Management of Interagency Contracting

Why It's High Risk

Management of interagency contracting—where one agency either uses another agency’s contract directly or obtains contracting support services from another agency—can offer improved efficiency in the procurement process. By providing a simplified, expedited, and lower cost method of procurement, interagency contracting can help agencies save both time and administration costs versus awarding new contracts. This is particularly important now as agencies face growing workloads and slow growth in the acquisition workforce.

Although precise numbers are unavailable, agencies reported spending at least $53 billion in fiscal year 2009 using interagency contracts. GAO designated the management of interagency contracting as a high-risk area in 2005, due in part to the need for stronger internal controls, clear definitions of roles and responsibilities, and training to ensure proper use of this contracting method.

^ Back to topWhat We Found

The management of interagency contracting continues to evolve, and agencies have made progress but still face challenges in making effective use of this contracting method. In response to congressional direction since 2004, agency inspectors general (IG) continue to review interagency contracting at the Department of Defense (DOD), the largest government purchaser of goods and services. These reviews found that agencies making purchases for DOD have improved interagency contracting practices by better defining roles and responsibilities and improving controls over funding procedures, among other things; however, problems persist with DOD’s use of interagency contracting. Specifically, the DOD IG has identified the following as areas that require further improvement when other agencies make purchases on behalf of DOD:

• acquisition planning,
• the use of proper funds, and
• contract administration

In April 2010, GAO reported on additional challenges that agencies face in fully realizing the benefits of interagency contracts. Specifically, GAO found that:

• the Office of Management and Budget (OMB) and federal agencies lack reliable and comprehensive data to effectively leverage, manage, and oversee these contracts. For example, the total number of one type of interagency contract—multiagency contracts (MAC)—is unknown due to a lack of sufficient and reliable data on these contracts. Similarly, GAO found that the General Services Administration (GSA) lacks data about customer agencies’ use of the Multiple Award Schedule program—the largest interagency contracting program—which limits GSA’s ability to determine how well the program meets customers’ needs.
• agency officials and vendors expressed concerns about potential duplication when multiple agencies create separate contracts for similar products and services. Unjustified duplication needlessly increases costs to vendors, which they pass on to the government, and can result in missed opportunities to leverage the government’s buying power.
• there is limited governmentwide policy for establishing and overseeing MACs. GAO made a number of recommendations to OMB and GSA in April 2010 to improve transparency and management, and to promote a more coordinated approach in awarding interagency contracts.

GSA and OMB have taken steps to address these recommendations and improve the management of interagency contracting.

^ Back to topWhat Needs to Be Done

1. OMB and GSA have established corrective action plans that outline the steps they will take in response to GAO recommendations. These initiatives are in the early stages of implementation and will require continued management attention to demonstrate progress.
2. In addition, it is similarly important that DOD continue to focus on addressing the problems identified with their use of interagency contracts.
3. Finally, agencies must take steps to ensure their compliance with OMB’s guidance on the management and use of interagency contracts in order to achieve the greatest value possible from interagency contracting.

^ Back to topKey Reports

Government Operations

Federal Acquisition

Contracting Strategies

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