[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]





  SERVICE ORIENTED STREAMLINING: RETHINKING THE WAY GSA DOES BUSINESS

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 16, 2005

                               __________

                           Serial No. 109-11

                               __________

       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

                                 ______

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
GINNY BROWN-WAITE, Florida           C.A. DUTCH RUPPERSBERGER, Maryland
JON C. PORTER, Nevada                BRIAN HIGGINS, New York
KENNY MARCHANT, Texas                ELEANOR HOLMES NORTON, District of 
LYNN A. WESTMORELAND, Georgia            Columbia
PATRICK T. McHENRY, North Carolina               ------
CHARLES W. DENT, Pennsylvania        BERNARD SANDERS, Vermont 
VIRGINIA FOXX, North Carolina            (Independent)
------ ------

                    Melissa Wojciak, Staff Director
       David Marin, Deputy Staff Director/Communications Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on March 16, 2005...................................     1
Statement of:
    Hewitt, Thomas, CEO, Global Government, on behalf of the 
      Information Technology Association of America; Vic 
      Avetissian, Corporate Director, Northrop Grumman Corp., on 
      behalf of the Contract Services Association; Mike Davison, 
      director & general manager, Canon Government Marketing 
      Division, Coalition for Government Procurement; Elaine 
      Dauphin, vice president, GSA programs, Computer Sciences 
      Corp., on behalf of the Professional Service Council; and 
      Richard Brown, president, National Federation of Federal 
      Employees..................................................    51
        Avetissian, Vic..........................................    60
        Brown, Richard...........................................    90
        Dauphin, Elaine..........................................    84
        Davison, Mike............................................    68
        Hewitt, Thomas...........................................    51
    Perry, Stephen, Administrator, U.S. General Services 
      Administration, accompanied by Donna Bennett, Commissioner, 
      Federal Supply Service; and Barbara Shelton, Acting 
      Commissioner, Federal Technology Service; Deidre Lee, 
      Director of Defense Procurement and Acquisition Policy, 
      U.S. Department of Defense; and Eugene Waszily, Assistant 
      Inspector General for Auditing, U.S. General Services 
      Administration.............................................    12
        Lee, Deidre..............................................    31
        Perry, Stephen...........................................    12
        Waszily, Eugene..........................................    31
Letters, statements, etc., submitted for the record by:
    Avetissian, Vic, Corporate Director, Northrop Grumman Corp., 
      on behalf of the Contract Services Association, prepared 
      statement of...............................................    62
    Brown, Richard, president, National Federation of Federal 
      Employees, prepared statement of...........................    93
    Cummings, Hon. Elijah E., a Representative in Congress from 
      the State of Maryland, prepared statement of...............   108
    Dauphin, Elaine, vice president, GSA programs, Computer 
      Sciences Corp., on behalf of the Professional Service 
      Council, prepared statement of.............................    86
    Davis, Chairman Tom, a Representative in Congress from the 
      State of Virginia, prepared statement of...................     3
    Davison, Mike, director & general manager, Canon Government 
      Marketing Division, Coalition for Government Procurement, 
      prepared statement of......................................    71
    Hewitt, Thomas, CEO, Global Government, on behalf of the 
      Information Technology Association of America, prepared 
      statement of...............................................    53
    Perry, Stephen, Administrator, U.S. General Services 
      Administration, prepared statement of......................    14
    Waszily, Eugene, Assistant Inspector General for Auditing, 
      U.S. General Services Administration, prepared statement of    33
    Waxman, Hon. Henry A., a Representative in Congress from the 
      State of California, prepared statement of.................     7

