Workshop Session I

Interagency Acquisition Panel Michael Canales, OUSD (AT&L) Kathryn Gillis, OUSD (C) Terry McKinney, DoD IG Robert Paschall, OGC (Fiscal)

Terry McKinney Office of Inspector General Department of Defense

Congressional Requirements Section 802(a) of the National Defense Authorization Act for FY 2005 (Public Law 108-375) required the Inspectors General of GSA and DoD to review each of GSA’s Client Support Centers to determine if they are in compliance with DoD procurement regulations and policies. Section 811(a) of the National Defense Authorization Act for FY 2006 required a review of each non-Defense agency of the Federal Government that purchased in excess of $100 million in goods and services during FY 2005 on behalf of DoD. The review is to determine if DoD procurement policies and procedures were followed when making purchases for DoD. The DOI, DOT, and NASA were the focus of the review. National Defense Authorization Act for FY 2007 required the same review at VA and NIH relating to FY 2006 purchases.

Activities Currently Being Reviewed FY 2005 DoD Purchases Contract Dollars (In Billions) Number of Orders GSA 3.03 18,960 Interior 1.66 8,784 NASA 0.30 2,841 Treasury 0.41 19,709 Totals 5.40B 50,294

AUDIT RESULTS Acquisition Issues Lack of Market Research by both DoD and Non- DoD Activities. Scope of Work often unclear as to What is Being Purchased. Competition not always used. Fair and Reasonable Prices not Supported. Contract Administration a Problem.

AUDIT RESULTS Funding Issues Use of Wrong Types and Years of Funds. Use of Expired Funds via “Banking of Funds.” Accountability of Funds. Numerous Potential Violations of Anti-Deficiency Act Bona Fide Need

Interagency Acquisition Robert D. Paschall Associate Deputy General Counsel (Fiscal) Office of General Counsel Department of Defense 9

Interagency Acquisition Economy Act General Authority to conduct business with Other Federal Agencies Non-Economy Act Authorities other than the Economy Act GSA Acquisition Service Fund Franchise Funds – GovWorks, and FedSource

Interagency Acquisition Transfer Funds Use until exhausted Franchise Fund FY Used FY Appropriated

Interagency Acquisition Interagency Agreements Agreements usually submitted using a Military Interdepartmental Purchase Request (MIPR) which should contain the following:  A description of desired goods, services, or outcome Delivery requirements (when and where the goods or services are required) A funds citation A payment provision (basis of payment) Appropriate acquisition authority (the Economy Act or other statutory authority) A dispute resolution provision (how disputes between the requiring activity and the supplying activity will be resolved)

Interagency Acquisition Non-Economy Act Policy Fiscal Policy Goods are to be awarded and delivered in the fiscal year in which the funds are available unless unforeseen circumstances arise causing delivery in subsequent fiscal year. Severable services are to be awarded and the period of performance begins in the fiscal year in which funds are available Non Severable services must be awarded, performance must begin, and be fully funded in the fiscal year in which funds are available and may extend across multiple fiscal years until deliverable is complete.

Interagency Acquisition Non-Economy Act Policy vs. Fiscal Law October 2006 Guidance Fiscal Law Goods (Computers, Office Supplies) Goods are to be awarded and delivered in the fiscal year in which the funds are available unless unforeseen circumstances arise causing delivery in subsequent fiscal year. No known fiscal law differences. However, it is considered acceptable and is implied that delivery time, within reason, may extend into the next fiscal year when it is considered a “reasonable period.” Severable Services (Maintenance and Repair Services ) Severable services are to be awarded and the period of performance begins in the fiscal year in which funds are available Severable Services are considered a contract at the time the MIPR is accepted by the other federal agency and services may extend one year beyond date of acceptance. Example: MIPR sent and accepted August 28, 2007 - services could extend to August 27, 2007 regardless of when the performance begins. Non-Severable Services (Studies) Non Severable services must be awarded, performance must begin, and be fully funded in the fiscal year in which funds are available and may extend across multiple fiscal years until deliverable is complete. No known fiscal law differences.

Interagency Acquisition Kathryn Gillis Office of the Under Secretary of Defense (Comptroller) Financial Reporting & Analysis 703-697-6875 – kathryn.gillis@osd.mil 15

Interagency Acquisition What is all the Hype? ** GovWorks brochure emphasized that funds may be sent and held until spent.

Interagency Acquisition Cease and Discontinue! ** GovWorks no longer markets this practice

Interagency Acquisition Further Complications: Other federal agencies advance billed DoD funds withdrawn via IPAC upon acceptance of MIPR DoD entities recognized as fully executed and expensed at time of payment Problematic Issues Expenses recognized in wrong periods Complete loss of visibility for Triannual Review process Tri-annual review procedures likely inadequate to identify advancement Fund control issues stemming from retention of funds with the other federal agency DoD agencies did not deobligate and retract funding Advance payments have significantly impaired the Department’s ability to reconcile outstanding agreements and return balances retained with other federal agencies. Most DoD Components expense amounts advanced giving the appearance that the agreement was fully executed and no further action was necessary. The Department’s authority to advance funds is restricted to specific authority, legislative action, or Presidential authorization. Accordingly, all DoD Components were directed to discontinue the practice of advancing funds in the March 1, 2007 memorandum, “Advance Payments to Non-Department of Defense (DoD) Federal Agencies for Interagency Acquisition.”

Interagency Acquisition October 16, 2006, OUSD(Comptroller) Issued Non-Economy Act Order policy memo providing the following guidance: Initiating Non-Economy Act Orders A firm, clear, specific, and complete description of the goods or services ordered. The use of generic descriptions is not acceptable Best Interest Determination Contracting Officer review for orders greater than $500K Fiscal Policy Clarified contract award and period of performance for Goods, Severable Services, and Non Severable Services Non-Economy Act Follow Up Procedures Non-Economy Act Order Oversight Monitor Fund Status