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TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS

P. L. 108-375

House Conference Report 108-767

     3 (a) INITIAL INSPECTOR GENERAL REVIEW AND DETERMINATION .—

(1) Not later than March 15, 2005, the Inspector General of the Department of Defense and the Inspector General of the General Services Administration 7 shall jointly —

(A) review —

(i) the policies, procedures, and internal controls of each GSA Client Support Center; and

(ii) the administration of those policies, procedures, and internal controls; and

(B) for each such Center, determine in writing whether —

(i) the Center is compliant with defense procurement requirements;

(ii) the Center is not compliant with defense procurement requirements, but the Center made significant progress during 2004 toward becoming compliant with defense procurement requirements; or

(iii) neither of the conclusions stated in 24 clauses (i) and (ii) is correct.

(2) If the Inspectors General determine under paragraph (1) that the conclusion stated in clause (ii) or (iii) of subparagraph (B) of such paragraph is correct in the case of a GSA Client Support Center, those Inspectors General shall, not later than March 15, 2006, jointly —

(A) conduct a second review regarding that GSA Client Support Center as described in paragraph (1)(A); and

(B) determine in writing whether that GSA Client Support Center is or is not compliant with defense procurement requirements.

(b) COMPLIANCE WITH DEFENSE PROCUREMENT REQUIREMENTS. — For the purposes of this section, a GSA Client Support Center is compliant with defense procurement requirements if the GSA Client Support Center’s policies, procedures, and internal controls, and the manner in which they are administered, are adequate to ensure compliance of that Center with the requirements of laws and regulations that apply to procurements of property and services made directly by the Department of Defense.

(c) LIMITATIONS ON PROCUREMENTS THROUGH 21 GSA CLIENT SUPPORT CENTERS. —

(1) After March 15, 2005, and before March 16, 2006, no official of the Department of Defense may, except as provided in subsection (d) or (e), order, purchase, or otherwise procure property  or services in an amount in excess of $100,000 through any GSA Client Support Center for which a determination described in paragraph (1)(B)(iii) of subsection (a) has been made under that subsection.

(2) After March 15, 2006, no official of the Department of Defense may, except as provided in subsection (d) or (e), order, purchase, or otherwise procure property or services in an amount in excess of $100,000 through any GSA Client Support Center that has not been determined under this section as being compliant with defense procurement requirements.

(d) EXCEPTION FROM APPLICABILITY OF LIMITATIONS. —

(1) No limitation applies under subsection (c) with respect to the procurement of property and services from a particular GSA Client Support Center during any period that there is in effect a determination of the Under Secretary of Defense for Acquisition, Technology, and Logistics, made in writing, that it is necessary in the interest of the Department of Defense to continue to procure property and services through that GSA Client Support Center.

(2) A written determination with respect to a GSA Client Support Center under paragraph (1) is in effect for the period, not in excess of one year, that the Under Secretary of Defense for Acquisition, Technology, and Logistics shall specify in the written determination. The Under Secretary may extend from time to time, for up to one year at a time, the period for which the written determination remains in effect.

(e) TERMINATION OF APPLICABILITY OF LIMITATIONS. —Subsection (c) shall cease to apply to a GSA Client Support Center on the date on which the Inspector General of the Department of Defense and the Inspector General of the General Services Administration jointly determine that such Center is compliant with defense procurement requirements and notify the Secretary of Defense of that determination.

(f) GSA CLIENT SUPPORT CENTER DEFINED.—In this section, the term "GSA Client Support Center" means a Client Support Center of the Federal Technology Service of the General Services Administration.

The Senate amendment contained a provision (sec. 803) that would prohibit Department of Defense officials from placing orders in excess of $100,000 through a Client Support Center (CSC) of the Federal Technology Service of the General Services Administration (GSA) until the Department Inspector General, in consultation with the GSA Inspector general, determines that the CSC has in place the policies, procedures, and internal controls necessary to ensure compliance with requirements of law and regulation.

The House bill contained no similar provision.

The House recedes with an amendment that would:  (1) extend the time frame for Inspector General review of the policies, procedures, and internal controls of the GSA Client Support Centers; (2) permit the Department to continue contracting for an additional year with any CSC that is making significant progress toward implementing effective policies, procedures, and internal controls; (3) require a second Inspector General review and determination at the end of the additional year; and (4) authorize the Under Secretary of Defense for Acquisition, Technology and Logistics to continue contracting through a CSC that has failed to implement appropriate policies, procedures, and internal controls, if he determines that it is necessary to do so in the interest of the Department.

Senate Report 108-260

In making these awards, CSC officials breached Government procurement laws and regulations, and on a number of occasions, processed procurement transactions for goods and services through the Information Technology Fund that were well outside the fund's legislatively authorized purposes. Inappropriate contracting practices included: improper sole source awards, misuse of small business contracts, allowing work outside the contract scope, improper order modifications, frequent inappropriate use of time and materials task orders, and not enforcing contract provisions. Although their authority is restricted to acquiring information technology equipment, software and related services, we identified CSCs making procurements for such things as: floating marine barriers; construction of classrooms and office buildings; and pathogen detection devices and services. In making several of these awards, millions of dollars were wasted by compensating the contractors for doing little more than placing orders with other favored contractors to do the actual work. Competition, or otherwise permitting vendors a fair opportunity to be considered, was absent from many of the transactions examined.

The GSA IG attributed these problems to an ineffective system of internal management controls and a culture that has emphasized revenue growth over adherence to proper procurement procedures. Because orders from Department customers provided 85 percent of the CSC's $5.8 billion of revenues in fiscal year 2003, the committee recommends a provision that would prohibit Department officials from placing additional orders until these problems have been addressed.