 
  SERVICE ORIENTED STREAMLINING: RETHINKING THE WAY GSA DOES BUSINESS

                              ----------                              


                       WEDNESDAY, MARCH 16, 2005

                          House of Representatives,
                            Committee on Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:21 a.m., in 
room 2154, Rayburn House Office Building, Hon. Tom Davis 
(chairman of the committee) presiding.
    Present: Representatives Davis of Virginia, Shays, 
Gutknecht, Souder, Platts, Westmoreland, Foxx, Waxman, 
Cummings, Kucinich, Davis of Illinois, Watson, Lynch, 
Ruppersberger, Higgins, and Norton.
    Staff present: Ellen Brown, legislative director and senior 
policy counsel; Rob White, press secretary; Drew Crockett, 
deputy director of communications; Edward Kidd, professional 
staff member; John Brosnan, GAO detailee; Teresa Austin, chief 
clerk; Sarah D'Orsie, deputy clerk; Mark Stephenson, minority 
professional staff member; Earley Green, minority chief clerk; 
and Jean Gosa, minority assistant clerk.
    Chairman Tom Davis. The committee will come to order. Good 
morning, and welcome to the Government Reform Committee's 
oversight hearing on restructuring the General Services 
Administration's operations, particularly its Federal Supply 
Service [FSS], and the Federal Technology Service [FTS], in 
order to meet the demands of the modern government market and 
to address GSA's management challenges.
    GSA each year buys products and services from the private 
sector worth well over $30 billion and resells them to Federal 
agencies using the FTS and the FSS revolving funds. Under FSS, 
Federal agencies, and in some cases State and local 
governments, can deal directly with private sector vendors who 
make their products available on the FSS Schedule, which is 
managed by GSA. Under FTS, GSA plays a more active role by 
acting as a third party advisor for the Federal agency in 
acquiring telecommunications and information technology goods 
and services. Fees collected from customer agencies are the 
main source of funds for both programs.
    While the bifurcated system may have made sense two decades 
ago when IT investments were a relatively new phenomena, 
technologies such as laptop computers, cell phones, and e-mails 
are now as ubiquitous with office supplies as are desks and 
phones. Two separate buying organizations operating out of 
different funds has become a barrier to coordinate acquisition 
of services and the technology needed to support the total 
solutions agency customers demand. As a result, GSA's 
leadership, the Office of Management and Budget, and I have 
been looking into legislative and administrative options to 
consolidate FSS and FTS into a single entity operating out of a 
unified fund, providing Federal agencies with a one-stop shop 
to acquire all of their goods and services.
    Today's hearing will build on evidence developed in prior 
hearings held by the committee on structural and management 
changes facing GSA operations in today's market. Also key are 
recent revelations of contract management challenges in FTS 
exposed by GSA's Inspector General reports. Those reports 
reveal weaknesses in the GSA's management control over its far-
flung regional offices.
    As the Government entity charged with providing best value 
solutions for customer agencies and taxpayers, I expect GSA to 
be compliant with applicable law, fiscally responsible, and 
responsive to concerns from both the private and public 
sectors. We expect GSA to lead the Government in the 
acquisition of solutions that capture the most current 
technology available in today's market. Along those lines, I 
want to commend GSA's recent efforts to generate in-house 
discussion about the most effective way to streamline its 
operations. I also want to commend GSA for proactively getting 
in front of some of the challenges facing the agencies that are 
identified in IG reports.
    I hope that through this hearing we will be able to get a 
clearer picture of how GSA is addressing its management 
challenges in the evolving technology marketplace. I intend to 
use the information we gather today along with some ideas of my 
own to craft a bill that will ensure that the structural 
reforms that we create are memorialized in GSA's organic 
legislation. I envision legislation that will amend title 40 of 
the U.S. Code to: meld the current General Supply and 
Information Technology Funds into a single Acquisition Services 
Fund that will combine the positive attributes of both of the 
current funds; create within GSA a single Federal Acquisition 
Service; provide for appointment and direct control by the 
Administrator of Regional Administrators; and establish 
Government-wide policies aimed at recruiting and retaining 
experienced acquisition staff in all Federal agencies whose 
mission will be to ensure that Federal acquisitions are as 
cost-effective as possible.
    In addition to our GSA witnesses, we will be hearing from 
Ms. Deidre Lee, representing the Department of Defense, GSA's 
largest agency customer. GSA's IG is also with us today to 
provide an update on their work in the regions. We will hear 
from a union representative. Finally, we will hear from private 
sector witnesses who work with GSA's FTS and FSS on a regular 
basis. We also invited Professor Steve Kelman of Harvard's 
Kennedy School of Government to appear, but he is unable to 
attend because of teaching obligations, but we have his 
statement available at the table.
    [The prepared statement of Chairman Tom Davis follows:]

