<DOC>
[107th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:85609.wais]
MAKING SENSE OF PROCUREMENT'S ALPHABET SOUP: HOW PURCHASING AGENCIES
CHOOSE BETWEEN FSS AND FTS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON TECHNOLOGY AND PROCUREMENT POLICY
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
APRIL 11, 2002
__________
Serial No. 107-172
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpo.gov/congress/house
http://www.house.gov/reform
______
85-609 U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2003
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpr.gov Phone: toll free (866) 512-1800; (202) 512ÿ091800
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COMMITTEE ON GOVERNMENT REFORM
DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida EDOLPHUS TOWNS, New York
JOHN M. McHUGH, New York PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California PATSY T. MINK, Hawaii
JOHN L. MICA, Florida CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia ELEANOR HOLMES NORTON, Washington,
MARK E. SOUDER, Indiana DC
STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland
BOB BARR, Georgia DENNIS J. KUCINICH, Ohio
DAN MILLER, Florida ROD R. BLAGOJEVICH, Illinois
DOUG OSE, California DANNY K. DAVIS, Illinois
RON LEWIS, Kentucky JOHN F. TIERNEY, Massachusetts
JO ANN DAVIS, Virginia JIM TURNER, Texas
TODD RUSSELL PLATTS, Pennsylvania THOMAS H. ALLEN, Maine
DAVE WELDON, Florida JANICE D. SCHAKOWSKY, Illinois
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
ADAM H. PUTNAM, Florida DIANE E. WATSON, California
C.L. ``BUTCH'' OTTER, Idaho STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia ------
JOHN J. DUNCAN, Jr., Tennessee BERNARD SANDERS, Vermont
------ ------ (Independent)
Kevin Binger, Staff Director
Daniel R. Moll, Deputy Staff Director
James C. Wilson, Chief Counsel
Robert A. Briggs, Chief Clerk
Phil Schiliro, Minority Staff Director
Subcommittee on Technology and Procurement Policy
THOMAS M. DAVIS, Virginia, Chairman
JO ANN DAVIS, Virginia JIM TURNER, Texas
STEPHEN HORN, California PAUL E. KANJORSKI, Pennsylvania
DOUG OSE, California PATSY T. MINK, Hawaii
EDWARD L. SCHROCK, Virginia
Ex Officio
DAN BURTON, Indiana HENRY A. WAXMAN, California
Melissa Wojciak, Staff Director
Chip Nottingham, Counsel
Teddy Kidd, Clerk
Mark Stephenson, Minority Professional Staff Member
C O N T E N T S
----------
Page
Hearing held on April 11, 2002................................... 1
Statement of:
Allen, Edward, executive director, Coalition for Government
Procurement; and Dwight Hutchins, partner, USA Federal
Government strategy practice, Accenture.................... 54
Cooper, David E., Director, Acquisition and Sourcing
Management, U.S. General Accounting Office; Stephen Perry,
Administrator, U.S. General Services Administration; and
Claudia S. Knott, Executive Director, Logistics Policy and
Acquisition Management, U.S. Defense Logistics Agency...... 8
Letters, statements, etc., submitted for the record by:
Allen, Edward, executive director, Coalition for Government
Procurement, prepared statement of......................... 57
Cooper, David E., Director, Acquisition and Sourcing
Management, U.S. General Accounting Office, prepared
statement of............................................... 11
Davis, Hon. Tom, a Representative in Congress from the State
of Virginia, prepared statement of......................... 3
Hutchins, Dwight, partner, USA Federal Government strategy
practice, Accenture, prepared statement of................. 70
Knott, Claudia S., Executive Director, Logistics Policy and
Acquisition Management, U.S. Defense Logistics Agency,
prepared statement of...................................... 41
Perry, Stephen, Administrator, U.S. General Services
Administration, prepared statement of...................... 23
Turner, Hon. Jim, a Representative in Congress from the State
of Texas, prepared statement of............................ 6
MAKING SENSE OF PROCUREMENT'S ALPHABET SOUP: HOW PURCHASING AGENCIES
CHOOSE BETWEEN FSS AND FTS
----------
THURSDAY, APRIL 11, 2002
House of Representatives,
Subcommittee on Technology and Procurement Policy,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:30 a.m., in
room 2203, Rayburn House Office Building, Hon. Tom Davis of
Virginia (chairman of the committee) presiding.
Present: Representatives Mr. Davis of Virginia, Schrock,
Turner, and Ms. Davis of Virginia.
Staff present: Chip Nottingham, counsel; Teddy Kidd, clerk;
Mark Stephenson, minority professional staff member; and Jean
Gosa, minority assistant clerk.
Mr. Davis. Good morning. I want to welcome everybody to
today's oversight hearing on the GAO's Federal Supply Service
and Federal Technology Service. Today's hearing will build on
work that is currently being conducted by the General
Accounting Office for the subcommittee on the structure,
management and coordination, or lack of it, between the two
Services, which do more than $30 billion in business each year.
The aim here is to determine whether FSS and FTS ensure
that the American taxpayers receive fair value for their hard-
earned dollars when the government acquires products or
services. As many of you know, through various revolving funds,
GAO buys products and services from the private sector and re-
sells them to Federal agencies. FSS and FTS both fit within
this model, but take different approaches to filling agency
customers' needs.
The Federal Supply Service, through its Schedules Program,
provides government agencies with the opportunity to quickly
purchase needed products and services, including, of course IT.
Customer agencies deal directly with vendors under their FSS
Schedule contacts. Used properly, the Schedules have proved to
be an invaluable tool for contracting officers. FTS offers
Federal agencies a range of IT and telecommunications services
through varied contract vehicles, including the Schedules. FTS
views itself as a value-added reseller of communications and
IT.
In addition to its contract vehicles, FTS offers consulting
and more extensive contract solutions to assist Federal
agencies with complex acquisitions that require in-depth
technical knowledge. Again, used properly, FTS offers Federal
agencies a valuable tool. The recent rapid growth of both
Services has been primarily fueled by sales of IT products and
services. Interestingly enough, this growth has been more
substantial for the Federal Supply Service than for FTS. Both
provide a full range of IT service contracts, often through the
same vendors. The overlap is largely the result of the
momentous changes made in 1996 under the Clinger Cohen Act.
Clinger Cohen eliminated GSA's then government-side IT
contracting responsibility through its Information Resource
Management Service. GSA reacted by relocating some of its IT
contracts through the Federal Supply Service and others to FTS.
With the approval of the Office of Management and Budget, GSA
continues to play a leading role in the government-wide IT
market.
The overlapping and possibly redundant nature of the
current structure--FTS is a major user of Federal Supply
Service contracts--raises questions related to the relationship
between the services. Is the relationship a result of
inefficiencies, unnecessary infrastructure, and cost? On the
other hand, perhaps the current structure results in increased
opportunities for vendors to capture Federal business and
amplified procurement options for Federal agencies. Various
customer agencies and vendors have differing views. What is
GSA's view? At this point in time, I don't know if you know. It
doesn't appear that GSA has focused on this issue enough to be
able to articulate a clear vision for addressing possible
structural problems and the relationship between FTS and FSS.
The good news is that at the urging of the subcommittee,
GSA has contracted for a study of the structure and efficiency
of both agencies, with the objective of developing a strategy
to improve GSA's services to its customer agencies. The
committee is further heartened by GSA's current efforts to
build better performance measures to gauge for the first time
its ability to achieve cost savings for the government rather
than simply measuring the revenue growth of the programs
themselves.
