GSA weighs creating new business units, splitting schedules program

The General Services Administration is considering whether to reorganize its contracting functions into a small number of business units, each selling a broad range of goods and services, according to agency documents and people following the process. As part of the plan, GSA may split up its successful and popular schedules program.

A set of GSA documents, obtained by Government Executive, lays out two proposals to create "business portfolios" under which specific schedules and other contracts would be included.

For instance, a "technology and professional services" portfolio would administer technology- and professional service-related contracts, including the lucrative Schedule 70 for information technology, the MOBIS contract for management and consulting services, telecommunications contracts, and governmentwide acquisition contracts. The portfolio might also manage governmentwide procurement programs such as SmartBUY, which is used to acquire software licenses, and a function for new product and program development.

Other business portfolios being considered, according to the documents, are "general supplies and services," travel, [purchase] cards and relocation" and "auto/fleet." One proposal would lump the second and third portfolios into a single unit.

GSA has been working on a plan to merge its main contracting units, the Federal Technology Service and the Federal Supply Service, into a single agency. Mary Alice Johnson, a GSA spokeswoman, said the reorganization would allow the agency to better serve its customers and to exercise stronger management of its operations.

But some observers believe the proposal is premised on an ineffective and potentially dangerous business model. These observers, some of whom asked to remain anonymous because the agency has not endorsed a final plan, say officials have only recently devoted significant attention to crafting a new structure. The plan laid out in the documents, they say, represents a hasty effort by senior GSA officials to come up with a solution before the agency's administrator decides which option to pursue by the end of the month.

Larry Allen, executive vice president of the Coalition for Government Procurement, an association that represents contractors, said he's concerned that a decision on GSA's future is being made "among a very limited number of people" and without input from contractors or GSA's agency customers. GSA has held a public forum to hear comments from those parties, but it's not clear how that has influenced the agency's actions.

GSA is focused on certain "cardinal principles," Johnson said, namely that the new organization will have strong management, will be devoted to the development of its acquisition workforce and will focus on its customers. Johnson said the reorganization "will reflect how customers buy goods and services rather than how we sell them."

But Allen and others say the current proposal is risky. First, splitting up the schedules among business portfolios would mean they would no longer be centrally controlled by a staff of acquisition experts, as is now the case. The schedules have always been run as a single program, and its managers set policy on contracts.

Under the proposed plan, the contract administration function could be subordinated to business managers who might be more focused on sales. "You're setting yourself up for the same types of problems you had in FTS," Allen said.

FTS was created to sell information technology goods and services to agencies, but it used technology contracts to sell a variety of unrelated items, including building construction and mental health counseling. GSA inspector general reports have established that a desire to grow the business and increase sales trumped sound contract management at FTS.

"We've seen the types of problems this model can cause," Allen said. "Why you would say, 'Let's do that again,' I'm not sure."

Others echoed Allen's concerns, and said GSA risked repeating FTS' mistakes on a potentially larger scale. The GSA documents state, "There will be an acquisition management function within the new service, but not located within each portfolio."

This function would "issue standards and guidance on existing procurement policy" and "perform quality and integrity reviews of contracts," among other duties. It would also "provide a direct linkage to and from the chief acquisition officer," who is currently responsible for overseeing contracts and determining policy violations.

Johnson stressed that GSA is looking at a number of business models. She said critics are probably seeing "just one fraction of the pie."

Johnson said the effort is "still in development" and any documents pertaining to the reorganization are not final. All documents, which bear the imprimatur of GSA and its reorganization consultant, Booz Allen Hamilton, are labeled "work in progress."

GSA Administrator Stephen Perry is expected to approve a reorganization plan by the end of this month. The plan cleared a major legal hurdle Monday when the House of Representatives approved a bill to create the new organization, which will be called the Federal Acquisition Service, and to merge two funds that will be used to support its operations.

A spokesman for House Government Reform Committee chairman Tom Davis, R-Va., who sponsored the bill, said, "The legislation focuses on high-level responsibility while allowing GSA the discretion to set up the most effective business structure for the new Federal Acquisition Service. The interim planning process at GSA is quite fluid and there is no way to know at this time what they will ultimately do. As soon as that is known, the committee will comment on it."