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    Chairman Tom Davis. I would now recognize the distinguished 
ranking member, Mr. Waxman, for his opening statement.
    Mr. Waxman. Thank you, Mr. Chairman.
    Today's hearing on the Federal Technology Service and the 
Federal Supply Service will examine the proposed merger of 
these two components of the General Services Administration. 
One of the principal functions of the Government Reform 
Committee is to ensure that the Federal Government operates as 
effectively and efficiently as possible. The members of our 
committee take that responsibility very seriously, and this 
hearing will hopefully help us further that goal.
    I also want to thank the chairman for agreeing to include a 
number of witnesses suggested by the minority.
    The Federal Supply Service was created in 1949 to provide 
an economic and efficient system for the procurement and supply 
of goods and services to Federal agencies. One way it does this 
is through the Schedules Program which set up long-term 
Government-wide contracts with commercial firms for commercial 
goods and services that can be ordered directly from the 
contractor or through FSS. The Schedules Program provides 
customer agencies with benefits of volume discount pricing, 
lower administrative costs, and reduced inventories. It is a 
largely Washington-based self-service type of operation for 
Federal agencies.
    The Federal Telecommunications Service offers agencies a 
range of information technology and telecommunications products 
and services on a number of contract vehicles, including the 
Schedules run by FSS. Its focus is more oriented toward 
providing full-service solutions for IT telecommunication and 
professional services. FTS is also more regionally based, with 
offices dispersed throughout the country.
    Given the differing structure and goals of these two 
services, they don't necessarily seem like a natural fit to me. 
Other observers have cautioned that merging the two services 
could hurt the procurement of information technology because 
without a service exclusively dedicated to technology, there 
will be less emphasis on it.
    While I have kept an open mind on the question of 
restructuring GSA, I am somewhat troubled by the process by 
which it has been proposed. The President's budget includes 
language to merge the two services and the revolving funds 
under which they operate. Yet, I am unaware of any considered 
analysis having been done to demonstrate whether these two 
units should be merged in the first place. All of the 
discussion and now considerable effort going on at GSA is 
currently focused on how to merge the two services, and not 
whether they should be joined.
    Three years ago, GSA commissioned a study by an outside 
expert to look at duplication and overlap between FSS and FTS. 
The recommendations of that study led to a realignment of 
certain functions and duties between the two services. GSA has 
maintained that all of the recommendations of that study have 
in fact been addressed, so it is not even clear that 
duplication continues to exist.
    As I said, I will keep an open mind on the proposed merger, 
but I expect more detail and a much clearer explanation of the 
benefits of this proposed merger before I can wholeheartedly 
support it.
    Thank you, Mr. Chairman. I look forward to hearing from our 
witnesses.
    [The prepared statement of Hon. Henry A. Waxman follows:]

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    Chairman Tom Davis. Thank you very much.
    Members can have 7 days to submit opening statements for 
the record.
    Anyone else feel they need to make a statement now? Ms. 
Norton.
    Ms. Norton. Thank you very much, Mr. Chairman. And I 
applaud you for looking closely at this proposed merger.
    I will be interested in looking at this merger in the way I 
think all moving blocks around ought to be viewed: first, in 
light of function and then whether structure fits function. I 
am interested in whether or not the merger follows a business 
model that plainly improves the functioning of both FTS and FSS 
as we now know it. I certainly buy the notion that purchasing 
personal technologies like laptops and cell phones has become 
more and more like purchasing personal services and products. 
But there is a big difference between purchasing technology and 
purchasing paper, and no consolidation will erase that. Indeed, 
if anything, purchasing various kinds of technologies become 
more and more highly specialized. Each year I know less about 
how to deal with new offerings.
    GSA, therefore, has to be understood for what it does, not 
only as a kind of third party that helps agencies to purchase. 
It has an important role in enabling agencies, particularly 
smaller agencies, to take advantage of somebody's advice before 
they go out into the market. I will be very interested to know 
how that function is going to continue. And, frankly, I could 
see a situation where we blog these things together, maybe for 
budget reasons--I am not sure that function has driven this--we 
blog them together and then after they were together, they 
essentially just aggregated anyway, based on the need for more 
and more expertise, especially in the technology sector.
    As always, if somebody is going to move parts of an agency 
around, the question for me is will the taxpayer benefit? Is 
there a functional benefit for the agency; will they do it 
better and will they do it cheaper?
    Thank you very much, Mr. Chairman.
    Chairman Tom Davis. Thank you very much.
    We will now recognize our first panel. We have the 
Honorable Steve Perry, the Administrator of the U.S. General 
Services Administration, accompanied by Ms. Donna Bennett, the 
Commissioner from the Federal Supply Service, and Barbara 
Shelton, the Acting Commissioner of the Federal Technology 
Service. Welcome.
    We have Ms. Deidre Lee, the Director of Defense Procurement 
and Acquisition Policy at the U.S. Department of Defense. 
Welcome back Dee.
    And Mr. Eugene Waszily, the Assistant Inspector General for 
Auditing, U.S. General Services Administration.
    It is our policy, as you know, that we swear you in before 
you testify, so if you would rise and raise your right hands.
    [Witnesses sworn.]
    Chairman Tom Davis. Mr. Perry, we will start with you, and 
then move to Ms. Lee and Mr. Waszily. And if Ms. Bennett or 
Shelton, if you want to make a statement, fine, but I think you 
are here as much for questions as anything else. But feel free.
    Steve, we will start with you. Thanks for being here. 
Thanks for your leadership at GSA, as well.