We look forward to Administrator Perry's remarks today to
further enlighten us on these issues. Whether these efforts
will bear fruit is, I think, still an open question. It is
critical for GSA to resolve its structural and management
challenges to assure the American taxpayer that both agencies
provide value as suppliers of IT products and services to the
Federal Government. Today we are going to explore the issues
related to the management and structure of the FTS and FSS in
the context of the impact on GSA's customer agencies and the
participating vendor community. To help us gauge the impact, we
are going to hear today from distinguished representatives from
both industry and government users. The GAO is also here today
to supply the context for our discussions.
In closing, I want to emphasize that the subcommittee will
continue to follow GSA's efforts to understand and measure the
results of the FSS and FTS programs. The subcommittee stands
ready to support appropriate strategies to improve GSA's
service to the Government IT market.
Let's get started, and I would yield to my ranking member
for any statements you would want to make.
[The prepared statement of Hon. Tom Davis follows:]
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Mr. Turner. Thank you, Mr. Chairman.
This subject, like many our committee deals with, is
somewhat mundane. I was a little surprised to see the big crowd
when I came in the room this morning, Mr. Chairman.
Mr. Davis. That's why we were in the wrong room.
[Laughter.]
Mr. Turner. I realized later that you and I both had
trouble finding the room, and I gathered you just selected a
smaller room. When you have a smaller room, you always get a
bigger crowd.
This subject today is one that there has been some
interested expressed in. Our purpose, of course, is to
determine whether or not the Federal Technology Service and the
Federal Supply Service are engaging in overlapping functions
and whether or not that needs to be remedied. I commend the
General Services Administration for looking into it, as well as
the GAO. We look forward to hearing from all of you today to
see if there is a need for some reform in this particular area.
Thank you, Mr. Chairman.
[The prepared statement of Hon. Jim Turner follows:]
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Mr. Davis. Thank you very much.
Mr. Schrock, any opening statement?
Mr. Schrock. No, thank you, Mr. Chairman.
Mr. Davis. Ms. Davis.
Ms. Davis of Virginia. No, thank you, Mr. Chairman.
Mr. Davis. We'll get right to it, then. As you note, we're
going to hear testimony from Mr. David Cooper of GAO, Steve
Perry from the General Services Administration and Claudia
Knott of the U.S. Defense Logistics Agency on our first panel.
We're also going to hear from Edward Allen of the Coalition for
Government Procurement, and Dwight Hutchins of Accenture, on
our second panel. Our first panel has been called. As you know
it is a policy of the committee to swear you in. If you would
just rise and raise your right hands.
[Witnesses sworn.]
Mr. Davis. Thank you very much. You may be seated.
To afford sufficient time for questions, please try to
limit yourself to about 5 minutes. I think we have a light up
here. When it gets yellow, that means you have a minute left of
your 5 minutes. I'll begin with Mr. Cooper then work down to
Administrator Perry and then Ms. Knott. Thank you very much.
STATEMENTS OF DAVID E. COOPER, DIRECTOR, ACQUISITION AND
SOURCING MANAGEMENT, U.S. GENERAL ACCOUNTING OFFICE; STEPHEN
PERRY, ADMINISTRATOR, U.S. GENERAL SERVICES ADMINISTRATION; AND
CLAUDIA S. KNOTT, EXECUTIVE DIRECTOR, LOGISTICS POLICY AND
ACQUISITION MANAGEMENT, U.S. DEFENSE LOGISTICS AGENCY
Mr. Cooper. Thank you Mr. Chairman.
Mr. Chairman and members of the subcommittee, it is indeed
a pleasure to be here again before your subcommittee. I thank
you very much for the invitation to testify on this very
important topic, even though it may be mundane.
The Federal Supply Service and the Federal
Telecommunications Service play a very important role in
helping Federal agencies acquire a very wide range of products
and services. In fact, everything from paper clips to very
sophisticated and complex computer systems. Sales for the two
programs last year exceeded $30 billion. FTS and FSS are funded
primarily through the fees that they charge the Federal
customers when placing orders on those contracts.
In recent years, both programs have experienced significant
growth in sales, principally from information technology
products and services. Just as an example, IT sales under the
supply service contracts increased from $3 billion in 1997 to
almost $11 billion last year. It's been a phenomenal growth in
those kinds of products and services.
Both programs offer Federal agencies a full range of IT
service contracts, including networking, information systems
analysis and design, installation, operation, anything Federal
agencies need. However, each takes a significantly different
approach to providing and satisfying Federal agency needs.
For example, FSS follows a self service model. Its
contracts are designed to be flexible, simple to use and embody
commercial buying practices. FSS negotiates master contracts
with vendors, seeking discounts off their commercial list
prices that are at least as favorable as those vendors offer
their most favored customers. Once the FSS negotiates these
master contracts, personnel in other Federal agencies place
orders and buy the things they need from them.
FTS, on the other hand, follows a full service business
model. In fact, it works very closely with Federal agencies
helping identify what the requirements are, coming up with an
acquisition strategy to satisfy those requirements, identifying
where those requirements can be satisfied and actually
administering the orders that are placed on those contracts.
FTS contracting officers use a variety of contract vehicles to
meet agency needs. The use their own contracts, contracts other
agencies have awarded, the so-called GWACs, and the FSS
schedule contracts.
In fact, FTS is the single largest user of FSS's IT
schedule contracts. Last year, it placed orders of about $1.7
billion on those contracts.
Concerns have been raised about the overlap between the two
programs. Both FSS and FTS provide customers agencies with
access to similar products and services, and in fact, use many
of the same vendors. In fact, eight of the top ten suppliers of
IT products and services to the Federal Government during
fiscal year 2000 held contracts with FSS and non-schedule
contracts used by FTS. Overall, according to data in the
Government-wide prime contract data base, over 300 vendors
received awards under FSS schedule contracts and non-schedule
contracts.
Some, noting that duplicative contract vehicles exist
throughout the Government, it's not solely limited to FTS and
FSS, have criticized the overlap between the programs. They
believe that duplicative contracting vehicles are inefficient
because companies are required to incur additional costs to
prepare proposals to compete for these contracts. They also
believe Federal agencies incur additional costs to award and
administer those contracts.
Others, however, favor the overlap. Many vendors are
willing to accept the increased costs of the overlapping
contracts because it provides additional Government business.
Agency customers view the overlapping contracts as providing
them greater procurement choices.
Notwithstanding these diverging views, we believe GSA needs
to take a hard look at how effective its procurement programs
are operating and, to its credit, and I think Mr. Perry will be
discussing some of those initiatives. GSA has begun two
principal initiatives that we believe will provide better
information on how the programs are operating. First, GSA is
encouraging the FSS and FTS managers to develop better
performance measures. Currently what the are using to measure
their performance are sales increases and customer
satisfaction, not specifically focused on the question of
whether quality products and services are being provided at
competitive prices and significant savings to the Government.
Accordingly, additional measures are being developed to provide
that information.
GSA also has chartered a study with a contractor to look at
the mission and operation of the two programs. The study will
survey current and potential customers to identify their needs
for IT and telecommunications services, analyze GSA's current
approach to fulfilling those needs, and identify high potential
alternative approaches to doing so. The study's ultimate
objective, and it's due to be completed in the near future, is
to develop strategies to improve GSA's capability to serve the
Federal technology market. We believe both initiatives are good
steps toward answering the questions this subcommittee is
asking. It is important for GSA to gain assurance that its
programs are delivering value to the Government and to identify
opportunities to increase their efficiency.
That concludes my statement. I'll be glad to answer any
questions.
