GSA IG reportedly probes companies

The inspector general at the General Services Administration’s San Antonio office has asked approximately 30 government contractors for their procurement records dating back as much as nine years in an apparent probe involving the reselling of products, two industry executives say.

Although details are unclear, GSA’s inspector general's office apparently began issuing subpoenas for the information shortly before the holidays in 2005, said Alan Chvotkin, senior vice president and counsel at the Professional Services Council.

The council is gathering information on the probe and trying to guide members involved.

The effort seems to focus on the reselling of products that contractors obtain -- often at a discount -- from suppliers, said Larry Allen, executive vice president of the Coalition for Government Procurement.

Chvotkin said the subpoenas request a broad swath of information related to GSA schedule activities from the companies. It is not clear what the IG is looking for, he said.

“Most of this is not GSA money," he said. "They are the purchasing activity on behalf of other agencies. The thing that’s more troubling is less what they’re looking for but the time frame. We’re told this goes over a long time, seven, eight or nine years. The documentation goes back a long time.”

Allen said the Energy and Justice departments may also have issued similar subpoenas.

"Of course, the implication is that there is something amiss, but I think that issue is far from settled," Allen said. "In fact, I believe that this government effort is a fishing expedition that unnecessarily disrupts the normal business operations of resellers and the manufacturers that supply them. If the government thought something was really wrong, they wouldn't have cast such a wide net to go hunting. I think this is a classic example of prosecutorial overreach."

Allen said the government seems to be trying to learn more about how resellers conduct business.

"I understand that this is not GSA-led but is rather a broader look at industry practices when selling through resellers," he said. "How does this channel work, for instance? What are the common industry practices? Are there any?"

Chvotkin declined to identify any of the companies involved. GSA was not immediately available to comment.

Chvotkin said the council cannot do much at the moment.

“The IG has broad authority to investigate and raise questions," he said. “The request is not unusual. The scope and period covered by the request seems to be broader than typical.”