GSA moves ahead with reorganization

The head of the General Services Administration threw his public support behind a consolidation of the agency Wednesday, a move that holds significant and still uncertain implications for federal agencies and the hundreds of companies that do business with them.

GSA Administrator Stephen A. Perry told members of the House Government Reform Committee that the agency intends to combine two of its major procurement divisions, and that doing so would require a change to federal laws. Perry said senior GSA managers are evaluating the agency's strengths and weaknesses in managing billions of dollars in procurements for agencies.

GSA hasn't always been able to meet its customers' deadlines for fulfilling requests, Perry said, and this was a compelling reason to blend the two procurement agencies, with the goal of streamlining the procurement process.

GSA has not always met its customers' "cycle times," Perry told lawmakers, partly because the agency's contracting staff is overwhelmed with work. Last month, GSA announced a plan to hire dozens of contract support employees from the private sector. Procurement experts said this reflects a broader trend across government: The number of skilled acquisition professionals is shrinking, and government is faced with having to hire from the private sector.

Richard N. Brown, president of the National Federation of Federal Employees, testified that the merger threatened federal procurement workers. "The rank and file employees at GSA vehemently oppose a merger," Brown said. "We have no assurance that hundreds of GSA employees will not be sacrificed to make way for profit-driven contract work."

Under the proposed GSA restructuring, the Federal Supply Service, which manages GSA's set of purchasing schedules, would merge with the Federal Technology Service, which provides a range of services--including writing, awarding and managing contracts--in the technology arena. Perry reasoned that agencies are no longer buying as many discrete technology items--such as hardware or software products--and they tend to purchase entire sets of products and services, thus negating the need for a contracting agency that handles technology exclusively. FSS does handle billions of dollars in technology procurements annually, but it also purchases all other manner of goods and services, from office supplies to engineering.

The merger won the support of committee chairman Tom Davis, R-Va. "While the bifurcated system may have made sense two decades ago when [information technology] investments were a relatively new phenomenon, technologies such as laptop computers, cell phones and e-mail are now as ubiquitous with office supplies as are desks and phones," Davis said.

Davis proposed, and Perry supported, legislation that would amend current law to combine the two operating funds on which the GSA agencies rely--the General Supply Fund and the Information Technology Fund. Davis said he envisions an "acquisition services fund," which presumably would ease accounting requirements and would be more aligned with the proposed single face of procurement.

Davis said he'd like new legislation to create a "federal acquisition service" within GSA and to provide for direct control of its regional administrators, who currently operate with a high degree of autonomy from Washington. Davis noted that recent GSA inspector general reports have found Federal Technology Service employees in the regions ran afoul of contracting laws.

The assistant inspector general for audits, who led the FTS investigation, said he generally supported the merger plans. "We see a combined organization as workable and one that could result in efficiencies," said Eugene Waszily. "It would also serve to eliminate concerns that FSS and FTS directly compete for client business," he added, echoing a frequent criticism about the dual structure.

Industry representatives urged GSA to seek the input of companies as well as customer agencies. Perry said he had established task forces to determine the best way to proceed with the merger, but an industry official said, "At this point, there is no indication that these task forces will be broadened to include any representatives outside of GSA."

In testimony on behalf of the Information Technology Association of America, the industry's main lobbying group, Thomas Hewitt, president of Global Government Inc., said, "These bodies will not provide the diverse points of view that are imperative for a successful reorganization."

Many companies, however, recognize that the slowdown in procurements caused by revelations of contract abuse at GSA must be addressed, explained Mike Davison, who testified on behalf of the Coalition for Government Procurement, another trade association. "Routine business has dramatically slowed and a climate of paralysis has crept into all of FTS and much of FSS," he said in prepared remarks, alluding to stricter contracting procedures that were put in place following the FTS scandals. "Reorganization can be the catalyst to put last year's problems behind."

In a related matter, the Bush administration announced Wednesday that the Office of Federal Procurement Policy, GSA and the Defense Department will initiate a program to standardize federal contracting employees' training. The new Federal Acquisition Institute will be led by OFPP and managed by GSA, and will be located at the Defense Acquisition University at Ft. Belvoir, Va.