[The prepared statement of Mr. Cooper follows:]
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Mr. Davis. Thank you very much.
Mr. Perry, thanks for being with us.
Mr. Perry. Chairman Davis and members of the subcommittee,
thank you very much for this opportunity to testify about GSA's
management reform and performance improvement initiatives, both
in general and as these two steps apply to our Federal
Technology Service and Federal Supply Service in particular.
Before I describe the specifics of our efforts at FTS and
FSS, please permit me to outline GSA's agency-wide management
reform and performance improvement initiatives, because I think
that will set the context for the more specific discussion.
After I was sworn in as Administrator of GSA last June, we
began a comprehensive review of the agency to ensure that GSA
is providing best value to customer agencies and to the
taxpayers. We began a round of management reviews and strategic
planning discussions within the organization and throughout the
organization.
As an agency, we redefined or refocused upon our mission.
We established six specific agency-wide goals, all of which are
supplemented by individual goals for respective units under
those categories. We established or defined for ourselves five
GSA-wide values that we will conduct ourselves by. And we
developed performance plans, laying out the strategies and
tactics of how we are going to achieve success.
This process, which we call creating a successful future at
GSA, is the foundation from which we will achieve a higher
level of performance at the agency. We determined that our
mission is to help other Federal agencies better serve the
public by offering to them at best value superior work places,
expert solutions, acquisition services and management policies.
In line with that mission statement, we determined that the
values of our organization which exist are as follows. First
and foremost, ethics and integrity in everything we do. Second,
respect for our fellow GSA associates, which leads to the third
value of teamwork, which is critical, really, to our success.
Fourth, results orientation and fifth, professionalism.
After having determined and refocused upon our agency's
mission and values, we then outlined the six GSA-wide goals
that we would hold ourselves accountable to achieve. Those
goals are first and foremost, to provide best value for our
customer agencies and the taxpayer. Second, to achieve
responsible asset management. That's particularly relevant in
our property management arena. Operate effectively and
efficiently. Four, ensure financial accountability. Five,
maintain a world class work force and a world class work place,
which speaks to the issue of human capital development and
training. And sixth, carry out our social and environmental
responsibilities as a Federal Government agency.
Mr. Chairman, in addition to establishing clear and
challenging goals for ourselves, we are also instituting a
rigorous performance management process at GSA. We're
establishing measures which will allow us to track our
performance achievements or lack thereof in every important
area within GSA. It was during this process of review that we
identified similar functions were being administered by the
Federal Supply Service and the Federal Technology Service.
These initial findings were consistent with what we were
hearing from this subcommittee and from others.
The Commissioners of FSS and FTS and I decided at that time
to conduct an objective, third party review of the two Service
areas in order to determine if the current policies, procedures
and structures of these two Service areas were in fact
providing best value to customers. On January 22nd of this
year, we engaged Accenture, and they began assisting us in this
review. Our study of FTS and FSS policies, procedures,
structures and operations include a focus on non-value adding
activities, duplication or overlap between these two
organizations. The study will also determine if there are any
gaps, that is in addition to duplication and overlap, are there
any voids where FSS and FTS should be adding or providing
additional information technology and telecommunications
services to our customer agencies.
Accenture's team has been given full access to the FSS and
FTS management and to all the other associates and to all the
other information with respect to these issues in those two
organizations. They are using that information to analyze our
organization's policies, procedures, structures and operations.
Accenture is also interviewing customer agencies and industry
partners to determine if they perceive that FSS and FTS are
operating in a manner that provides best value in procuring
products and services that our customers agencies need to meet
their missions.
After a detailed business analysis of these facts,
Accenture will provide GSA with the results of its study and
its recommendations or alternative solutions which could be
used to improve our performance and to better meet our goal of
providing best value to our customer agencies and the
taxpayers. We have set a very aggressive time table for the
completion of this study. We expect it to be completed by the
end of this month. The study is moving along at a good pace.
Once it is concluded, we will review the results and we will
consider and evaluate all of the recommendations or alternative
solutions and determine what steps, if any, should be taken.
Mr. Chairman, by taking an independent assessment of the
FTS and FSS business lines, GSA hopes to evaluate and if
necessary, make changes to the current policies, procedures and
activities that might significantly enhance our ability to
provide best value to our customer agencies. Our work in the
FTS and FSS IT solutions arena is just one part of our overall
performance improvement initiative to improve GSA's performance
in providing best value to our customer agencies.
I certainly want to thank you for your interest in this
issue and for the opportunity to testify before you and this
subcommittee. At this time or at a later time, I will be happy
to answer any questions you may have.
[The prepared statement of Mr. Perry follows:]
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Mr. Davis. Thank you very much.
Ms. Knott.
Ms. Knott. Good morning, Mr. Davis, Mr. Turner and other
members of the committee.
I also appreciate the opportunity to appear before this
committee. This morning I will briefly discuss DLA's use of the
services provided by the General Services Administration
Federal Supply Service and Federal Technology Service. This is
also a timely occasion for comments from DLA pertaining to
Section 803 of the National Defense Authorization Act for
fiscal year 2002.
DLA has directly awarded contracts using Federal Supply
Service schedule contracts in the past. In fact, in fiscal year
2001, we awarded $389 million and in fiscal year 2000, we
awarded $343 million. We have found the schedules offered by
GSA to be efficient and consistent with our agency's goal to
ensure that the best value is obtained for the Government.
DLA also utilizes the Federal Technology Service primarily
for telecommunications. All of our telecommunication
requirements go through the Defense Information Systems Agency,
who functions as the single DOD agent in this area. Using what
we call military inter-departmental purchase requests, in
fiscal year 2002 we provided $15.4 million to DISA for
telecommunications requirements. And in fiscal year 2001, the
amount was $14.1 million.
In a brief overview of the specific questions raised by
your committee, let me say that I am unaware of any DLA issues
associated with competing contracts issued by FTS and FSS. We
have found the schedules offered by GSA are consistent with our
agency's goal of acquiring best value solutions. The
information and training provided by GSA through its Web sites
and seminars provide valued information into their products and
services and how we can best utilize them.
As to the provisions of Section 803 of the National Defense
Authorization Act for fiscal year 2002, under this proposed
rule, each order for services exceeding $100,000 made under a
multiple award schedule will be made only after all contractors
offering such services under the schedule are notified of the
intent to make a purchase, or the contracting officer must
inform as many scheduled contractors as practical, and the
contracting officer must ensure that proposals are received
from at least three schedule contractors to be considered for
award. This new process is a departure from current rules for
awarding orders under the schedules. The current rules require
a contracting officer to contact only three schedule
contractors that are capable of performing the requirement. We
will be implementing this section 803 upon receipt of the DOD
implementation guidance.
Thank you very much, and I stand ready to answer your
questions.
[The prepared statement of Ms. Knott follows:]
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Mr. Davis. Thank you very much.
I'll start the questioning with Mr. Schrock.
Mr. Schrock. Thank you, Mr. Chairman, and thank you all for
being here today.
I just have a couple of brief comments. Mr. Cooper, one of
the things that struck me that you said, you talked about
overlap, which to me means duplication of efforts, and you said
businesses like that. You have to help me through that,
something doesn't sound right about that.
Mr. Cooper. The overlap that exists is in the IT area.
What's happening is, as Federal agencies need more and more
services, IT services, to keep their systems operating, help
desks, so on and so forth, they turn to either the schedule or
to FTS for a solution in that area.
