Defense policies on GSA contracts are confusing, officials say

Two senior General Services Administration officials said new and stricter Defense Department policies governing the use of GSA's contracts are being met with "confusion" among Defense purchasers, and they questioned whether this could push customers from GSA, the government's largest buying agency.

"There is a great deal of confusion in the field…[about] what rules DoD buyers are bound by," Donna Bennett, the commissioner of GSA's Federal Supply Service, said of Defense buyers, who constitute the largest base of customers for GSA contracts. Bennett's group manages the popular schedules contracts and other governmentwide acquisition programs. The Pentagon last year initiated restrictions on the use of GSA and other non-Defense contracts in the wake of procurement abuses at GSA.

A drop-off in Defense business would hurt GSA, which relies on fees it charges customers to use its contracts and procurement services. Bennett said not all Defense agencies are clear on whether and how they can use GSA contracts properly under the new policies. She said GSA will begin offering a course on the new guidelines for customers soon. She made her comments at a technology market conference sponsored by Input, a Reston, Va., based research firm.

But Bennett acknowledged that GSA could see a change of course from its important Defense customer base, which spends billions of dollars annually through schedules and other contracts.

"I think the future looks different than the past," Bennett said. She added that she has heard contradictory opinions about the effect of the new policies, which require Defense buyers to conduct detailed assessments of whether it's in the department's best interest to use an outside agency's contract.

Privately, some GSA officials have bemoaned the policies and have acknowledged that some Defense customers have been scared away because of GSA's contracting improprieties.

Bennett said she has heard from some who believe there will be a significant downturn at GSA in Defense business this fiscal year. But others think that Defense customers will return to the agency closer to the peak buying season, nearer the end of the fiscal year, Bennett added.

Sales through GSA's schedules are often a good indicator of the strength of the agency's overall contracting business. Agencies spent almost $8.5 billion through schedules in the first quarter of fiscal 2005. During the same quarter of 2004, they spent almost $8 billion. In all of fiscal 2004, agencies spent $31 billion.

In the past, agencies had used, and in some cases GSA had facilitated, the use of the technology schedule and other technology contracts for purchasing unrelated items, specifically certain professional services. Now, Bennett said, agencies are going to contracts specifically designed for professional services, rather than putting their requirements onto technology contracts. GSA officials have noted that because technology is such a fundamental component of many services, agencies might have felt justified in using technology contracts for various needs.

One of Bennett's colleagues confirmed the feeling of "confusion" among Defense buyers. But Barbara Shelton, who was appointed acting commissioner of the Federal Technology Service in January, said she doesn't think it will have a dramatic effect on GSA's business. "We don't expect that within the new few months DoD is going to take its business away from GSA," Shelton said at the conference.

One large non-Defense buyer is taking a conservative approach to using GSA contracts, at least until the details of the agency's reorganization plan, which would merge Bennett and Shelton's organizations, are sorted out.

Speaking on a panel following the GSA officials, Scott Hastings, the chief information officer of the Homeland Security Department's US VISIT, a massive program to track foreign visitors, said, "I'm in sort of a wait-and-see mode" regarding how to use GSA contracts. Hastings said he is "looking with interest in terms of the organizational and policy issues they're dealing with."

The Defense Department's procurement chief, Deidre Lee, couldn't be reached for comment on how the new policies are being followed. In previous congressional testimony this month, Lee stated that GSA contracts were integral to Defense's mission.