DOD cuts back on orders with GovWorks
Impact could severely reduce revenue at Interior's IT assisted services center
The Defense Department’s decision to stop using GovWorks for
transactions of more than $100,000 could have a crippling effect on
business at the Interior Department’s assisted-acquisition services
center. DOD last week suspended indefinitely its use of GovWorks for
large procurements after an inspector general reported continued
problems in following procurement rules.
The suspension is
the latest move by DOD after a series of audits found widespread
procurement rule violations among several agencies that provide
government- wide assisted-acquisition services.
The effect on
GovWorks could be more severe than the impact on the General Services
Administration, beginning in fiscal 2004. The services cut back their
use of GSA’s assisted services after audits found illegal procurement
activities. Other agencies followed DOD’s lead and shied away from
using GSA, and the agency still is trying to rebound. Its revenue is
$46 million below what it needs to cover costs, GSA officials have said.
Nyce, director of the Acquisition Services Directorate at Interior’s
National Business Center, said DOD’s NBC $100,000 spending limit is
“quite restrictive.” DOD provides a major portion of GovWorks’
business, although Nyce couldn’t cite spending figures. In fiscal 2005,
GovWorks had revenues exceeding $1.5 billion. (See chart at left.)
problem stems from ambiguities and different interpretations of fiscal
practices and acquisition rules, said Doug Bourgeois, NBC’s director.
Shay Assad, DOD’s director of defense procurement and acquisition
policy, said in a May 31 memo that he is disappointed with GovWorks for
not improving its funding and contracting practices, as recommended by
DOD’s inspector general.
“We direct that no interagency
agreement in excess of $100,000 be accepted by GovWorks Federal
Acquisition Center …from DOD unless a determination has been made in
writing by the Under Secretary of Defense Acquisition, Logistics and
Technology that it is necessary in the interest of the department to
procure the particular property or services,” Assad wrote in a memo
obtained by Federal Computer Week.
As DOD has requested,
Interior must comply with DOD regulations with respect to all
interagency agreements, Assad’s letter states.
However, Nyce and
Bourgeois said NBC has solved the problems, and they have asked the
Interior’s inspector general to perform another review.
addition, GovWorks has made systems changes to enforce policies, and
they have sent staff through extensive training, officials said.
an individual agency has policies that are more restrictive than what
the law requires, it requires an additional level of control and
training that we’ve had to adjust to,” Bourgeois said.
DOD’s decision, government procurement experts say it could send
shockwaves throughout DOD’s branches, GovWorks and industry.
prohibition could affect departments’ contracts with option years left,
said Stan Soloway, a former deputy undersecretary at DOD and now
president of the Professional Services Council.
ultimately becomes to what extent DOD authorities will grant the waiver
authority so departments can use GovWorks, he said.