GSA reorganizes contracting divisions

Months of anticipation over the future of the General Services Administration's two biggest contracting divisions ended Thursday as the agency announced it would reorganize the Federal Technology Service and the Federal Supply Service.

GSA has been conducting a review of FTS and FSS for several months. Congressional overseers and vendors had prodded the agency to eliminate duplicative operations in the two organizations.

FTS is a full-service contracting shop that writes, competes and manages technology and telecommunications contracts on behalf of federal agencies. FSS is a more bare-bones operation-it simply oversees the contracts that agencies use on their own. But those contracts, known as the federal supply schedules, are some of the most lucrative in the government. The schedules are awarded to more than 6,000 companies and sell all manner of goods and services. Agencies spent more than $22 billion through the schedules in fiscal 2002. Technology goods and services account for the bulk of those buys.

Technology vendors had complained that they must spend time and money competing for contracts at both FTS and FSS, and that this was unnecessary since both agencies are a part of GSA. An audit by consulting firm Accenture earlier this year found that the two agencies often performed the same functions, and that if some redundancies were eliminated-particularly in sales and marketing efforts-the performance of both operations would be improved.

FTS commissioner Sandra Bates detailed the changes GSA Administrator Stephen Perry has approved, which will take effect Jan. 12:

• The development and day-to-day management of contracts will be handled by FSS. Contracts currently managed by FTS will be transferred along with the employees who work on them.
• FSS, a better-known agency in government circles, will take over the marketing of all contracts and market research for new contract opportunities. FTS employees currently performing those tasks will move to FSS.
• FTS, which employs a sales and accounts management team that works much like a private sector organization, will be the sales force for all information technology contracts. The agency will be the point of contact for any organization in government that wants to procure technology goods or services. But FTS also will expand beyond its traditional realm and sell eight new professional services contracts that have little to do with technology, such as engineering and financial services.

GSA also will establish a review board to approve any new contracts before they're marketed to agencies.

The plan was immediately endorsed by at least one powerful industry association, the Coalition for Government Procurement. "True streamlining and efficiency is more easily accomplished when all contracts are under the same service," said Larry Allen, coalition's executive director. FSS, he added, has "contract negotiation and management strength."

FSS generally has been regarded as a more effective marketer of its contracts, and FTS has been criticized by lawmakers for the contract management fees it charges its agency customers. FTS officials have always defended those fees, saying that the services the agency supplies are valued most by agencies that would rather pay the fees than manage procurements and contracts on their own.