What we see, the overlap, is that there are contractors
under both of those arrangements that provide similar types of
services. Services is a very difficult issue. A lot of people,
we're in a new era of contracting because of the explosion in
service contracting in recent years. Services aren't as easy to
buy as products have been in the past, particularly off the
schedules. In the past, on a schedule, you could go in with a
description, in fact, a national stock number for a product.
Then you could see which vendors were offering that product,
it's very defined, and then pick three and then place your
order.
Services are a little bit different. Services vary from
contractor to contractor and it needs a little more
deliberation and understanding of what the requirement is and
what those contractors are providing to satisfy that
requirement. So the overlap is----
Mr. Schrock. Not overlap?
Mr. Cooper. It's not the exact duplicate thing, like you
would find in the product area.
Mr. Schrock. So four different vendors may offer similar
things, the Government agency can say, hey, this best fits what
we want to do and pick from that?
Mr. Cooper. Exactly.
Mr. Schrock. It's not overlap. I understand.
Mr. Cooper. The overlap is not synonymous with duplication
as you would find in products.
Mr. Schrock. OK. That's what we're trying to do away with.
Mr. Cooper. Right.
Mr. Schrock. Mr. Administrator, you mentioned that FTS and
FSS do the same things, and this report is going to come out on
30 April. Once the report is out, how long is it going to take
to implement? I've been in Government long enough to know
sometimes I'll have several birthdays before that happens. I'm
just wondering how long something like that will take to
implement.
Mr. Cooper. In our overall performance improvement
initiatives, we are focusing on quick action and quick
implementation. The specific answer to your question,
Congressman, of course will depend upon the nature of the
recommendations that we receive. But we have taken this on as a
priority. We know it's a priority to this subcommittee, and I
can assure you that we will address those recommendations as a
high priority.
Mr. Schrock. I guess the thing about it, at the State level
I remember they used to do these magnificent reports and pay
hundreds of thousands of dollars, somebody stuck them in a
drawer and that's where they stayed.
Mr. Cooper. That will not happen in this case.
Mr. Schrock. Ms. Knott, I certainly agree with your comment
about best value. As a retired military guy, I think the
Department of Defense is doing a great job with inter-
operability to make sure that the Services are working more in
concert with one another and not at cross purposes. I hope
that's what this is all going to come out to be. But I have to
compliment the Defense Department for doing that. I'd be remiss
if I didn't.
Ms. Knott. Thank you very much.
Mr. Schrock. Thank you. Thank you all for being here.
Mr. Davis. Mr. Turner.
Mr. Turner. Thank you, Mr. Chairman.
Mr. Cooper, I'm trying to read between the lines here, but
I'm getting the sense that you have not perceived a great
problem here.
Mr. Cooper. I think when people see and hear some of the
things being said, it's in large part a perception right now,
and there's very little data, we say that in our statement,
there's very little data that defines this overlap.
Let me give you an example. The GSA Inspector General did
what they called a limited review back in the summer of 2000.
At that time, they identified 139 contractors that were both
FTS and FSS. And when they went and looked at the 139, what
they found was that 109 of those, or 78 percent, were SBA 8(a)
firms that were part of FTS's Federal Acquisition Services for
Technology, FAST, program. They were graduating from that
program, and in anticipation of graduating from that program
they also went and got on the FSS schedule.
So if you just looked at the numbers, you would say, that's
duplication. Well, when you get behind that a little bit, it is
not as much duplication as it might appear to be.
Mr. Turner. Mr. Perry, when you first heard about this
possible duplication and you began to look into it, did you end
up with the sense that there was a problem here?
Mr. Perry. Well, that's what this study will determine. We
really haven't got to that answer. But there was enough
discussion of it, there was enough perception that we believed
that the only way to really get to the root of the problem here
was to have a third party objective review of the facts. That's
what is going to answer that question.
Mr. Turner. So the study that you are initiating through
the contract with Accenture is initiated just a few months ago
and supposed to be completed?
Mr. Perry. Yes, we initiated it in January, we gave them 90
days, which also addresses your question, Mr. Schrock. The 90
days is an indication of the priority level that we're putting
on this in order to come to some conclusion.
Mr. Tuner. What's the cost of that contract with Accenture
to do the study?
Mr. Perry. I have to admit, Congressman, I don't know the
answer to that. I'd be happy to provide that information to
you.
Mr. Turner. Why don't you do that, I'd like that. Thank
you, Mr. Chairman.
Mr. Davis. I'm going to ask who gives the better deal,
since they're both out there. But I guess it really depends,
doesn't it, on the vehicle?
Mr. Cooper. That's an excellent question and that I think
is where GSA needs to place some emphasis. I think they're
beginning to with some of the measures that we've talked about.
Right now, there is no information that will tell you
whether in fact we are getting the best value. The study, I
think, is going to get at that and identify some ways to maybe
promote leveraging of the buying power between the two
Services.
Mr. Davis. I kind of have an open mind. Maybe this gives
the consumers out there, the Government, because there are more
choices, the option of being able to go in a couple different
directions on this. I don't know. That's what we want to try to
find out. And you don't have an opinion one way or the other
yet, do you?
Mr. Cooper. Definitely it gives the buyer tremendous
choice. And it's not just with FTS and FSS. You can go to the
NIH GWAC and get the same kind of services from the same
vendors. So the issue that the subcommittee is looking at is an
issue that really is broader and is across the Federal
Government.
Mr. Davis. You can obviously also go, NASA also has a
Schedule.
Mr. Cooper. NASA, DOT.
Mr. Davis. You don't have to be NASA to go to the NASA
Schedules, do you?
Mr. Cooper. No, you don't. There are lots of opportunities.
Mr. Davis. I don't mean to be picking on GSA, because there
are many schedules out there that are overlapping. I don't know
how it all works out, except that there are many choices right
now.
Mr. Perry, let me ask a few questions. OMB has noted that
sales growth is not a particularly good performance measure,
although I think it's relevant. With other Schedules out there,
outside of GSA, the fact that they're coming to you still in
droves instead of others, I think, is indicative of something.
But one look at the savings that are generated for the agency
customers, I mean, at the end of the day, that's kind of
another bottom line you want to look at on this.
Do you have any strategies right now for reorienting the
performance measures for the FTS and FSS?
Mr. Perry. Yes, Mr. Chairman, we certainly do.
Mr. Davis. Those are the ones you read off earlier?
Mr. Perry. That's the general and overall concept. It gets
back to the mission objective that we have where we describe
our mission to provide best value to customer agencies. So the
question you're raising then is, what is best value. And best
value can't completely be measured just by the fact that our
sales growth is going up.
Now, I agree with you, it certainly is an indication,
because clearly if our sales volume was going way down, that
would be an indication that customers are not satisfied with
our service. The fact that the reverse is true is a valid
vindication.
Mr. Davis. And ought to be included, absolutely.
Mr. Perry. Absolutely. But we do want to go beyond that, in
addition, and we have. One of the things we are already doing
is to conduct customer satisfaction surveys, where we give the
customers the opportunity to fill out a form and tell us
specifically areas where we are meeting their needs and areas
where we are failing to meet their needs, so that gives us a
blueprint for performance improvement. A third thing we're
doing, which is relative to that, is that we also are conducing
what we call customer service visits.
At the national level, myself and the commissioners as a
team visit the agency management and talk with them about,
first of all, the short term things, how are we doing with
respect to meeting your current needs. We have that discussion.
Then we talk about what I believe is more important, that is
their longer term programmatic needs. How are we doing, or what
are some of the longer term programmatic things that you are
embarked upon, and how can we support that effort. So that
again gives us, as we leave those meetings, a couple of pages
of to-do items with respect to performance in the short term
areas and a couple of pages of to-do items with respect to the
longer term issues.
