Mr. Fixit

They're called cleaners-the people you call when the mess hits the fan and you need the house back in order. There's no doubt such jobs aren't coveted, since they're almost impossible to execute gracefully.

Karl Reichelt has just landed one. In June, he became the first chief acquisition officer of the General Services Administration, charged with keeping the government's central purchasing agency on the path of proper, legal behavior at a time when continuing investigations show that some in the agency have lost their way.

The problems began in August 2003, when an agency inspector general audit, first reported by Government Executive, revealed that a regional office in GSA's Federal Technology Service had run afoul of procurement and contracting regulations. Subsequent investigations showed that employees in that office might have tried to hide their actions from headquarters officials, and that they weren't alone. The same practices were found in other regional offices of FTS, which awards technology contracts on other agencies' behalf in exchange for a fee.

FTS is supposed to procure only technology goods and services, but its employees have purchased items as diverse as construction services and naval equipment, helping to increase its sales figures. Some customers, particularly in the Defense Department, encouraged FTS to award contracts to companies they preferred to do business with, circumventing competition, investigations have shown.

Reichelt is supposed to put a stop to all that. He's responsible for a range of policy issues, including oversight of all GSA contracts, notably governmentwide acquisition contracts and the agency's schedules program, a set of pre-negotiated deals with thousands of companies. Those contracts are the product of mid-1990s procurement reforms that loosened restrictions and helped agencies start buying more like businesses.

Some in government and Congress wonder whether agencies think being businesslike means they can shirk their responsibility to properly steward taxpayer dollars. Reichelt said in a recent interview that he plans to restore GSA's image.

"We take seriously the trust placed in GSA by our federal agency customers, Congress, [the Office of Management and Budget] and, most important, the taxpayers," he says. But, he insists, "Our problems are not systemic."

Critics, some of them former government officials, believe the FTS contracting irregularities have exposed a wider problem at GSA and among fee-for-service agencies. Organizations that sustain themselves on fees and reward employees with bonuses for bringing in business-as FTS does-have a profit motive, some say. Angela Styles, President Bush's first procurement policy chief, called it "perverse," particularly since investigators have found that some Federal Technology Service employees disguised extra costs in contract orders, perhaps to increase their fees.

Reichelt says such behavior doesn't reflect FTS' or GSA's mission, which is to bring best value acquisition to the government and serve taxpayers' interest. "Yes, certain associates acted improperly," Reichelt says. "But we know for sure that it's a fraction of the overall work." GSA's inspector general has identified hundreds of millions of dollars in contracts and orders that were improperly administered. In 2003, FTS reported that it awarded $8.3 billion in contracts.

"GSA is not under scandal," Reichelt insists. "Associates who have crossed the line have met with serious consequences," he says, adding that some left the agency, or were suspended, reprimanded, or put on probation. GSA Administrator Stephen Perry confirms that some employees were fired.

Reichelt says GSA leaders deserve credit for finding the contracting irregularities and bringing them to the IG's attention. Indeed, managers in FTS' Bremerton, Wash., office, the subject of the initial audit, first alerted the agency's watchdog. Also, managers in the Washington, D.C., area office hired a consulting firm to review their books months later.

Congressional sources say Perry wants to rectify the problems. Creating the position of chief acquisition officer and appointing Reichelt-Perry's former chief of staff-was a visible attempt to restore public confidence. And in July, Perry announced GSA's new Get It Right plan, which teams the agency with its biggest customer-the Pentagon-in a series of actions aimed at getting employees to adhere to regulations and laws.

"Any time we learn that GSA or its customer agencies aren't operating properly," Reichelt says, "it automatically draws our attention and causes us to take action.

"Misuse of schedules, concern about out-of-scope activity, finding that certain contracts [were] mismanaged, all of those issues are given the highest attention by us, because it undermines our integrity. It causes a loss of faith."

For GSA, losing customer confidence means going out of business. On that front, there was some drama in January when a manager in the Office of the Undersecretary of Defense for Acquisition, Technology and Logistics warned employees against doing business with FTS.

"Contracting improprieties at several GSA offices have finally triggered congressional and IG investigations," the memo's author wrote. "Many of you use the Bremerton, Kansas City [Mo.], and Atlanta GSA regional offices. The GSA's own inspector general has determined that these three FTS regional offices have been in breach of laws and regulations for at least the past three years. . . . Clearly, using an [FTS] activity or contract . . . is inviting investigation."

Defense's procurement executive later said the Pentagon had no prohibition on FTS, and industry sources close to the matter say the memo's author had no authority to issue a ban. But the memo revealed that the contracting agency's troubles have been noticed at high levels and that some want to steer clear of the mess. Privately, senior GSA and Defense officials say FTS' failings need to be exposed, because that's the best motivation for Perry and others to fix the problems.

"We are willing to absorb the heat," Reichelt says.

Scrutiny of fee-for-service contracting organizations is likely to increase in light of the massive contracting efforts undertaken in Iraq. In March, the Interior Department's National Business Center received rare national attention when officials acknowledged that they had obtained private-sector interrogators for the Abu Ghraib prison using a contract for information technology services. The center handled the purchase on behalf of military commanders in Iraq.

Also, the Coalition Provisional Authority and Pentagon inspectors general have examined several Iraq-related purchases for subject matter experts that were made under technology and professional services contracts administered by GSA.

None of this is lost on Reichelt, who acknowledges that when it comes to contracting procedures and rules, "it is vital that we get it right."

Reichelt's reform agenda centers on preserving GSA's good name and making employees understand that agency leaders expect them to obey the law. Contracting officers and program managers will get new training on that front.

Still, many procurement experts are left wondering whether a backlash against the reform movement of the mid-1990s is in the works. "We can't have a leftward swing of the pendulum," Reichelt says. "Our challenge is to balance out ethics, integrity and compliance with flexibility and with entrepreneurship in our acquisition activities.

"I do believe that some are overreacting," Reichelt adds, referring generally to media reports and procurement reform critics who say the FTS issues demonstrate that entrepreneurial contracting needs to be reined in. "It's the easy solution to go in a direction of over-regulation," Reichelt says, and he objects to legislative attempts to limit fee-for-service agencies' flexibility.

GSA has the right allies on its side, notably House Government Reform Committee Chairman Tom Davis, R-Va., who has held hearings on FTS and Iraq contracting issues and believes the blame for abuses rests on a few bad apples.

Ultimately, though, GSA's success will depend on two factors that Davis and other defenders can't control. First, the agency's customers must not take their business elsewhere. For now, there's no sign that skittishness over contracting irregularities is driving them to do so.

But more important, GSA will have to make a convincing case that its problems aren't systemic and that the work of a few errant employees in regional offices doesn't betray a pervasive culture inclined to build the business at any cost. There are those, like Reichelt, who are convinced the problems are isolated. There are others who believe FTS is a house of cards waiting to fall. They're all watching to see what the next act brings. And Reichelt has just landed center stage.