   STATEMENTS OF STEPHEN PERRY, ADMINISTRATOR, U.S. GENERAL 
    SERVICES ADMINISTRATION, ACCOMPANIED BY DONNA BENNETT, 
  COMMISSIONER, FEDERAL SUPPLY SERVICE; AND BARBARA SHELTON, 
 ACTING COMMISSIONER, FEDERAL TECHNOLOGY SERVICE; DEIDRE LEE, 
 DIRECTOR OF DEFENSE PROCUREMENT AND ACQUISITION POLICY, U.S. 
DEPARTMENT OF DEFENSE; AND EUGENE WASZILY, ASSISTANT INSPECTOR 
   GENERAL FOR AUDITING, U.S. GENERAL SERVICES ADMINISTRATION

                   STATEMENT OF STEPHEN PERRY

    Mr. Perry. Thank you, Mr. Chairman. Mr. Chairman, members 
of the committee, we appreciate this invitation to discuss with 
you the subject of improving performance at GSA by reorganizing 
and consolidating our Federal Technology Service and our 
Federal Supply Service.
    We agree with the view that organizations like GSA, who 
desire to achieve high performance and continuous improvement 
should periodically review their operations and review their 
operational or organizational structures in order to identify 
and implement improvements where possible. We believe that 
there are in fact operations in FTS and FSS that can be 
accomplished more effectively, and that the current structures 
of those two organizations can be streamlined to improve our 
performance in meeting the needs of our customer agencies in 
terms of their requirements for excellent acquisition services 
and best value for the American taxpayer.
    Consequently, GSA is in the process, as you know, of 
developing a detailed action plan to accomplish the operational 
and structural changes necessary to reorganize and consolidate 
FTS and FSS. This action I think is in line with GSA's mission 
to provide best value services to Federal agencies; it is in 
line with principles outlined in the President's budget or 
management agenda to improve performance of all Federal 
agencies; and it is in line with this committee's commitment 
for efficiency and effectiveness in Federal Government 
operations.
    I would like to emphasize just a few points about our work. 
First, this initiative to reorganize and consolidate FSS and 
FTS is designed to strengthen GSA's capability to meet 
increasing Federal agency requirements for excellence in 
acquisition of information technology, telecommunications, and 
other products and services. As we all know, Federal agency 
procurements are increasing every year. Agencies must be able 
to continue to rely upon GSA to meet their increasing 
requirements for acquisition services in order to avoid the 
need for each of them to place more and more of their budgets 
into resources that duplicate the acquisition activities at 
each Federal agency throughout the Federal Government.
    Second, this initiative will make it easier for Federal 
agencies and for industry contracts to use GSA's acquisition 
processes. Our work will include extensive outreach efforts to 
obtain the input and collaboration of customer agencies and 
industry contractors.
    Third, we will enhance the efficiency of GSA's 
administrative support functions by consolidating certain 
accounting and operational systems activities that are now 
performed separately in both FSS and FTS. Reorganizing and 
consolidating these two services into one will break down 
artificial barriers to economies of scale.
    Another point is that the reorganization and consolidation 
work that we are discussing here today is now underway. A 
steering team and several task force teams of GSA managers and 
subject matter experts have begun their fact-based analysis to 
identify areas of opportunity and to develop specific proposed 
changes and solutions. These teams are scheduled to complete 
the first draft of their detailed reorganization/consolidation/
implementation plan by May 31, and complete the final plan by 
July. This will enable the implementation to begin in the very 
near future.
    As you pointed out, Mr. Chairman, there will be one 
legislative change needed to enable GSA to significantly 
streamline the administrative and financial management aspects 
of FTS and FSS operations by combining what is now two separate 
funds, one the General Supply Fund and two the Information 
Technology Fund into a single fund. A separate Information 
Technology Fund which was established about 20 years ago for 
the acquisition of technology, telecommunications, and related 
products and services, which is separate from the General 
Supply Fund, which is used for the acquisition of other 
products and services. The technology IT fund is no longer 
useful, and having two funds are administratively burdensome.
    Separate funds are no longer useful primarily because the 
acquisition and the use of information technology and 
telecommunication products and services have evolved into the 
acquisition of a total solution, that is, a mix of information 
technology hardware and software combined with telecom and 
other professional services that may be outside of IT. To 
enable our recordkeeping systems to be consistent with this 
evolution and the marketplace, the President's budget for 
fiscal year 2006 calls on Congress to provide GSA with the 
authority necessary to combine the two funds into a single 
revolving fund.
    Last, it is important that while GSA associates implement 
the changes necessary to accomplish the reorganization and 
consolidation of FSS and FTS, we must not lose momentum in 
other important initiatives, including Networx, which, as you 
know, is the Government-wide telecommunications procurement; 
and our ``Get It Right'' plan, where GSA and DOD and other 
agencies are working together to achieve excellence in Federal 
acquisition while achieving full compliance with Federal 
acquisition regulations and best practices.
    Again, I would like to thank the committee for its support 
of GSA's performance improvement initiatives, and all of us 
look forward to working with you.
    [The prepared statement of Mr. Perry follows:]

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    Chairman Tom Davis. Thank you very much.
    Dee, thanks for being with us.

