GSA and DOD forge a new relationship

The General Services Administration and the Defense Department announced a detailed agreement last week intended to improve relations between the largest federal procurement agency and its biggest single customer.

The 20-point memo focuses on every aspect of acquisition, from identifying requirements to closing out contracts. It clarifies some ambiguous aspects of current acquisition policy, establishes clear lines of responsibility and identifies the rules that apply to acquisitions conducted on DOD’s behalf. The agreement also sets timetables for compliance with 24 action items.

“It’s the first time that you’ve seen DOD and GSA publicly singing off the same song sheet in a couple of years,” said Larry Allen, executive vice president of the Coalition for Government Procurement. “It’s not going to bring DOD customers back overnight, but it is incredibly helpful to start that process.”

Trey Hodgkins, director of defense and intelligence at the Information Technology Association of America, said the agreement could help restore good working relations between the two agencies. “There was a significant loss of trust between DOD and GSA a couple of years ago, and the efforts to restore that trust or relationship have been in fits and starts.”

Hodgkins pointed to multiyear funding as a major cause of bad blood between the agencies. DOD sent money to GSA for purchases, some of which GSA was supposed to make in future fiscal years. But government auditors, who became concerned about potential abuses, cracked down on the practice after fiscal 2005 and forced GSA to return millions of so-called parked dollars, including DOD funds, to the Treasury Department.

“GSA had to forfeit the funds, which meant that DOD lost all those funds it had sent to GSA,” Hodgkins said. “That was at the heart of the matter.”

Some procurement experts agree that GSA should have the authority to carry over funds. They say GSA lost some of its competitive edge when it chose to drop the multiyear funding option. GSA has since reversed its decision. GSA Administrator Lurita Doan has called multiyear funding a legitimate option to offer customers and said she would like Congress to pass legislation to codify the practice.

“The idea behind the memorandum is that both GSA and DOD need more training in terms of how to work together,” said Courtney Fairchild, president of Global Services, a government contracting consulting firm. “Whether or not they will be able to enact all of the points set forth in the memorandum remains to be seen.”

Allen said the memo sends a message to DOD buyers that they can use GSA schedule contracts. It also asserts that GSA is going to follow DOD procedures when it conducts procurements for the department.

“That’s important for DOD, frankly…because DOD does not have sufficient in-house contracting strength to conduct all of its procurements alone,” Allen said. “It never has, and it certainly doesn’t have that capability now.”

Despite DOD’s wariness of GSA, its use of GSA’s Federal Acquisition Service schedules and governmentwide acquisition contracts has risen steadily in the past three years, from $17.6 billion in fiscal 2004 to $18.9 billion in fiscal 2006, according to GSA.

Overall, however, annual sales through GSA multiple-award schedule contracts for IT products and services declined for the second straight year in fiscal 2006, according to Input.

“The decline in schedule spending reflects a conspicuous move by buyers to other contract vehicles,” said Ashlea Higgs, an analyst at Input.

Stan Soloway, president of the Professional Services Council, said the agreement is workable as long as both sides do a better job of planning and scheduling procurements.

Under its terms, GSA and DOD agreed to jointly develop standardized content for interagency agreements by 2007, with special emphasis on the roles and responsibilities of each agency. They will work together on quality assurance surveillance plans, statements of work requirements, fair and reasonable price determinations, and funding of oversight management, including the timely release of excess funds.

GSA Deputy Administrator David Bibb said GSA and DOD agreed not to assess penalties for not meeting the timetables.

Matthew Weigelt contributed to this report.