# Presentation: 775118

## Interagency Contracting

**Interagency Contracting**

**Althea Kireilis**
- Director, Office of Acquisition Policy
- Office of the Chief Acquisition Officer
- General Services Administration

## What is Interagency Contracting?

- A. Ordering under Interagency Contract Vehicles
- - GSA Schedules, GWACs, MACs
- - Under Specific Program Authority or Economy Act
- B. Utilizing Interagency Assisting Entities
- -	FEDSIM (GSA), GovWorks (DOI), FedSource (Treasury), Program Support Center (HHS), etc
- Franchise Funds or Other Intragovernmental Revolving (IR) Funds Authority
- C. Combination of Both

**What is Interagency Contracting?**

**Notes:**
Interagency Contracting may be—
 Direct ordering under interagency contract vehicles such as Federal Supply Schedules or GWACs;
A procedure by which an agency needing supplies or services (the requesting agency) obtains them from another agency (the servicing agency) for example using assisted acquisition services provided by other agencies such as GSA, DOI, Treasury, or HHS; or
Combination of both.  For example, majority of GovWorks acquisition activities are through Federal Supply Schedules.

## Interagency Contract Spend

**Interagency Contract Spend ($139B)**

**Non-Interagency Contract Spend ($212B)**

- Source: FPDS-NG Report for the SARA Panel 11/15/2005

**FY 2004**

**40%**

**Notes:**
According to FPDS-NG, 40% of $351 Billion spent by the Federal Government in FY 2004 was through some form of interagency contracts.

##      GSA Schedule Sales

*     ***GSA Schedule Sales**

***5.6***

***7.7***

***10.5***

***13.6***

***16.5***

***21.1***

***25.6***

- Billion

***33.9***

***31.1***

***35.1***
***(8/2006)***

**Notes:**
Federal Supply Schedules is the most well-known interagency contracting vehicles.  The Schedules program has had rapid growth since FASA led to a significant increase in the number of services available on GSA’s schedules. 
In FY 05, GSA schedule sales totaled $33.9 billion with services constituting 61.9% or $20.9 billion.  As of August, FY 2006 sales was approximately $35.1 billion, indicating another strong year.  Sales under IT Schedule account for approximately half.

Hopefully, in the future I will be able to have similar information on the GWACs as the current data submitted to FPDS is lacking. Thus OFPP’s data call currently in analysis

## Challenges in Interagency Contracting

**Challenges in Interagency Contracting**

- GAO-06-996 -- Improved Guidance, Planning, and Oversight Would Enable the DHS to Address Risks (9/2006)
- GAO-05-456 – Franchise Funds Provide Convenience, but Value to DoD is Not Demonstrated (7/2005)
- DOD IG – DOD Purchases Made through the GSA (7/2005)
- GAO-05-207 – High-Risk Series: An Update (1/2005)
- DOI IG – Review of 12 Procurements Placed Under GSA Federal Supply Schedules 70 and 871 by the National Business Center (7/2004)

**Notes:**
This listing of some of the GAO and Agency IG reports gives a good idea about challenges faced in using interagency contracting properly.  In 2005, GAO added interagency contracting to its “High-Risk” series.
So what does this mean: Inspecting agencies look at the servicing agency (assisting) and also if at those who order directly order from an interagency vehicle.
DoDIG by statute is inspecting jointly with the assisting agency” IG as well.  FY 06 they reviewed GSA, DOI Treasury and NASA and only the report on GSA has been released in the public domain .   
FY 07 DoDIG will jointly review VA and NIH IGs.

## Guidance in Utilizing Interagency Contracting

**Guidance in Utilizing Interagency Contracting**

- DOD -- Proper Use of Non DoD Contracts (7/2005, 6/2005, 10/2004)
- DoD – Proper Use of Interagency Agreements with Non-DoD Entities under Authorities Other than the Economy Act (3/2006)
- DoD – Interagency Acquisition:  A Shared Responsibility (9/2005)
- GSA – Purchases on Behalf of Other Agencies (2/2005)
- DoD – Fiscal Principals and Interagency Agreements (9/2003)

**Notes:**
In response to the critical reports by GAO and IGs, some agencies issued various guidance to address the weaknesses identified in the reports.  The guidance generally emphasized 3 main areas. 
DoD and its departments have specific guidance in dealing with IAC and also,  GSA and DOE. All parties must know the rules. 

## I. Acquisition Planning & Market Research
Selection of Appropriate Method to Meet Requirement that is in the Best Interest of the Agency

- I. Acquisition Planning & Market Research
- Selection of Appropriate Method to Meet Requirement that is in the Best Interest of the Agency

**Guidance in Utilizing Interagency Contracting - Three Focus Areas**

- II. Enhanced Competition
- Expanded Section 803 –

- III. Compliance with Fiscal Law
- Bona Fide Need Rule
- Authority, Purpose, Time

**Notes:**
Enhanced competition: FAR case being established to make this Government wide vice DoD.
When in doubt speak to the fiscal attorneys.

