GSA issues stricter rules on year-end spending requests

Agency asks for breathing room to award contracts before the end of the fiscal year

Agencies seeking to spend their appropriations money before Oct. 1 must adhere to stricter policies from the General Services Administration, which wants to avoid year-end spending slip-ups.

To fend off a torrent of spending requests to use soon-to-expire appropriated funds, GSA issued a memo June 13, which agency managers refer to as the cutoff memo. The document asks agencies to give GSA a reasonable amount of time before Sept. 30 to award inter-agency contracts.

GSA’s memo illustrates a situation that every agency faces as the end of fiscal 2007 approaches. Across government, program managers and financial officials are busy trying to allocate funds before they expire.

The memo tells agencies that GSA will enter into interagency agreements and accept funds only if the customer agency has a genuine need. To determine if there is a true need, GSA wants the customer agency to provide a specific, definite and concise description of its requirements.

GSA is still working to change the public perception of how it handles year-end money. Agency officials said they intend to meet customer expectations of timeliness and adhere to procurement laws and fiscal policies.

“We know what the rules are, and we know how to spend the money in the right time frame,” said Molly Wilkinson, GSA’s chief acquisition officer, in a speech in June.

The policy outlined in the memo is most important in the last months of the fiscal year, when the need is greatest to obligate funds before their expiration date. The document reminds agencies to avoid common mistakes.

“It really establishes a uniform methodology of dealing with end-of-year funds and requirements that are sent to us,” said Al Matera, GSA’s acting deputy chief acquisition officer.

When time runs out, GSA might have to return unused funds if it accepts an inter-agency agreement late in the year but fails to award a contract. The return could nullify those dollars, Matera said.

What should agencies do if caught with money and little time?

John Sindelar, a former GSA official who now is a client/industry executive at EDS, said agencies should place orders now on established indefinite-delivery, indefinite-quantity contracts because acquisition agencies are nearing the cutoff date for fiscal 2007. “Do it tonight,” he said.

When submitting those orders, the customer agency must prove it has a valid need and provide details about what it wants.

“Again, we stress bona fide need,” Matera said. After GSA accepts money, the customer must work reasonably and diligently to complete the transaction, he said.

Agencies must also avoid a practice known as parking money. They should know the boundaries and limits of their appropriations, Matera said.
“Perhaps sometimes, some people really don’t understand — which is a very complex field — fiscal policy,” he said.

Agencies usually must spend funding from Congress for particular purposes. But officials say adherence to procurement laws and policies has slipped in recent years. For example, between 2000 and 2002, GSA reportedly misdirected $37 million of the Army’s funds for information technology to build an office building and pay for renovation work. And GSA had to return hundreds of millions of dollars to agencies after officials realized they were banking expired money for customers.

GSA’s policy is important in the last months of the fiscal year when the need to obligate funds before their expiration date is greatest, the memo states. GSA will make those decisions on a case-by-case basis, officials said. One consideration will be the time needed to award a contract.

“This isn’t rocket science and [is] pretty much common sense,” Matera said.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.


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