                    STATEMENT OF DEIDRE LEE

    Ms. Lee. Mr. Chairman and members of the committee, thank 
you very much for having me here today as GSA's largest 
customer, I believe.
    As you know, the Department of Defense is the largest user 
of GSA Schedules and contracting service within both the 
Federal Supply Services and the Federal Technology Services. In 
fiscal year 2004 alone, FTS awarded over $6 billion on behalf 
of the Department of Defense for telecommunications, 
professional services, and information technology. DOD's use of 
FSS, Federal Supply Schedules, is even greater, with DOD 
spending approximately $7 billion on the Federal Supply 
Schedules last year.
    DOD receives quality support from GSA, and we expect that 
we will continue to receive that quality support however the 
reorganization is accomplished. And we will continue our mutual 
efforts toward improving acquisition.
    I would like to reaffirm DOD's commitment to working 
closely with Administrator Perry and the GSA team to improve 
our use of the Schedule contracts and to ensure that contracts 
awarded by GSA on behalf of DOD are proper and represent the 
best interest of the Government.
    And I would be happy to answer any questions.
    Chairman Tom Davis. Thank you very much.
    Mr. Waszily.

                  STATEMENT OF EUGENE WASZILY

    Mr. Waszily. Good morning, Mr. Chairman, members of the 
committee. I just have a few brief remarks to begin.
    We are firm supporters of merging the Federal Technology 
Fund with the General Supply Fund from a financial aspect. As 
Mr. Davis pointed out in his opening comments, there are far 
too many discussions about whether something is IT or non-IT, 
and it is ubiquitous throughout all of our operations, so we 
would like to eliminate that legislative barrier to the 
procurement activities. At the same time, we also see the 
possibility in the merger of the two services to provide some 
economies in the support activities underneath, although we are 
not strongly in favor of or opposed to the merger of the two 
organizations.
    But we are very strong in our belief that there are certain 
kinds of service and varying service offerings that are 
provided to the GSA customers to meet their specific needs, and 
that is what we would like to preserve. We do not particularly 
see that the service offerings of the Federal Technology 
Service are in direct competition with the Federal Supply 
Service. For the most part, we see the Federal Supply Service 
available for those clients who can define their requirement, 
it is well known and the contract is readily available to meet 
their procurement need. Those who need acquisition assistance 
or technical support, particularly in the technology area, we 
see that as the role of the Federal Technology Service.
    That said, there are really two points that I would like to 
make. One is that, as Mr. Davis raised, we have raised in our 
prior audit reports over the past few years some difficulties 
and some procurements that were not executed the way that we 
would like to see them occur. When I look at the program, I see 
three elements to it: customer service, helping the customer 
meet its mission, and then compliance with the rules, 
regulations, and economies in doing a sound procurement. It is 
only that last leg that we need to improve, and I particularly 
commend Administrator Perry and Ms. Lee for the ``Get It 
Right'' initiative. Our audits on a continuing basis have shown 
marked improvement over the last 2 years. We are heading in the 
right direction.
    That concludes my opening comments. Thank you.
    [The prepared statement of Mr. Waszily follows:]

