The General Services Administration overestimated how much money eight Federal Supply Service warehouses were losing in order to justify closing the warehouses, officials of the American Federation of Government Employees have charged.
In a letter sent in October to AFGE President Bobby L. Harnage, GSA administrator David Barram said the warehouses are expected to lose $100,000 per day this year.
GSA has referred to such financial loss as a primary reason the agency wants to shut down the warehouses in favor of a new supply system that delivers orders directly from vendors to agencies.
But union leaders, who want to keep the warehouses open and save as many as 2,000 of their members' jobs, refuted the $100,000 figure. "It's hard to find a credible explanation for that number," said Phil Kete, an AFGE spokesman.
The $100,000 figure, calculated over a year, would lead to an annual loss of $36.5 million on warehouse operations. GSA has told the union that "the $36.5 million figure is erroneous and never was intended," Kete said.
A GSA spokesman said the agency did not want to publicly discuss its negotiations with the union, but allowed that the potential for error exists.
On Tuesday, GSA officials issued the following statement: "The fact is that we all acknowledge the challenges with the distribution system. Administrator Barram has directed GSA representatives to provide the unions with information so we can make informed decisions. The information is very detailed and covers a period of years, and it would not be surprising if there were confusion among some of the participants who are not familiar with the daily business," GSA said.
According to GSA data, sales in the stock program were about $800 million in fiscal 1999 and the program suffered a $1.1 million loss that year. That amounts to the warehouses losing less than $100,000 per month, not per day.
AFGE and GSA are currently negotiating to find a solution to the financial problems in the warehouses. GSA only agreed to the joint negotiations after months of legal wrangling over the agency's independent decision to shut down the warehouses, which the agency later retracted.
According to Kete, the two parties are still "actively assessing the facts" to try to solve the warehouses' financial woes.
The union has been watching carefully to make sure GSA is restocking the warehouses as promised when the bargaining process began, Kete said. If the warehouses are not regularly restocked, sales will go down and losses will mount. AFGE is also scrutinizing all costs allocated to the stock program, to ensure they are accurate.
And despite the $100,000 error, Kete said, "it appears that they are being very forthcoming with the data."
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