials said in a recent update.

A senior GSA official speaking on background said the two agencies are on schedule for a series of reviews, training sessions and policy guidelines intended to restore the Pentagon's use of GSA's contract offerings. The Defense Department began developing more in-house contract vehicles following audit reports of flaws at GSA's regional procurement shops and disagreements over issues including interpretation of appropriations law.

Efforts to restore the relationship were made formal with an agreement signed by the two agencies in early December. A February 2007 monthly update from GSA lists a series of initiatives that have been started or completed since the signing of that document.

According to the update, GSA officials have reviewed issues identified in a recent Defense inspector general audit of GSA's assisted services regional contracting shops, and have provided the Office of Management and Budget's Office of Federal Procurement Policy and the Pentagon with a proposal to address weaknesses. GSA also is working with the Defense comptroller to reinforce proper management of department funds, the update stated.

A GSA spokeswoman said the agency is finalizing quarterly numbers that will show the level of business conducted between Defense and GSA.

It may be a while before transactions are fully restored, observers said. A set of Defense agency contract vehicles threatens to keep the department's acquisition business in-house, they noted.

These vehicles include the Army's Information Technology Enterprise Solutions-2 Services, awarded in April 2006 with a $20 billion ceiling over three years, and the Navy's 2004 SeaPort-e IT contract. They are going to exist for a long time and could pick up business that would otherwise go to GSA, said Warren Suss, president of Suss Consulting Inc. in Jenkintown, Pa. He provided a list of 10 major in-house contract vehicles in place at Defense that compete with GSA.

"GSA and [Defense] are unlocking the doors but the doors have yet to open," Suss said. "They have the capability to do this, but now they are facing an enormous competitive challenge."

Larry Allen, executive vice president of the Washington-based Coalition for Government Procurement, said it's a mistake to think that the December agreement will solve all the problems between Defense and GSA. Various Defense entities have decided to bring their contracting functions in-house rather than use GSA, he said, and many believe, however erroneously, that the department cannot use GSA.

"Those continue to be the major hurdles facing GSA," Allen said. "There just aren't any quick solutions."

Allen said that Shay Assad, director of defense procurement and acquisition policy, has said repeatedly that Navy SeaPort is a "best-in-class solution" for buying engineering, financial and program management support.

Defense officials did not return calls requesting comment for this article.

A GSA spokeswoman said in a statement that it is up to customer agencies to decide whether to use GSA's offerings in lieu of in-house contract vehicles.

"GSA is committed to acquisition excellence and its ability to deliver superior acquisitions at best value to our customers and to the American taxpayer," the spokeswoman said.

Paul Denett, OMB's procurement policy chief, said he commends GSA and Defense for taking steps to improve the basic management of interagency contracting.

"These efforts should help to ensure that [Defense Department] customers consistently receive good value when using GSA acquisition vehicles and support services," Denett said.

David Marin, staff director for House Oversight and Government Reform Committee ranking member Tom Davis, R-Va., said a better relationship between Defense and GSA would benefit both sides and the government as a whole.

"It is good to see that the lines of communication between GSA and [Defense] are open," he said. "Davis is optimistic that the challenges of the recent past can be overcome."