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    Chairman Tom Davis. Thank you very much.
    Let me start the questioning.
    Ms. Lee, let me just ask. I know that there is growing 
pressure, not from DOD, but particularly from the Senate, that 
DOD avoid using GSA contract vehicles in favor of internally 
awarded managed contracts. That policy not only I think could 
be harmful to GSA, but also to the Department, in that the 
contracts would have fewer vehicles on hand to meet their best 
needs. A, does that pressure also apply to like NASA SOUP, NIH, 
Interior, or is it aimed at just GSA? How much does the 
Department currently rely on GSA contract vehicles? And B, 
could the Department handle its critical mission without GSA's 
help?
    I don't want to put you on the spot, but----
    Ms. Lee. Mr. Davis, as you know, we are the largest 
customer and GSA does provide us good support. I do not think 
we could execute the Department's mission sharply without them.
    Now, it is not that we haven't had our issues. One of the 
things we are doing at the ``Get It Right'' campaign is making 
sure that our people, as DOD people--and that is technical 
folks as well as our contracting people, because some of the 
money goes directly to GSA--that we make sure they understand 
the proper use of these vehicles; and GSA has been a wonderful 
partner in making sure that they help us reinforce those 
requirements.
    At the same time, it is not only GSA that DOD spends 
money--we call them assisting agencies. So I do have a program 
in place where DOD representatives will be going around and 
visiting the other assisting agencies. That does include NASA 
SOUP, it includes the Department of Interior and some other 
agencies that provide assistance to Department of Defense. And 
we will be asking for the same staunch support that we have 
gotten from GSA in making sure we use these vehicles properly. 
But we will continue to use them.
    Chairman Tom Davis. And as you take a look at all of these 
different Schedules that are out there, is there any concern 
there may be a proliferation of Schedules and that maybe some 
of the agencies involved don't have the kind of background and 
oversight that GSA does in administering them? Have you run 
into that?
    Ms. Lee. There are a good number of Schedules. My biggest 
concern is that our people know what is out there, what is 
available, and how to use them properly. And I do think that in 
many cases obviously the best structured business arrangements 
or the ones that people are aware of are the ones that are 
getting a lot of use. So we are going to go around and visit 
with these assisting agencies and try to make sure we 
rationalize those and have a good understanding of what is 
available.
    Chairman Tom Davis. OK.
    Mr. Perry, your statement I think sets forth in some detail 
GSA's plans to accomplish the operational and structural 
changes needed to transform GSA's FTS and FSS, but I didn't 
hear anything about the regional structure. Now, as I 
understand it, GSA has 11 regional offices today. The 
acquisition management exercise by the various regional offices 
was what was really called into question in the IG reports. Are 
you considering any changes in the number of regional offices 
or their functions or their control exercised by the 
headquarters at this point? Is that part of your thinking?
    Mr. Perry. Well, obviously in a comprehensive study of this 
type everything is on the table. At the same time, I think it 
is important to remember that one of the functions that GSA 
carries out, separate from its technology and supply 
acquisition, is the management of facilities, some 8,300 
facilities around the country, either Government-owned 
buildings or leased facilities. The physical facilities in the 
field really require GSA to have a presence at those locations 
where our customers are, and I would say primarily to provide 
them with physical workspace and lease those spaces, as well as 
maintain them. As an adjunct to that, in some instances it 
makes it convenient, if you will, to be able to place FTS or 
FSS people at those same locations.
    I would also point out that while we have 11 regional 
offices, and we do have 11 client support centers that service 
technology acquisitions, in some of our FSS areas we provide 
those customer services in a zone, and that is we don't have an 
FSS operation in every single region. So as we look at this, we 
will view that with a particular eye toward how we can best 
deliver the services that customers need.
    Chairman Tom Davis. As you know, you have almost 4,000 GSA 
associates working both FTS and FSS. Are you involving them in 
your thoughts and in the process?
    Mr. Perry. Yes. At this stage, we are at an early stage, 
but we have established a steering team of GSA managers and 
subject matter experts. We are in the process of establishing a 
number of special task forces which will involve many, many 
more GSA associates; and we will continue to involve GSA 
associates. Our outreach will also extend outside of GSA to 
customer agencies and industry contractors. But all of those 
entities will be involved in the discussions.
    Chairman Tom Davis. I have additional questions, but my 5 
minutes are up. I am going to recognize Mr. Waxman.
    Mr. Waxman. Thank you, Mr. Chairman.
    Mr. Perry, approximately 18 months ago this committee held 
a hearing on the realignment of certain duties between FTS and 
FSS. That hearing focused in part on a report done by Accenture 
for GSA on overlap and duplication between the two services, 
and recommendations for addressing that overlap. At that 
hearing you testified that you were pleased to announce that 
``each of those changes had been implemented and are fully 
operational.''
    Now, 18 months later, OMB and GSA have announced yet 
another major restructuring of FTS and FSS, so I am trying to 
gain an understanding of what prompted this push for a merger, 
Mr. Perry. Is there a senior level management review, a new 
business case scenario or other analysis or report that has not 
