Audit puts GSA on the spot again

The General Services Administration has spent the past year making sure it got contracting right, but a draft audit by the Defense Department’s inspector general pinpoints areas where DOD and GSA failed to comply with procurement rules.

Despite the IG’s critiques, the report recommends that DOD be allowed to conduct business with GSA’s Client Support Centers (CSCs).

Nevertheless, GSA officials expressed frustration that the draft report failed to adequately acknowledge the steps the agency has taken to ensure it complies with procurement rules and regulations. In fact, several GSA officials said they have been pleased with the agency’s progress in improving its procurement processes and are concerned that the audit could hurt its credibility with customers.

They are concerned enough that both GSA Administrator Lurita Doan and Federal Acquisition Service Commissioner Jim Williams wrote responses to the draft report expressing their frustration with what they consider to be errors. The draft has not been released publicly, but it was leaked.

GSA has been struggling to regain its status as the government’s premier procurement agency since a series of problems came to light several years ago involving violations of procurement rules at several centers. GSA officials and industry experts say they fear the IG report could cause a setback in those efforts.

The audit shows a lot of room for improvement, said Hope Lane, director of GSA schedule consulting services at Aronson and Co. DOD and GSA have to iron out the differences in their interpretations of technical procurement regulations, she added.

The draft report notes that DOD and GSA are meeting to resolve the problems that the IG found with four CSCs and that DOD will continue to do business with all of GSA’s centers. That’s one of the most important points in the report, Lane said.

“Not to use GSA could be even more detrimental” because DOD does not have the staff it needs to do all of its acquisitions in-house, she said.

Without GSA’s assistance or enough DOD staff to handle $3 billion in orders, Lane said, the result would be many more hastily prepared acquisitions. “The bottom line is it needs to work,” she said.

What the IG found
The IG found that 55 of the 56 purchases it audited, all from fiscal 2005, were either hastily planned or improperly executed or funded. Both agencies violated the Anti-Deficiency Act by spending more money than Congress appropriated for 12 of 54 reviewed purchases.

The auditors found that GSA’s centers did not give enough justification for sole-source procurements for six of 14 purchases. In addition, interagency agreements between various DOD agencies and GSA were inadequate for 54 of the 56 purchases. Finally, DOD did not keep an audit trail of funds and lacked sufficient planning for purchases, according to the draft report.

GSA officials respond
In an Aug. 17 letter responding to the draft report, Williams recommended that the IG delete the comments about the six sole-source procurements and the four CSCs. He wrote that the IG failed to include evidence for focusing on the centers, and he wants the dozen Anti-Deficiency Act infringements reduced to a single infraction.

Williams suggested adding a more positive paragraph about GSA’s procurement improvements. According to Williams’ letter, the report should say the IG “found significant improvements by both GSA and DOD contracting and program management officials in the use of GSA’s assisted acquisition process.”

Lane said the IG’s language, while not as positive as Williams would like, is typical of audit reports.

An IG spokesman said the office stands by the audit. “To date, nothing has been provided to us to change our position,” he said.

What the report means
GSA has worked hard to correct problems and ensure that it meets contracting rules and regulations, said David Bibb, GSA’s deputy administrator. The agency is mostly concerned about its credibility with customers, which it has been trying to rebuild, Bibb said. The report leaves an incorrect impression about how GSA handles procurements, he added.

Frank Pugliese, a former Federal Supply Service commissioner who is now managing director of government business development at DuPont, said GSA needs to make drastic changes. Recently, it’s been nibbling around the edges of transformation, he said.

If officials find a wrongheaded business model, they should scrap it, said Pugliese, who worked at GSA for 32 years.

Carl DeMaio, president of the Performance Institute, said GSA officials are taking a transactional view of their situation. Because of dropping revenue numbers, GSA is trying to reduce its workforce. But unless GSA examines its offerings and carves out a unique niche in the acquisition system, agencies will continue to look elsewhere, he said. That will not ease the agency’s financial difficulties.

DeMaio has said Doan could be “the splash of cold water in the face of the GSA’s culture.” Last week, he reiterated that point and said he hopes she does not get lost in the bureaucracy.