So the customer service visits at the national level is
another indication, the information we get out of that dialog.
And then at the regional level, we're doing the same thing.
We're asking each of our regional administrators and their
respective teams to visit the customer agencies in their
location and to have that discussion. Then last, with respect
to this, we are doing that as it relates to our groups of
customers in groups in each of our 11 regions around the
country. This group is known as the Federal Executive Boards.
We meet with them, I go to those meetings myself as often as I
can to engage in this dialog, and we document the results.
So all of those are additional parts of determining whether
or not we are providing best value. But they are also not
precise measurements. So in terms of precise measurements, we
are trying to do a couple of things. Right now, the data is not
really reliable enough. But we're nevertheless stepping into
this.
In the case of FSS, we're looking at trying to collect
information that shows the discount from lists that our
customer agencies are being able to receive as a measure of the
real value that's being derived by that agency. In the case of
FTS, we're trying to do similar things, that is to make a
statement as to what would it have cost the agency to procure
that particular IT solution had they not used an FTS approach
versus what they actually did. That will be a numerical
measure.
I think it's a useful one, but still, we will not be at
what in my judgment is the biggest measure of the value to the
customer agency. In order to get that information, the customer
agency itself would have to present it, namely that is, once I
put that integrated system into my operation, what was the
ongoing productivity improvement or cost savings that the
agency is generating as a result of that.
Clearly, some of the credit for that savings would belong
to the agency itself who made the decision to go forward with
that. But in fact what we find is that, in FTS in particular,
where they are providing value added services, very often the
agency will say, we would not have come to that solution
without FTS's direct involvement. So in that kind of a
situation, you could say that FTS was a part of deriving that
value. Candidly, that information is difficult to obtain,
because it takes time to obtain it. In the case of some
agencies, they even have concern about showing what their
savings are, for fear of losing it.
But we are at least on an anecdotal basis looking at
individual cases. Just last, there was one recent article in
the news of an agency who indicated that by converting from its
prior approach to a GSA approach, they were now saving $400,000
a year annually on this particular system. Now, those are the
kinds of savings that today most agencies don't measure very
precisely. We're working to try to move in that direction. And
until we get to that point, which I suspect is down the road,
we're going to do more in terms of measuring, continue to
measure the soft items, if you will, that I've mentioned, the
customer satisfaction, the customer interaction, the customer
service visits, but then also move to measuring this discount
from list savings on schedules and the savings of using FTS
versus not having used FTS for a solution, at least the unit
cost reduction.
Mr. Davis. In my experience and observation, both of these
are pretty well-run agencies. We're just trying to take it,
particularly for government agencies with all the rules and
regulations that we, the transparency that goes with that. But
clearly, if we can take this to the next level, we want to be
able to do that. I think it's with that in mind. So we're not
coming into this with any direct criticism of the people
running it. I think they do a pretty good job. But they are
growing very rapidly and there are always ways to fine tune
this and make it better and more efficient. I think that's what
we're trying to get at. And I think you're the guy to do it.
Mr. Perry. Well, now, let me say too, on behalf of the
commissioners, when we talked about this review and the need to
explore as to whether or not there were opportunities for
improvement, there is no hesitation in our management group in
terms of moving forward to do just that.
Mr. Davis. I think the staff feels the same way.
A couple of other questions. Some folks have reported to us
that they think there may be problems in the implementation
between headquarters and the regional offices, particularly
with FTS. Do you detect any of that at all, have you had any
problems brought to your attention?
Mr. Perry. Well, I wouldn't say that we have any
extraordinary or significant problems. What we do have, or what
we have had in the past, is that we did not have clear
performance expectations or goals set that would cover both
what we're doing, for example, we're trying to do from an FTS
national perspective and regional perspective. So when there
wasn't a clear set of goals, there was certainly the potential
for various regions to be going in different directions and to
be not in synch with the national direction.
One of the things that we're doing is forging a much closer
working relationship among our national commissioners and our
regional administrators, so that we only have one performance
plan. Everyone is on the same page with respect to that. That's
No. 1.
No. 2, that closer working relationship among that group,
taking those two things together, having one plan and a close
working relationship among the national people and the regional
people will drive us to minimizing, if not eliminating, any
issues such as that if they otherwise would have occurred.
Mr. Davis. Just one last question. Have you given any
thought to maybe establishing a position under you that would
have the authority to oversee both services as well as the
regional structure within each service?
Mr. Perry. That will be, again, a subject of the study. We
are looking at a number of things of that nature.
Mr. Davis. Just an option?
Mr. Perry. That would be an option. Today, as our present
structure exists, as you know, the Commissioner of FTS and the
Commissioner of FSS report directly to me. So I'm the
integrating force, and it's my responsibility and my role to
make sure that they are collaborating, that they are
eliminating any non-value added duplication, and they're doing
all the things they should do together to meet the needs of our
customer agencies.
And I'll just add, additionally one other thing that we're
doing, in addition to what I believe is a more active role by
the Administrator in this area, we also have a much more active
executive committee. The executive committee consists of
myself, our chief of staff and the commissioners and the heads
of our major staff offices, the chief financial officer, the
chief information officer and so forth. That group comes
together, not as representatives of our respective areas, but
as the management team for the GSA enterprise. In those
discussions, that team talks about how our units need to work
together and collaborate to provide the total product offerings
that our agency can provide to give our agencies best value.
So in the course of the study, all of those subjects will
be reviewed, and I'm sure recommendations will be made along
those lines.
Mr. Davis. Thanks.
Ms. Knott, let me ask you a few questions. Your statement
focused mainly on the telecommunications purchasers under FTS.
Does your agency do much business under the FTS for IT products
or services?
Ms. Knott. We do some. But it's not significant in
comparison to the telecommunications.
Mr. Davis. That makes sense. You cite the new provision
that recently was included in Section 803 of the 2000 DOD
Authorization Act, which I think started off far worse that it
ended up, in my opinion, under which all these schedule
contractors have to be informed of task order opportunities
over $100,000. You indicate these provisions should strengthen
competition practices under the Schedules. Do you think these
provisions will provide benefits to offset additional burdens
that are placed on the system, in balance?
Ms. Knott. Yes. I think competition is the key to a lot of
success in the acquisition arena. So any time that you are
improving your opportunity for competition, then I think that
you do have opportunities to improve the result.
Mr. Davis. You also mention in your statement that GSA
offers a variety of training and communications options to
assist customer agencies like yours to make smart acquisition
decisions. Training is something that I've tried to focus on
and Mr. Turner has tried to focus on. What's your view as to
the quality of those training options for the customer? Do you
think they adequately prepare agency contracting officers to
make the best-value choice? Could they be improved?
Ms. Knott. I haven't had any personal experience with the
training opportunities. But I do know that their Web site
there, the information they provide in their publications, it's
readily available. It does provide valuable information to the
person who is looking for a choice of products available to
them and what the right one may be.
The training, again, I don't have any personal knowledge of
that, but I haven't heard anything negative concerning it. I
would certainly be the one to hear that from the procurement
officials within our organization.
Mr. Davis. I'm going to ask you a tough question. In your
experience as a customer agency, do you think that the Federal
Supply Service or the FTS provide the best value to you as an
agency? [Laughter.]
Ms. Knott. I think it really depends on what you're looking
for. [Laughter.]
Mr. Davis. Very good.
Ms. Knott. Again, it's your needs.
Mr. Davis. She's going to be a survivor.
