Lawmakers drop restrictions on FTS services

Lawmakers eased fears among Defense Department and General Services Administration officials by dropping a proposal that would have denied DOD officials access to the GSA's Federal Technology Service.

The controversial provision would have prevented DOD officials from using non-DOD contract vehicles if the fee were more than 1 percent of the contract value. FTS, which supports its activities through revenues rather than appropriations, charges such fees for its assisted procurement services. Service officials make IT and telecommunications purchases on behalf of their customer agencies, so agency officials do not need to devote resources to a procurement.

DOD is FTS' largest customer, and officials at both agencies feared the consequences of the measure if lawmakers had passed it. In fiscal 2003, DOD purchases accounted for $6.2 billion, or 71 percent, of the $8.7 billion in sales through FTS' IT fund, an FTS spokesperson said. The IT fund is basically the entirety of FTS' business, the spokesperson added.

The measure was proposed as an apparent response to a scandal involving FTS officials in Washington state. Officials used the IT fund to pay for building construction and inappropriate purchases. An ongoing investigation by GSA's inspector general has revealed similar lapses at other FTS offices.

To evade legislative restrictions, DOD and FTS officials launched the Get It Right program this summer to combine greater scrutiny of contracts and further education for employees about legal usage of contracts.

Although lawmakers removed the proposed ban, the bill still puts some limits on DOD and FTS officials. Deidre Lee, DOD's director of procurement and acquisition policy, said "there still are a number of requirements regarding the use of non-DOD contracts" in a couple of sections of the conference bill.

The bill, for example, would require DOD and GSA inspectors general to conduct a joint review by March 15, 2005, to ensure that FTS' nationwide client support centers are following department acquisition rules when making purchases for agency customers. The bill could restrict DOD officials' use of noncompliant centers, depending on whether the officials at the center are making progress to fix improper practices.

The bill also forbids DOD officials from using the centers for procurements valued at more than $100,000, unless the procurement is conducted under the procedures established by the agency's leader. That provision would ensure that procurements follow DOD's rules, even when FTS officials handle them.