yet been made public that is driving this move toward a merger?
    Mr. Perry. Mr. Waxman, let me first comment on the report 
that was done some time ago. You are quite correct that what we 
looked at in that case was to see whether there were areas of 
what we called non-value-adding duplication that was occurring 
between the two that we could somehow eliminate by 
consolidating. And you are correct to point out that there were 
several areas that we found non-value-adding duplication that 
we have now combined, and I think quite successfully.
    The review that we have done more recently really looks at 
what are the various things that we might do to in fact expand 
our capability to meet the needs of our customer agencies.
    Mr. Waxman. So there has been another review?
    Mr. Perry. This was an internal management review, yes, 
just looking at the fact that many times we are not able to 
meet the needs of our customer agencies on a cycle time that 
they would require. I would even submit that some of our 
difficulties with respect to complying with Federal acquisition 
regulations was a result of workload and a result of not being 
able to focus to the extent we needed to on processing customer 
requests.
    Mr. Waxman. Let me ask you this. The senior level 
management review that you are referring to, may we have a copy 
of that?
    Mr. Perry. It is not a document, it is a series of 
discussions, starting with brainstorming, managerial 
discussions about what we might do, what options we might take 
into account. We are continuing that now under the auspices of 
a more formalized steering team and task force.
    Mr. Waxman. Thank you. The proposed merger was announced in 
the President's proposed budget for fiscal year 2006. Mr. 
Perry, who made the decision to press for a merger? Chairman 
Davis seems to be a proponent of the idea, but did this idea 
develop internally at GSA from FTS and FSS, or is it being 
driven from above?
    Mr. Perry. Mr. Waxman, I think I would have to answer the 
question all of the above. Certainly, we have heard from this 
committee and its chairman that this would be an area of 
interest, and there was a review that was done by the people at 
OMB, taking a close look at our budget, looking at some of our 
offices that appeared to them to be duplicative, and they 
brought that to our attention at the same time that we were 
looking at it to see whether we would drive toward a 
resolution.
    Mr. Waxman. I want to ask Ms. Lee and Mr. Waszily do either 
of you have any additional insight or information regarding 
what is driving the merger proposal?
    Ms. Lee. I am aware that there was some language in GSA's 
bill, but I don't know the origin of that.
    Mr. Waxman. Thank you.
    Mr. Waszily.
    Mr. Waszily. No, sir, I am not.
    Mr. Waxman. Thank you very much for your testimony.
    Thank you, Mr. Chairman.
    Chairman Tom Davis. Mr. Gutknecht.
    Mr. Gutknecht. Mr. Chairman, I would just say, if it is a 
good idea, I would be happy to take credit for it. You can 
share it with the administration. If it is a good idea, it is a 
good idea.
    I don't have any other questions, Mr. Chairman, though, so 
I would yield my 5 minutes back to you.
    Chairman Tom Davis. Thank you.
    Mr. Perry, the trend in government acquisition is toward 
more complex services and fewer products. How will the new 
combined Acquisition Services Fund help GSA better manage this 
trend?
    Mr. Perry. Well, let me just emphasize that this 
consolidation, reorganization, merger, whatever term we apply 
to it, is not a homogenization; it is not taking all of the 
acquisition activities we do today and spreading them paper 
thin in a homogenization sort of way so that we are not 
specialized to any extent. We will continue to have our 
business lines; we will continue to have areas of 
specialization. There will be part of the GSA organization with 
people who have the skills and competencies to particularly 
address very complex information technology or telecom 
acquisitions. Other areas will address the less complicated 
areas such as the acquisition of general supplies.
    But while those business lines would be separate so that 
there would be a proper focus on the customers and on the 
products and services involved, the overall management of it 
could be the same. That is the difference that we are making 
here.
    The other area of difference is that the support services 
that are provided to these business lines--today, for example, 
we have accounting happening in each of the services 
separately. We have the administration of the computer systems 
happening separately in two different organizations. 
Oftentimes, they come up with similar proposals. For example, 
some years ago both FSS and FTS had invested in developing a 
customer relationship management software. They were actually 
purchased from the same company, but they were two separate 
systems that did not work together.
    Now, one would argue that shouldn't happen, whether you are 
a separate organization or a combined organization. But in this 
case of having a combined management, we will be able to do a 
much better job of taking those kinds of opportunities and 
addressing them GSA-wide, as opposed to each service having to 
do its own. With the consolidation of the two funds, there will 
be even more opportunities for the financial operations and the 
systems operations to be combined or operated in a more 
efficient way.
    Chairman Tom Davis. Thank you.
    Let me just ask Mr. Waszily do you think that the 
reorganization efforts will impact ongoing GSA operations like 
Networx?
    Mr. Waszily. Networx I really don't know that much about, 
sir, so I can't comment on that.
    Chairman Tom Davis. OK.
    Mr. Waszily. As I was talking earlier, our particular 
concern going forward, as Mr. Perry was highlighting, our 
concern is the key functions and the key capabilities of GSA be 
retained. The structure, our sense of it the structure should 
be driven by the customer requirements. Certain activities need 