Mr. Turner. May be in your seat some day. [Laughter.]
Mr. Davis. Exactly.
Ms. Knott. It so much depends on your specific requirement
and matching the requirement to the services that are
available. And again, we haven't had any issues. We enjoy the
benefits from both of the Services. So that kind of sums up my
feeling about that.
Mr. Davis. Frankly, that's what I think; it's going to
depend on the deal and what you do, and it just gives you
another shopping option.
Ms. Knott. Right. And having more sources is always good.
Mr. Davis. Well, almost always. That's what we're trying to
find out, in terms of what is the duplicate; can you do it a
little more efficiently? Because there is a cost to doing it.
Ms. Knott. From a customer perspective.
Mr. Davis. I hear you. I understand.
Anything anybody else wants to add? Mr. Schrock.
Mr. Schrock. Let me make one comment. I think what you're
doing is great. I think the report is going to shed some light
on it. Let me use an analogy.
After September 11th, we wondered, how could this happen to
us, why didn't somebody know about this. Then the President
took Tom Ridge out of the Pennsylvania Governor's office,
brought him into town and we discovered there were 47 Federal
agencies that did intelligence. My agency didn't talk to Mr.
Nottingham's, his didn't talk to the chairman's, the chairman's
didn't talk to Mr. Turner and so on. Ridge came to town and
said, everybody put your notes and papers on the table. They
put the pieces of this puzzle together, consequently we're
killing the Taliban everywhere, all the cells in this country.
That's the way I look at this, trying to figure out the right
way to do it so the puzzle will all make sense and it can work.
Not that they're a terrorist organization, I certainly hope
not. [Laughter.]
But I think you're going to benefit, and I think this
report will do that. So I commend you for what you're doing.
Mr. Davis. Thank you, Congressman.
Thank you all very much. We'll take a brief recess and move
to the next panel.
[Recess.]
Mr. Davis. Mr. Edward Allen of the Coalition for Government
Procurement, Mr. Dwight Hutchins of Accenture, if you would
just stand and raise your right hands.
[Witnesses sworn.]
Mr. Davis. Thank you. If you can try to limit it to 5
minutes, we've read your testimony and we're ready to go with
just a few questions. Your entire testimony is in the record.
Mr. Allen, we'll start with you, and thank you for being
with us.
STATEMENTS OF EDWARD ALLEN, EXECUTIVE DIRECTOR, COALITION FOR
GOVERNMENT PROCUREMENT; AND DWIGHT HUTCHINS, PARTNER, USA
FEDERAL GOVERNMENT STRATEGY PRACTICE, ACCENTURE
Mr. Allen. Thank you, Mr. Chairman and members of the
committee. It's an honor to be here this morning.
I am Larry Allen, also known as Edward, the Executive
Director of the Coalition. The Coalition appreciates the
opportunity to testify on the operations of GSA's Federal
Supply and Federal Technology Services. We have a background of
working very closely with the entire GSA, but especially with
these two entities.
While the Coalition represents companies in the technology
and service industries, we also have members in office
equipment, furniture, pharmaceutical and other commercial
areas. It is this diverse nature that gives us a unique
perspective to comment on the current operations of FSS and
FTS. When GSA was created, no one could have contemplated the
significant role information technology would play in the
operation of Government. Few could also have seen that both the
Government and commercial marketplaces would become service
dominated. GSA has had to adapt to these changes, and to its
credit, it has met each challenge and helped other Federal
agencies adapt.
At the start of the 1990's, GSA was under strong
consideration for dissolution. Today, however, the agency is
held up as an example of a Federal organization that has
thoroughly reinvented itself. It plays an important role in
helping Federal agencies get what they need at great values.
The leadership of FSS and FTS has been responsible for much of
this transformation.
Government procurement changed dramatically for the better
in the 1990's. It is important to note, however, that the
agency today is under assault from some who do not share this
view. It is the Coalition's belief that those who criticize the
competitiveness and efficacy of today's GSA are not looking at
the whole picture. Rather, they are using analytical tools
that, unlike procurement, have not changed. As a result,
critics are missing part of the important picture and are
devising perceived remedies for ills that do not exist.
Our members' experience show that reforms are working well.
The schedule's program is the best, most effective acquisition
tool that exists today. Competition has never been stronger,
and without efficient access to schedule contracts, acquisition
costs and lead times will rise. This is no way for the 21st
century Government to operate.
The Coalition believes that FSS and FTS both play important
roles in the acquisition process. Agencies turn to these
organizations daily to fulfill a variety of acquisition needs.
At the same time, critical management issues have arisen that
must be addressed. In short, the agency must continue to evolve
in order to continue its success.
The Coalition is concerned that GSA's substantial growth
has resulted in overlap between the two Services. Virtually
every technology solution FTS has contracted for through its
own contracts can also be found through FSS schedules. IT
services, products, seat management solutions and more are
available from large, medium and small schedule businesses.
Even FTS buyers acknowledge the wide array of schedule
offerings as FTS as among the largest customer of FSS
contracts.
There are duplicative contracts even within FTS. Many
companies have multiple FTS vehicles with similar offerings. A
review by the Coalition showed that seven companies have at
least two FTS contracts with some holding more than three.
Businesses are in business to do business and not chase after a
parade of overlapping contract methods. While you will rarely
have an individual company comment on this concern, privately
they tell us that the existing overlap takes valuable time away
from customer service, and inevitably increases acquisition
costs.
Another problem with duplicative services is customer
confusion. More than one Coalition member has likened the
current situation to the television show, What's My Line,
complete with the tag line, will the real GSA please stand up.
Some customer agencies have become so frustrated that they
chose to conduct their own procurement.
These observances are not meant to be criticisms of GSA
leaders. The senior GSA leadership is strong. Administrator
Perry, as well as Commissioners Bennett and Bates, are capable
leaders. We feel that some of the agency's operational
difficulties, however, stem from its organizational structure.
GSA maintains a strong central office and an organization of
regional headquarters. These dual structures make it difficult,
if not impossible, for the commissioners to make the best use
of their resources. The competition that exists between
regional offices and the central office and among differing
regions can be intense. Each region seems to operate on what is
perceived to be the best course of action for itself, and the
two management lines meet only within the GSA Administrator's
office. This structure, in our opinion, does not lend itself to
the efficient operation of the agency.
The need to eliminate duplication and increase efficiency
is especially critical when you look at the aging Federal work
force. A substantial number of managers either are or will
become retirement eligible over the next decade. Without a
reorganization, it may be impossible for GSA to continue its
efficient operation.
We believe that the existing overlap between FSS and FTS
must be eliminated, and that the key to a successful future of
the agency lies in making the best use of the combined
resources of each Service. One way to do this is to create an
associate administrator for acquisition operations at GSA. The
creation of this position and the endowment of it with the
ability necessary to make the best use of agency resources is
an important first step. Such a position will help create a
results oriented buying force that allows FSS and FTS to
eliminate duplicative programs and utilize the expertise of
each.
The Coalition has discussed these and other ideas with this
subcommittee, the General Accounting Office and GSA. We share a
common goal in making sure that our Government has a state-of-
the-art procurement system. And we look forward to continuing
our work with you and other stakeholders to attain this goal.
On behalf of the Coalition, thank you for the opportunity
to testify, and I look forward to your questions.
[The prepared statement of Mr. Allen follows:]
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Mr. Davis. Thank you very much.
Mr. Hutchins.
Mr. Hutchins. Thank you, Mr. Chairman, Mr. Turner, members
of the subcommittee.
