Fate of Treasury contracting shop remains in limbo

The Defense Logistics Agency has decided that it cannot adopt FedSource, the Treasury Department's governmentwide contracting shop. The decision highlights a debate over where authority lies to make a transfer and what service disruptions might arise for current contract-holders and customers should the shop move or be closed down.

DLA -- which handles combat support contracting for the armed services -- had expressed interest in taking on FedSource after Treasury indicated that it intends to find a new host for the contracting shop and transfer it by the end of the fiscal year in September.

But after reviewing the business opportunities, risks and legal questions, DLA has decided that it does not have sufficient authority for the transfer, an agency official said.

The official, who asked that his name be withheld, said once that conclusion was reached, consideration of the proposal ceased.

The General Services Administration also has acknowledged looking at whether FedSource could be a good fit. "We are evaluating all options in terms of best interest for GSA, FedSource and customers of FedSource," said Mary Davie, the assistant commissioner for assisted acquisition services with GSA's Federal Acquisition Service. She said there is not a firm timeline for a decision but the agency is "working with Treasury to meet their time frames."

Speaking on background, an OMB official said moving an entire franchise fund would require legislation. Treasury's franchise fund authority encompasses activities other than FedSource, like the Administrative Resource Center, a contracting group that Treasury officials have previously expressed an interest in preserving.

Several Treasury officials would not comment or did not return telephone calls for this story.

As a decision on FedSource's fate remains in the air, contractors and customers question how the debate will affect continuity of service.

One FedSource contractor said he was working with a member of Congress to secure the authority needed for a transfer to DLA in the interest of preserving his contracts. The contractor, who asked not to be named due to the sensitivity of the issue, said the process was moving forward in the House and language could be attached to an easy-to-pass bill.

The contractor expressed concern over potential service disruptions among the many military medical facilities that use FedSource contracts for staffing services, including Walter Reed Army Medical Center in Washington and Brooke Army Medical Center at Fort Sam Houston, Texas.

At an agency that relies on FedSource for a wide range of services, an official who manages those contracts said transferring the shop could have a "huge" impact on services.

"If somebody doesn't figure out the alternative in the very near future, instead of being proactive, we're going to be very reactive, and impact [program activities] and other things that are important," the official said.

The official said if FedSource closes down, contracting or project officers would have to find alternative vehicles through which they can secure the services of critical contractor employees now hired through FedSource agreements. Those changes could require individual employees to switch companies at the end of the fiscal year, the official said. This process is familiar to veteran contract employees, but could pose a burden to the offices managing them.

"If we don't know something on [FedSource's] continuation between May and June, we will be looking for other sources," the official said. "The likelihood that people will sit back and wait for FedSource to make a decision [is slim]. They're probably going to lose existing customers."