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Thought No. 13: Oversight of the procurement system—is there balance?

Welcome back!  I hope you all had a wonderful Thanksgiving!    As the end of the year approaches, it is time to finish the “Thirteen Thoughts for 2013.”  On January 14th of this year, I introduced the “Thirteen Thoughts for 2013.” Throughout 2013, this blog has tackled/addressed significant procurement issues, which can be found here.   Now it is time to address “Thought No. 13: Oversight of the procurement system—is there balance?”  Exploring the need for balance in the oversight of the procurement system, this blog will focus on GSA, as the central procurement agency for the federal government.

As a former government employee who often worked collaboratively with the GSA Inspector General’s Office (IG), I understand and appreciate the vital role the IG plays in addressing risk management in our procurement system.  Oversight and risk, however, must be balanced.  There is a tolerable level of risk in all government and business operations.  Risk drives innovation, efficiencies, and best value solutions.  Moreover, there is an inflection point on the risk mitigation curve where the benefits of mitigation are exceeded by the costs of mitigation.  For GSA or government to eliminate every scintilla of risk (assuming it could do so) through oversight not only would increase the risk that government innovation, efficiency, competition and best value solutions would grind to a halt, but also would simply transform risk costs into oversight costs.

Clearly, oversight is necessary; it is vital to ensuring integrity in our system.  The question is finding the right balance that maximizes value delivered to customer agencies and the American people through our procurement system.   A key to that balance is the vital, positive role played by contracting managers in procurement operations.

Contracting manager leadership is a key to ensuring open, balanced communication between all stakeholders throughout the procurement process.  Communication is vital to maximizing best value outcomes for all.  It is what the Myth-Busters campaign is all about.  The risk to communication is why a recent GSA FAS instructional letter issued by the FAS Office of Acquisition Management and the recent IG audit of management intervention are of such concern.  Stay with me now–here are the particulars.

On May 6, 2013, the Office of Acquisition Management issued FAS Instructional Letter 2014-04entitled “Contracting Officer Responsibilities Pursuant to GSA Office of Inspector Contract Audits” (the instructional letter).  The instructional letter (publically availablehere) provides guidance on audit procedures, specifically the responsibilities of the contracting officer concerning GSA IG audits. The drafting of instructional letters is typically a collaborative effort involving all GSA internal stakeholders.   The instructional letter guidance includes a series of questions and answers on key issues.

Although the instructional letter provides several positive statements regarding contracting officer discretion when utilizing the audits in negotiating pricing for MAS contracts, it also includes a question and answer regarding the right of the IG auditors to escalate issues to the appropriate agency officials when the contracting officer disagrees with the audit findings.   Here is the instructional letter’s question and answer No 7:

Q7.  What can the auditor do if I [i.e. the contracting officer] disagree with the report finding(s)?

A7. The RIGA [the Regional Inspector General for Auditing], if in disagreement with the CO’s final position or the original 60-day CO’s response, retains the right to escalate the issues to the appropriate agency officials.  The RIGA shall notify the Assistant Inspector General for Auditing (AIGA) or designee, who will initiate contact with the appropriate agency officials to resolve the issues.  Furthermore, the auditor may request to the CO and/or appropriate agency officials that actions be temporarily suspended in order to discuss the differences.

On June 4, 2013, the GSA IG issued Report Number A120161/Q/6/P13003, Improper Management Intervention in Multiple Award Schedule Contracts, Federal Supply Schedule 70-Information Technology Contracts, Federal Acquisition Service.   The report included the following recommendation:

The Commissioner, Federal Acquisition Service, should:

  1. Ensure that the contracting process is independent and free from FAS management interference due to contractor pressure.  These steps should include:
    1. Requiring FAS management not to intervene in contracting actions in response to requests from contractors except for instances of misconduct or other serious administrative issues;
    2. Requiring FAS management to fully document all conversations and correspondence with contractor officials regarding specific contracts and offers, to include such information as date, time, participants and specific details of information exchanged; and
    3. Issuing a memorandum expressing support for contracting staff making independent determinations, including decisions not to award contracts or contract extensions.

In response to the audit and its recommendations, a multi-association letter was sent to GSA raising concerns regarding the appropriate role of senior management in the day-to-day operations of the MAS program.  The letter can be found here.  Simply put, it is a question of balance.  Managers of a procurement operation, like the MAS program, must be able to hear from all stakeholders, including the IG and contractors, regarding issues surrounding the negotiation of contracts.  These managers also should feel empowered to find innovative approaches to assure that best value solutions are available through GSA.  To do otherwise would be to abdicate leadership of the program.

Unfortunately, the instructional letter and the IG audit, standing alone as the only public guidance/positions on the role of the contracting manager, make clear a current limited communications role for managers.  The key management role of ensuring balance between oversight and operation is out of balance!  Unfortunately, to date, there has been no written response to the multi-association letter.  All in industry would value further positive communication from GSA leadership regarding the role of contracting managers.

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