## DoD Memo – “Proper Use of Non-DoD Contracts” (10/2004)
Must evaluate whether using a non-DoD contract is in the best interest of the DoD considering—
Requirements
Schedule
Cost Effectiveness (including discounts and fees)
Contract Administration
Must ensure work is within scope of the contract vehicle
Must provide DoD-unique terms and conditions to the assisting agency for incorporation

**DoD Memo – “Proper Use of Non-DoD Contracts” (10/2004)**
- Must evaluate whether using a non-DoD contract is in the **best interest** of the DoD considering—
*Requirements*
*Schedule*
*Cost Effectiveness (including discounts and fees)*
*Contract Administration*
- Must ensure work is **within scope** of the contract vehicle
- Must provide **DoD-unique terms and conditions** to the assisting agency for incorporation

- Three Focus AreasI. Acquisition Planning & Market Research

**Notes:**
DoD requires their agencies and departments establish a pre-award review process and procedures to ensure the non-DoD vehicle in its best interest.  This applies any agency. 
Requirements: properly defined, within scope of the IAC vehicle, include unique Ts and Cs. Applicable over SAT and both supplies and services. Should have realistic milestones and client expectations.

## Expanded Section 803

**Expanded Section 803**

- Additional requirement for orders of services exceeding $100,000 ***using DoD funds***
- Expanded to supplies under Federal Supply Schedules (3/2006, DFARS 208.405-70)
- Also applies to orders placed by non-DoD agencies on behalf of DoD.
- CO must provide Fair Notice--
- to as many Schedule contractors as practicable to reasonably ensure that offers will be ***received*** from at least 3 contractors, or
- by posting RFQ on **“e-Buy”**** (PGI 208.405-70)**

- Three Focus Areas**II. Enhanced Competition**

**Notes:**
DFARS 208.405-70 Additional ordering procedures.
(a) This subsection--
(1) Implements Section 803 of the National Defense Authorization Act for Fiscal Year 2002 (Pub. L. 107-107) for the acquisition of services, and establishes similar policy for the acquisition of supplies;
(2) Applies to orders for supplies or services under Federal Supply Schedules, including orders under blanket purchase agreements established under Federal Supply Schedules; and
(3) Also applies to orders placed by non-DoD agencies on behalf of DoD.
PGI=Procedures Guidance and Instruction = companion to the DFARS.
eBuy tool has been ID by OMB as an acceptable way to meet the competition requirements of Section 803 also working case for its application to the rest of the Federal agencies

## Proper IA Transfer of Funds Requires--
AUTHORITY
	Permitted only when authorized by law (31 U.S.C. § 1532);  
PURPOSE
	Amounts transferred must be IAW the "purpose" as defined in the law that authorized the transfer and as specified in the IA;
TIME
	a) Requesting agency actually incurred a fiscal obligation for that amount during the funds' original period of availability, and
	b) Such obligation was for a Bona Fide Need of the requesting agency as determined by the requesting agency and as reflected in the IA.
* GAO Legal Opinion – “Transfer of FY 2003 Funds from the Library of Congress to the Office of the Architect of the Capitol” (B-302760)

- Three Focus Areas**III. Compliance with Fiscal Law**

***Proper IA Transfer of Funds Requires--***
_**AUTHORITY**_
- 	Permitted only when authorized by law (31 U.S.C. § 1532);
_**PURPOSE**_
- 	Amounts transferred must be IAW the ***"purpose"*** as defined in the law that authorized the transfer and as specified in the IA;
_**TIME**_
- 	a) Requesting agency actually incurred a fiscal obligation for that amount during the funds' original ***period of availability***, *and*
- 	b) Such obligation was for a** *****Bona Fide Need*** of the requesting agency _as determined by the requesting agency_ and as reflected in the IA.
- * GAO Legal Opinion – “Transfer of FY 2003 Funds from the Library of Congress to the Office of the Architect of the Capitol” (B-302760)

**Notes:**
In light of the GAO legal opinion published 5/17/2004, the key is to make sure the IA, when entered, is complete, in itself, to be able to construe it as a contract, thus resulting in a legitimate fiscal obligation by the requesting agency.  In addition, it needs to clearly articulate the funds' period of availability and the date for account closure, anticipated schedule for contractual obligation by the servicing agency.  To do that, GAO seems to require, at the time of the IA,--
a) that the transfer bet/n requesting agency and servicing agency is permitted by law (usually other than the Economy Act if with GSA); 
b) that the amounts transferred are in accordance with the "purpose" as defined in the law that authorized the transfer and as specified in the IA;
c) that the requesting agency actually incurred a fiscal obligation for that amount during the funds' original period of availability, and
d) that such obligation was for a bona fide need of the requesting agency as determined by the requesting agency and as reflected in the IA.  

