GSA procurement pause sparks confusion
President Trump shortly after signing several executive orders at the White House. Gettyimages.com/Anna Moneymaker / Staff
By
Nick Wakeman
A new memo halts all General Services Administration-funded contract awards, a move that raises questions about scope and legality as industry leaders look for clarity.
The General Services Administration has put a pause on all new contract awards and other procurement actions funded by the agency.
Sent out Thursday, the memo from acting administrator Stephen Ehikian is addressed to all contracting officers and leasing contracting officers. The memo covers new obligations that include new awards, task and delivery orders, modifications, and options.
But early reaction to the memo has some industry observers feeling confused about how far reaching it is.
For example, the memo refers to “new GSA-funded obligations.”
“What does that mean?,” one industry executive asked.
“If I am GSA and buying something on behalf of another agency is that a GSA-funded obligation?” said one industry consultant, who is trying to answer that question for clients.
The Professional Services Council, one of the main trade associations that represents GovCon companies, also is asking for clarification while recognizing that every new administration takes time to review programs and priorities.
"Our members are ready to support that alignment of programs and priorities," the group's statement said. "The executive orders and guidance memos issued to date are necessary steps to create that alignment of programs and priorities."
But the statement also points to how the memo has left many unanswered questions.
"PSC seeks on behalf of our members additional details regarding timelines, criteria, and objectives of the reviews that have been announced."
PSC is also talking with administration officials to convey the impact of the pauses in programs and payments.
Other unanswered questions the memo brings up include whether spending is allowed if the money has already been obligated? That question arises because there are multiple references to “new” in the memo.
“Does a renewal or extension fall under the pause? It’s not clear,” a third observer said.
The memo specifically pauses spending through the GSA schedule for diversity, equity, and inclusion. But that same section of the memo appears to allow spending to continue through the Schedules.
If that is the case, then a lot of IT spending should continue.
But “what it says and how it is interpreted can be two very different things,” another observer said. “It’s smart to be cautious.”
The industry executive said the memo is ambiguous.
“We are keeping an eye on everything coming out of the administration and trying to work on interpretations with our customers,” that executive said.
Industry observers also expressed concern about how long the pause will be in place, particularly for small businesses.
WT is being told that companies expecting an award or an extension to come in the first quarter and have made hiring and other investments based on that may suffer financial losses.
Separate to GSA's memo, one issued by the Army that WT has seen directs a pause on all new solicitations and awards. Modifications on existing contracts are also on pause and there is no timeframe for the halt.
An industry observer said the pause is to be expected because the service branches do not want to get ahead of Trump administration priorities.
But a second observer we spoke to is questioning the legality of a stoppage in spending and believes it fits a pattern of overreach coming out of the Office of Management and Budget.
“All presidents are stuck with whatever the previous Congress and administration agreed to until the next budget cycle. This is what the Impoundment Act is all about,” that person said.
Congress passed the Impoundment Act in 1974 after the Watergate scandal and others from the Nixon administration.
The Impoundment Act limits the ability of a president to replace Congress’ spending decisions with his or her own. The Supreme Court unanimously upheld the law in 1975.
A new fight over the Impoundment Act looks like a real possibility. Russ Vought, Trump's nominee for OMB administrator, repeated the president's campaign statements that the law is unconstitutional during his confirmation hearing.