My name is Dwight Hutchins. I'm a partner in Accenture's
Federal Government Strategy Practice.
I appreciate the opportunity to testify today on the study
Accenture is conducting for GSA which is aimed at enhancing
customer service and improving internal efficiencies.
Accenture, the world's leading management and technology
consulting organization, employs more than 75,000 people in 47
countries, and generated more than $11 billion in revenues for
fiscal year 2001. Accenture's U.S. Federal Government practice
services many of the Federal agencies and departments.
This January, GSA awarded Accenture a contract to study its
current performance, service offerings and service delivery. We
will be evaluating the Federal Technology Service and the
Federal Supply Service to determine how GSA can provide best
value to the Government and to the American taxpayer.
Accenture's 12 week study will be completed at the end of
April.
Accenture has a diverse set of credentials that we are
applying to this study. We are a global leader in providing
strategic planning and implementation assistance to the private
and public sectors. We serve 86 of the global Fortune 100 and
have served the majority of Federal departments and numerous
international organizations and governments worldwide. Our
Federal practice has deep experience in assisting Government
agencies with the planning and implementation of major agency-
wide transformation initiatives. Our strategy practice focuses
on engaging senior executives in the articulation of
organizational aspirations and the identification of best
practice solutions to help them achieve those aspirations.
Recent examples of our work include, for HUD and the
Department of Treasury, we've helped the CIOs at those
departments develop e-Government strategic plans and
organizational strategies that both GAO and OMB have ranked
among the best in Government. For the Department of Education,
Accenture developed and is helping to implement a modernization
strategy for the Office of Student Financial Aid that is the
basis for an agency-wide transformation effort.
The purpose of our study with GSA is straightforward. We
are to determine if GSA's current service offerings, processes
and organizational structure are providing best value to the
Government and the American taxpayer. We are also to help GSA
improve its ability to deliver value to customers by increasing
its understanding of customer needs, identifying high value
support services, and identifying internal improvement
priorities.
GSA asked Accenture to focus on its two main business
organizations, FSS and FTS. For each organization, we are
assessing offerings, business processes and procurement
activities and providing recommendations for improved
performance and cost efficiencies. GSA requested that Accenture
focus particular attention on the potential overlap between FSS
and FTS in information technology and telecommunications. We
are using proven methodologies supported by structured
analytical tools and business best practices. Our 90 day study
at GSA comprises three phases: customer and market analysis,
internal capabilities assessment, and improvement strategy
development.
In the first phase, we focused on GSA's customers in the
Federal technology market. This phase addressed two key
questions: What do customers need? Why are customers using or
not using GSA's services? The objective was to understand the
market conditions surrounding Federal technology services,
including an analysis of customers needs, competitor offerings,
substitutes and business value. The analysis involved numerous
interviews with GSA senior executives and managers, customers
within Federal agencies and industry partners. It also involved
market research and an assessment of the value proposition of
GSA services.
In the internal capabilities phase, we identified areas of
potential improvement within GSA. The objective was to
understand GSA's strengths and general improvement needs
relative to other procurement options available to the
Government. During this phase, we augmented our interviews with
assessments of internal data on effectiveness and efficiency,
and conducted a workshop with key GSA executives to increase
understanding and facilitate a discussion of GSA's capabilities
and needs.
In the final phase, we're helping GSA executives develop an
improvement strategy. The objective is to develop actionable
strategies to improve GSA's performance. To develop the
improvement plan, we're reviewing best practice organizational
design models and recommending solutions based on the
opportunities and challenges our study has identified. These
proposed performance improvement strategies were the focus of a
second executive workshop that was held earlier this week.
After synthesizing the results of the workshop, we will develop
an integrated plan for GSA. Upon completion of the study, we
will provide GSA with program management and implementation
services, as needed and requested, to achieve the identified
goals and improvements highlighted by our analysis.
The 90 day project began on January 22nd and will be
completed on April 30th. The final results will be delivered to
GSA at the close of the project.
Mr. Chairman, thank you again for the opportunity to
testify today on the approach Accenture is taking to determine
how GSA can enhance its service to customers and improve
internal efficiencies.
[The prepared statement of Mr. Hutchins follows:]
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Mr. Davis. Thank you very much.
Mr. Allen, you are in a great position, not representing
any particular company, so you can say whatever you want.
That's good. To address concerns raised by your organization
and others with the overlap, duplication of FSS and FTS, GSA
has commissioned your study. How do you envision the outcome?
What would you like the outcome of this study to show?
Mr. Allen. I think one of the things we would like to see
come out of this, and I was made very hopeful by Mr. Perry's
testimony, is that we would find a way for the business lines
of FSS and FTS to work together to provide total solution to
GSA customers. That would be perhaps a cross-sectional team of
FTS and FSS elements that works together to make the most use
of each agency.
What we've seen in the current situation is that sometimes
you will have one organization promote its solution at the
expense of the other, and they may not even make the customer
aware that within the same agency, there's another program that
perhaps might be a slightly better fit. I think if we can
eliminate those instances and have them working together as one
GSA, we'd all be better off.
Mr. Davis. You say businesses are in business to do
business, not to chase after a continuing parade of duplicative
contracting methods. Obviously a sophisticated buyer who
understands this, the more options they have, they can set a
match. But that takes a lot of training, a lot of experience
and frankly, from the people I deal with, not everybody is a
sophisticated buyer on this. I guess you're getting it, the
occasional and the mid-level buyer who just can't somehow
negotiate this maze that they have to work their way through of
duplication.
Do you think there are too many different contracting
vehicles, both within GSA and outside the agency? And do you
believe that the proliferation of fees for service entities
offering government-wide contracting vehicles help firms
looking to do business with the government or hurts them by
increasing their cost of doing business and diluting the
government market?
Mr. Allen. Good questions. The Coalition represents over
330 member companies, most of them in the information
technology and professional services areas. What our members
tell us on these accounts that you asked about is that the
answer is not as easy to arrive at as you might hope. Generally
they tell us that the right number of contract methods falls
somewhere between one and less than we have now. And I think
there is some frustration among some of our member companies
who have spent considerable amount of resources on multiple FTS
vehicles with the need to feel like they are being responsive
to various FTS agencies when they're not really sure what type
of business they're going to get out of it.
In most cases, the companies involved have done pretty
well.
Mr. Davis. It's like a hunting license, right?
Mr. Allen. Yes, sir. But in other cases, we've had
companies go to great lengths to obtain contracts, only to see
very little if any business. That is, as you alluded to, not by
any means reserved to GSA. It is a phenomenon that is
Government-wide. Companies tell us that they chase down
difficult and myriad contract vehicles on the hope that the
next one will be the one that brings in the business and
develops the relationships they want to develop. Of course,
after a while, when some of them don't pan out, they've sunken
their resources in. And at the end of the day, the company is
going to find a way to recover what its investment has been. So
yes, I think in the long run, the Government does pay the price
for both diluting its contracting power and increasing the
overhead to contractors by having as many vehicles as it has
today.
Mr. Davis. You have so many vehicles and so many people on.
But in point of fact, in some of the other hearings we've heard
some of the largest producers of IT products in the world don't
sell to the Government still. I think you want to try to bring
them in. And there are a lot of problems with that. Some of
them go back to the Bayh-Dole Act and other issues of copyright
and trademark protection and the like. But it's difficult for a
lot of companies in the old mold to understand how this works.
It used to be you had your bookings, you'd go to the
marketplace with your bookings, bookings don't mean anything
now for the most part, because everything is competed with
regularity. As I said, it's like a license to hunt in these
areas.
