OFPP details increased oversight of interagency contracts

A new report to Congress says OFPP will release new policies this fall to improve the management and use of multiple award contracts. One of the policies will r...

By Jason Miller
Executive Editor
Federal News Radio

The Office of Federal Procurement Policy is pursuing several avenues in the near term to bring multiple award contracting under control.

OFPP will issue policies around the creation and management of multiple award contracts (MACs), require the use of business cases to justify these acquisition vehicles and possibly create a clearinghouse where data on all of the contracts governmentwide exists.

“Progress has been made in improving some aspects of interagency acquisition,” said Jeff Zients, acting director of the Office of Management and Budget in its annual report to Congress on interagency contracting.

“Most agencies have advised OMB that their buying organizations are strengthening internal management controls to improve the processes used to evaluate if an interagency acquisition is likely to be beneficial as well as those to manage the roles and responsibilities each agency bears in such an arrangement. However, on other fronts, progress has been insufficient and uneven. In particular, there continues to be concern that the agencies, through both single-agency and multi-agency contracts, may be duplicating each other’s contracting efforts and creating redundant contracting capacity.”

OMB sent the report, required by the fiscal 2009 Defense Authorization bill, to 12 members of Congress including the chairman and ranking members of the Senate Homeland Security and Governmental Affairs and House Oversight and Government Reform Committee.

“We agree with OMB that many improvements have been implemented to improve federal interagency acquisitions,” said Rep. Ed Towns (D-N.Y.), chairman of the Oversight and Government Reform Committee in an e-mailed statement. “At the same time, we believe that many more changes and improvements will be necessary to ensure interagency contracts are functioning as intended and in the most efficient, transparent and effective means possible.”

To that end, earlier this month Towns and Ranking Member Darrell Issa requested a new study by the GAO to evaluate what improvements have actually taken place and what additional efforts and changes are needed.

“This GAO report will provide the Oversight Committee and OMB with an effective roadmap for the necessary improvements going forward,” Towns said.

Agencies spent $52 billion on GWACs and MACs in 2009, OFPP states. Of that, $37 billion went through the General Services Administration’s schedules program, and agencies spent another $3 billion through GWACs.

The report states agencies used NASA’s SEWP contract the most last year, spending $1.8 billion, while on all but one of the GWACs agencies spent less than $100 million.

The report also found that 10 agencies: Commerce, Education, Homeland Security, Interior, Justice and Treasury, and the Nuclear Regulatory Commission, the National Science Foundation, the Small Business Administration and the Social Security Administration, said they spent more than 20 percent of their procurement budget on interagency contracts.

Five agencies spent between 10-20 percent and nine said they spent less than 10 percent, including the Defense Department.

OFPP administrator Dan Gordon has made controlling both the growth and duplication of these contracts one of his major priorities. He told Federal News Radio in May that OFPP must find a happy medium between having 100 similar or even duplicative contracts that are wasteful to vendors and not helpful for the government, and having just one contract provider or making GSA’s schedules mandatory.

To that end, OFPP guidance expected later this fall would require agencies to prepare business cases describing the expected need for the contract vehicle, the value that its creation would add and the agency’s suitability to serve as an executive agent.

“Over the years, interagency contracting has been hampered by weak contracting practices and concern that contracts are created in an uncoordinated manner that has resulted in a wasteful proliferation of vehicles,” the report states. “Poor contracting has been traced to unclear lines of responsibility between agencies with requirements and agencies providing acquisition support. The proliferation of vehicles has been tied to a lack of guidance on multi-agency contracts and agency-wide contracts as well as weak data on their usage.”

The report states OFPP will take a similar approach for interagency contract business cases as they have for governmentwide acquisition contracts (GWACs).

“The business case will require an agency to address the anticipated impact that its proposed vehicle will have on the government’s ability to leverage – such as how it differs from existing vehicles and the basis for concluding that it will offer greater value than existing vehicles,” the report states.

“The business case will also require the agency to evaluate the cost of awarding and managing the contract and comparing this to the likely fees that would be incurred if the agency used an existing vehicle or sought out acquisition assistance.”

OFPP also will consider whether a review by an outside agency is necessary to guard against unjustified duplication with an existing GWAC.

While the review that OMB has conducted of interagency contracting likely brings pressure on agencies to improve management of these contracts, OMB needs to require agencies to support interagency contracts with business case analyses of the cost of awarding and administering the contracts,” said Leslie Phillips, a spokewoman for the Senate Homeland Security and Governmental Affairs Committee. ” The fiscal 2009 National Defense Authorization Act contains a provision authored by Senator [Joseph] Lieberman and Senator [Susan] Collins to require development of a business case analysis for OMB agencies to use. Implementation of this provision is long overdue, even though it would help ensure that interagency contracts aren’t duplicative or a waste of taxpayer money.

Additionally, OFPP is considering whether a business case is needed for interagency contracts that are expected to be used by other agencies minimally.

However, OFPP will require business cases for agencywide contracts because they could impact the governmentwide buying volumes and thus cause agencies to pay higher prices.

OFPP also is taking several non-policy related steps to improve the use of these MACs. For instance, the procurement policy office will recreate a clearinghouse of data on existing MACs, including blanket purchase agreements and schedule contracts. OFPP states that it developed such a database in 2006, but it has not been kept up-to-date.

OFPP also has revisited the Service Acquisition Reform Act (SARA) Panel recommendations from 2007, surveyed chief acquisition officers and senior procurement executives and met with others in the acquisition community to share best practices.

Agencies are making some progress on managing these contracts. OFPP found in a June 2010 survey that agencies are implementing at least some of the seven internal controls that GAO says would promote effective use and prevent misuse of MACs.

The controls include:

  • Decisions to use another agency’s contracts are supported by adequate documentation;
  • Decisions to seek the acquisition support of another agency are supported by adequate analysis;
  • Requesting agency’s contracting office is appropriately informed about the intended use of acquisition services outside of the agency;
  • Most effectiveness of interagency acquisition is adequately analyzed;
  • Contracting vehicle is used properly by requesting agency;
  • Roles and responsibilities between the customer and servicing agency are clearly defined;
  • Post-award reviews are conducted and corrective actions are taken where appropriate.

“Most agencies have advised OMB that their buying organizations are strengthening internal management controls to improve the processes used to evaluate if an interagency acquisition is likely to be beneficial as well as those to manage the roles and responsibilities each agency bears in such an arrangement,” the report states. “This progress is encouraging, as GAO cited unclear lines of responsibility as a root cause underlying its decision to place interagency acquisition on the high risk list.”

OFPP also is adding these internal controls to the Federal Acquisition Regulations in an effort to codify the use of and management of MACs.

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