## All Future Interagency Agreement funding document must include the following statement—
If for Severable Services—
“These funds are available for services for a period not to exceed one year from the date of obligation and acceptance of this order.  All unobligated funds shall be returned to the ordering activity no later than one year after the acceptance of the order or upon completion of the order, whichever is earlier.”
If for Goods—
“I certify that the goods acquired under this agreement are legitimate, specific requirements representing a bona fide need of the fiscal year in which these funds are obligated.”
DoD Memo – “Proper Use of Interagency Agreements with Non-DoD Entities Under Authorities Other Than the Economy Act” (3/27/2006)

**All Future Interagency Agreement funding document must include the following statement—**
**If for Severable Services—**
***“******These funds are available for services for a period not to exceed one year from the date of obligation and acceptance of this order.  All unobligated funds shall be returned to the ordering activity no later than one year after the acceptance of the order or upon completion of the order, whichever is earlier.”***
**If for Goods—**
***“******I certify that the goods acquired under this agreement are legitimate, specific requirements representing a bona fide need of the fiscal year in which these funds are obligated.”***
**DoD Memo – “Proper Use of Interagency Agreements with Non-DoD Entities Under Authorities Other Than the Economy Act” (3/27/2006)**

- Three Focus Areas**III. Compliance with Fiscal Law (cont.)**

**Notes:**
Accordingly, DoD's 3/27/2006 Memo entitled “Proper Use of Interagency Agreements with Non-DoD Entities Under Authorities Other Than the Economy Act” required that
All Future Interagency Agreement funding document must include the following statement—
If for Severable Services—
“These funds are available for services for a period not to exceed one year from the date of obligation and acceptance of this order.  All unobligated funds shall be returned to the ordering activity no later than one year after the acceptance of the order or upon completion of the order, whichever is earlier.”
If for Goods—
“I certify that the goods acquired under this agreement are legitimate, specific requirements representing a bona fide need of the fiscal year in which these funds are obligated.”
There is also another DoD revised financial management policy for non-economy act orders dated October 16, 2006. Among other things it  provides a checklist for the non-economy order acquisition package and it also outlines the requesting officials responsibilities.  

## Other Interagency Contracting Issues

**Other Interagency Contracting Issues**

**Acquisition Advisory Panel (SARA Panel) Recommendations**
- OMB to issue guidance on the creation,  continuation/reauthorization, and expansion of interagency contract vehicles and assisting entities
- Require transparency in sole-source orders made under interagency contracts
- Enhance competition by expanding Section 803 governmentwide to all services/supply orders and by strengthening requirements process
- Permit protests of task and delivery orders over $5 million under multiple award contracts
- http://www.acquisition.gov/

**Notes:**
The Acquisition Advisory Panel, also known as SARA Panel, was authorized by Section 1423 of the Services Acquisition Reform Act of 2003. Section 843 of Title VIII of the National Defense Authorization Act for Fiscal Year 2006 (Pub. L. No. 109-163).
The SARA Panel has been busy over the last 18 months. During the last year and a half, the Panel--  * Held 31 public meetings; * Heard testimony from over 100 witnesses representing over 85 organizations including federal agencies, trade associations, commercial companies, government contractors, both large and small, government audit agencies, government watchdog groups, academics, and private citizens; and * Recorded nearly 7,500 pages of transcripts.   Two of the specific areas the Panel was tasked to review were commercial buying practices and interagency contracting.  Listed are some of the major recommendations. There were 9 recommendations each in both of these areas.   The Panel will submit its final report to OFPP and Congress before years end. 
Transparency is requirement to publish for information purposes only notice of sole source for task and delivery orders (GWACs and MACs) in excess of SAT.  
Click on quick link:   Acquisition Advisory Panel (SARA Panel) on the left side of the page to review information

## Interagency Contracting - Summary

**Interagency Contracting - Summary**

**AGENCY CUSTOMER**

**INDUSTRY**

**Interagency Contract Vehicles**

** ****Assisted Acquisition**

**Notes:**
In discussing all the problems identified in interagency contracting, it is important to keep perspective that interagency contracts play a critical role in allowing agencies to accomplish their missions.  
The guidance and the SARA Panel recommendations are to maintain the value and efficiencies created by interagency contracts while responding to key management challenges that have arisen from their increased use.  As stated in the "Proper Use of Non-DoD Contracts" policy memo, "the use of non-DoD contracts is encouraged when it is the best method of procurement to meet DoD requirements." 
The key is in using these tools “PROPERLY.”  GSA continues to work with DoD and other customer agencies to ensure that all acquisitions made by and on behalf of the customer agencies comply with applicable statutes and regulations.
Our Industry partners are responsible as well to perform and make sure that the work is within scope and its reasonably priced and in the best interest of the tax payers. 
There is an I AC working group chaired by OFPP to establish guidance clarifying roles and responsibilities of servicing agencies and requesting agencies.   GSA is on of the IACWG members.

## Questions?

**Questions?**