Mr. Allen. Right.
Mr. Davis. It brings my question: You indicated that
companies spend anywhere from tens of thousands to over $1
million to respond to a single FTS solicitation. That's a lot
for a hunting license, basically.
Mr. Allen. Yes, it is.
Mr. Davis. Do you have any suggestions how such costs could
be reduced or avoided from your perspective?
Mr. Allen. One of the things we like to see is have there
be fewer vehicles. And again, this isn't unique to within GSA,
it just happens that GSA is the focus of our hearing this
morning. If there are fewer vehicles, then contractors will
incur fewer costs in having to run down each one.
We also think that the further implementation of
technology, electronic Government, elctronic contracting will
probably be a great cost savings in this process.
Mr. Davis. It doesn't cost that much to get on the FSS
Schedule, does it?
Mr. Allen. Not usually, no. There's a process that people
have to go through and fill out the paperwork. But it's not the
same sort, usually it's not the same sort of technical
proposal, the depth of which can really run into the project
management cost.
Mr. Davis. Right. And I'm not sure, but looking at some of
these other Schedules out there, a lot of these Schedules
aren't that expensive to get on. Now, to get onto a GWACs and
these others, it costs a lot of money sometimes to go through
all that. As you say, there are so many different purchasing
options at that point for the government, companies may decide
they don't want to participate everywhere, because it's an
overhead cost that you have to absorb.
I think I understand where you are. I have more questions,
but I'm going to yield to Mr. Turner and let him ask some
questions for a few minutes.
Mr. Turner. You go ahead, Mr. Chairman.
Mr. Davis. Thank you.
You stated that the overlap between the Federal Supply
Service and the FTS has grown so over the years that Federal
buyers and vendors are not sure which entity is the real GSA.
Given this state of affairs, do you think that the creation of
a new position of associate administrator with authority over
both of them could be an option? Mr. Perry said it was an
option.
Mr. Allen. Yes, sir, in fact, we recommended the creation
of a position, both in our testimony this morning and in a
letter we sent to Mr. Perry in October 2001. The two entities
today, the commissioners of each Service we feel do a fine job.
The problem that they have is that they are not really fully
empowered to manage their agencies because there is a regional
power structure within GSA as well. What we are envisioning by
the creation of an associate administrator position is someone
within the office of the Administrator who will be able to deal
with the day to day management issues that arise because of
those conflicting organizational structures, making the best
use of each.
What we said in our prepared remarks is that right now, the
only place that all those organizational structures come to a
head is in the office of the Administrator. As a practical
matter, given its current staffing capabilities, staffing
levels, they can only really handle the big macro issues when
major conflicts develop. By creating this position, you get a
little bit better day to day management.
Mr. Davis. My last question: Would you agree that since
Clinger Cohen the whole operation works a lot more efficiently
for the taxpayer?
Mr. Allen. Oh, absolutely, yes, sir.
Mr. Davis. And that both these agencies, for government
agencies, do a pretty good job? We're just talking about taking
it to the next level?
Mr. Allen. Absolutely, Mr. Chairman. There is no question
that GSA as an agency today is viewed very much more favorably
and is a much stronger agency than it was prior to Clinger
Cohen. The current management does a fine job and we are
talking about making it even better.
Mr. Davis. I agree with that. I don't want to be beating up
on them, because when you compare it with other agencies, in
particular, I think they do a great job. But we can always try
to do better. We try to do better, that's our job, is to
oversee that.
Mr. Allen. That's right.
Mr. Davis. Mr. Hutchins, let me ask, I'm tempted to ask you
preliminarily what do you think in your study, but I'm not
going to do that. I think you want to get everything in. So I'm
just going to kind of get around it a little bit with three
quick questions. GAO found there is an overlap within FSS and
the FTS structure, but they didn't find a consensus among
vendors or user agencies as to whether the current structure is
beneficial or not. Is this consistent with your findings, that
there's no consensus, that it depends on who you talk to?
Mr. Hutchins. That's right, Mr. Chairman. We've talked to
over a dozen Federal agencies and a dozen major vendors that
are on the schedules or in the contracts. There is a wide
variety of opinion.
Mr. Davis. One of the goals of your study is to determine
if GSA structure is providing best value to the Government and
the taxpayer, whatever best value is. I think we have an idea
of what that is. Could you share with us the criteria you would
use in best value, in that determination?
Mr. Hutchins. Our criteria falls along two lines. We found
this out during the workshops. That is, a combination of
ensuring that every customer that GSA serves is able to deliver
on their aspirations with regard to their technology buys.
Mr. Davis. Gets the product they want, in other words.
Mr. Hutchins. Get the product they want, but as Mr. Perry
said, ultimately to get an IT solution that enables their
agency to achieve its mission. So GSA is looking past just the
purchase and making sure that the money they are spending, the
taxpayer money they are spending, actually delivers value. The
other part of it is, given that GSA offers so much value to
Federal agencies, to make sure that they are making that
available to as many agencies as needed.
Mr. Davis. Great. As you know, the constant debate up here
is, do we want to have everything run by central rules and
regulations on every procurement to make sure that you have all
of these protections, or do you want to trust the buyers out
there with these agencies, given appropriate training, to go
out and get what they need. They are often in conflict. I just
remember so many of the years when we would have page after
page of rule or regulation that drove the outcome. And you'd
end up certainly meeting the criteria, but you didn't get the
product you needed at the end of the day. The goal, I think,
ought to be, as you stated, to make sure that they can fulfill
their mission and get the product that fulfills their mission
and have the flexibility and the contracting vehicles to do
that. I think we've come a long way over the last 6 or 7 years.
But I think in the hearing today we're trying to see how we
can do a better job. Because there is still, when you look at
saving money, a lot of waste in Government on the procurement
side, although a lot less than there was. I just would say
that's so because you've got the lawyers out of it, to a great
extent. Any time you're not giving to the lawyers, that means
somebody benefits. [Laughter.]
Last, you noted in your statement that during the progress
of the study you've had extensive engagements with senior GSA
executives and managers. Have you found them to be pretty open
to suggestions for change or do you see any barriers within GSA
to implementing the recommendations?
Mr. Hutchins. They've been very open to the ideas and
generating ideas. We've found them to be very committed and
aggressive at making GSA a better place.
Mr. Davis. Yes, I think some of them, we lose sight, are
extraordinary public servants who want to do the right thing.
They have been pretty innovative in some of the things they
have come up with over the last few years. So yes, I'm hopeful
that when the study comes through that we can make this even
better.
Mr. Turner.
Mr. Turner. I just had one. Mr. Allen, is there a trend
toward more or less litigation in this particular area among
contractors and the Government?
Mr. Allen. We've seen over the last decade with the
procurement reforms put into place a market trend toward less
litigation. We think that is very beneficial to the process. It
reduces procurement lead times, it reduces the costs associated
with acquisition, and it has the happy consequence of getting
the Government today's technology today.
Mr. Turner. Thank you, Mr. Chairman.
Mr. Davis. Thank you very much.
Before we close, I want to take a moment to thank everybody
for attending today's hearing. I want to thank the witnesses,
and Congressman Turner, I want to thank you, thank Mr. Schrock
and Ms. Davis who are upstairs at a briefing our full committee
is doing now, for participating. I want to thank our staffs for
organizing this, I think it's been very productive. The record
will remain open, if any one has comments, for the next 10
days.
Thank you very much.
[Whereupon, at 10:47 a.m., the subcommittee was adjourned,
to reconvene at the call of the Chair.]
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