[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]





 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
____________________________________________________________________________
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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.]
    [Additional information submitted for the hearing record 
follows:]

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