For several years, Congress has been concerned that the Defense
Department’s use of “assisting” procurement agencies
and other contracting vehicles has concealed poor acquisition planning
or attempts to circumvent limits placed on funding.
These include orders issued under federal agency multiple award
contracts (MACs), government-wide acquisition contracts (GWACs),
as well as the General Service’s Administration’s federal
supply service (FSS) schedules.
As a result, Congress and the administration have established new
policies to ensure accountability for Pentagon funds spent through
Concerns have centered on five key areas:
Funding. Have funds transferred to assisting agencies
under indefinite delivery/indefinite quantity (ID/IQ) contracts
been used to create obligations beyond the time period specified
in an appropriation, thus circumventing the intent of the appropriators?
This practice essentially “parks” money to circumvent
annual budget constraints.
Acquisition planning. Has an acquisition plan
been prepared in advance of every task order or delivery order issued
under an ID/IQ or schedule contract, as required by the federal
Ordering procedures. Have contracting officers
followed the ordering procedures required under each specific contract?
ID/IQ ordering procedures differ from other forms of contracting.
Competition. Did non-defense assisting agencies
ensure the acquisition process was transparent and competitive,
and that the government and taxpayers receive the best value through
the contracting process? The Government Accountability Office recently
found that competition was waived for nearly half of the MAC and
FSS orders GAO reviewed. Guidance for granting waivers apparently
did not sufficiently describe the circumstances under which a waiver
of competition was appropriate, or at what levels waivers should
In response to a new statutory requirement, specific Defense Department
requirements exist for reviewing and approving use of non-defense
contracts exceeding $100,000. These procedures apply to all acquisitions
using defense funds, whether by or on behalf of the Pentagon. At
the same time, GSA has launched its widely publicized “Get
It Right” program, aimed at government contracting officers,
program managers and finance officials. It also focuses on the responsibility
of contractors to recognize and report potential problems.
What if a government auditor determines that work requested by
a contracting officer and performed by a contractor is beyond the
scope of the contract? Some officials have suggested that if the
“task or item ordered is outside the scope of the contract,
the contractor has responsibility to notify the government.”
This suggests that the contractor’s integrity could be called
into question if it performs “out-of-scope” work.
Except when a contractor and a government official conspire to
violate the law, it is unfair to suggest that there is misconduct
on the part of a contractor who performs the precise work requested.
Otherwise, the government is, in effect, asking contractors to make
legal “scope” determinations for each order that comes
in, and forcing contractors to challenge or protest potentially
Traditionally, scope issues have been treated as administrative
matters, without a suggestion that contractor ethics or integrity
are implicated. This is particularly true with respect to many cases
that fall into a “gray area” where the scope issue is
not clear legally. For example, what if a company is hired to provide
business process consulting under a contract like GSA’s Group
70 IT schedule, because the improvements will require new information
technology? Should the contractor turn the work down because others
could argue that GSA’s services schedule is designed for such
Contractors will need to become acutely aware of new and revised
requirements that apply to the Defense Department’s use of
GSA schedules, MACs, and GWACs, while being prepared to work with
customers to avoid any after-the-fact allegations that work was
improper. In addition to a combined Defense Department/GSA inspector
general report due to Congress by mid-2005, contractors may see
further attention from the administration and Congress to the rules
governing federal acquisitions.
The recent, dramatic surge in military deployments has led to instances
of corner-cutting and concomitant policy changes. All contractors
should be mindful of striking the appropriate balance between efficiently
satisfying the Defense Department’s needs as a primary customer,
while at the same time achieving the benefits of competition and
meeting regulatory requirements. This has always placed difficult
demands on both contractors and government officials.
Dorn McGrath is an attorney with the Greenberg Traurig law firm.
Steve Charles, executive vice president of immixGroup Inc., also
contributed to this article. The opinions expressed here are solely
those of the authors and are not intended to provide legal advice
or represent the view of NDIA or the NDIA Ethics Committee.