to be very close to the customer and there is constant contact; 
there are other activities that I think, once they are looked 
at, could probably be consolidated and perhaps be operated out 
of one specific point to cover worldwide. I think that customer 
requirements formulate the strategy and then the structure 
should fall from those two elements.
    Chairman Tom Davis. You note that you strongly favor the 
merger of the technology and supply funds.
    Mr. Waszily. Certainly the funds itself. We ran into, when 
we were conducting our audits, a lot of these issues; was this 
an IT purchase or wasn't it, and we started calling it the 
hanging chad issue. And we don't think that is really a good 
debate. The debate is whether or not we are making a sound 
procurement and it is getting to satisfy the mission in the 
most cost-effective and timely manner.
    Chairman Tom Davis. Now, you also indicate that it is 
important for the GSA to have a regional structure because you 
need to be close to the customers, the same thing that Mr. 
Perry said. Audit reports from your office showed acquisition 
mismanagement in most of these regions. What do you attribute 
that to and how do we solve that?
    Mr. Waszily. Yes, sir. That is a very good point. I think 
the one thing we are talking about here as far as structure and 
design of the agency, we are really talking the strategic. Most 
of the issues that we were reporting on regarding the 
deficiencies in procurement I would label as the tactical. To 
use sort of the football coach's vernacular, we need to go back 
to the basics, and we really need to do solid procurements. 
There were some lapses. A lot of the buildup, particularly in 
the FTS service programs, began in the 1998-1999 period. I 
think a little bit of that fever of the ``new economy'' sort of 
spilled into the program, and in many ways the program was so 
successful that it got ahead of itself. And I think it grew so 
large that it just didn't have the chance to catch up with the 
controls.
    As I mentioned, we have been doing a review of the program 
about every 6 months, and each successive review is showing 
continuing improvement.
    Chairman Tom Davis. Thank you very much.
    Mr. Lynch, did you want to say anything? I think Ms. Watson 
was next.
    Mr. Lynch. Oh, all right.
    Chairman Tom Davis. And what I was going to do, we are 
going to have a series of votes that is going to take about a 
half hour.
    Ms. Watson. This comment and question goes to----
    Chairman Tom Davis. Just a minute. Just a minute, Ms. 
Watson.
    What I was going to suggest is I will let Ms. Watson move 
ahead with her questions. If we have time for Mr. Lynch to get 
a question or two in, then I will turn it over to Ms. Norton, 
who can ask her questions. And at the end of that you can 
dismiss this group.
    Rarely do I turn this chair over to Ms. Norton. I hope she 
won't abuse it, but we have a pretty good relationship. But I 
think that way we will try to dismiss you and not keep you 
around.
    Go ahead.
    Ms. Watson. Mr. Chairman, thank you very much. And I will 
take my answer in writing.
    Chairman Tom Davis. OK.
    Ms. Watson. And then we can move ahead quicker.
    But this Committee on Government Reform examines the 
financial and performance management practice at Federal 
departments and Defense, and we plan to review the financial 
management at the Department of Defense, Homeland Security, and 
it goes on.
    This question is directed toward Ms. Lee. I would like to 
know, in seeking services and seeking contracts, do you always 
go out to bid, or do you make these decisions within the 
Department of Defense, and do you make them transparent? What I 
am seeking, do you always go out to bid or do you make a 
decision; and, if so, what is it based on? The bidding process 
gives a chance for several different businesses to have their 
services compared.
    And then I wanted to ask what is the relationship, then, to 
GSA, since you seem to operate independently at times. I just 
want to know what the practices are.
    You can put that in writing to me, since we have a call to 
the floor. And then you might want to consult with Mr. Perry 
and combine the response.
    Thank you so very much.
    Chairman Tom Davis. That will be fine. Thank you very much.
    Mr. Lynch.
    Mr. Lynch. Thank you, Mr. Chairman.
    I want to thank the panel as well for helping the committee 
with its work.
    Just from a customer standpoint, I am a firm believer that 
GSA needs to reform, so I might be out of step with some of my 
Democratic colleagues in that respect. But I definitely believe 
GSA is in need of reform. And that is just from me as a 
customer of GSA.
    What I would like to just ask of any of the panelists, and 
especially of Mr. Waszily, the statement here in your testimony 
regarding the organizational structure of GSA with respect to 
the proposed merger, it says what we would caution against is a 
structure popular among some conglomerate corporations in the 
1970's and shown over time to be ineffective. By this we mean a 
unified structure centrally controlled, rigidly imposing the 
same structure upon each of its business units and measuring 
them by the same set of metrics. That is what we want to 
caution against.
    But isn't that what we have right now? Isn't that what we 
have with GSA, a bureaucracy that largely reflects organization 
of times past and not necessarily reflective of modern 
technology and the needs of the customer?
    Mr. Waszily. Well, sir, I think we can certainly streamline 
what we have right now. What we were suggesting to guard 
against, we look at three major supply and acquisition 
structures that we have within GSA right now. We have the 
Multiple Award Schedules, one of our largest programs that is 
pretty much the customers can come in, tap into the program, 
and place their own orders. FSS is willing to help them and has 
come up with some innovative solutions, but they can also use 
it as a self-service vehicle. We also have the Global Supply 
system, which is a ready supply to move anywhere in the world 
on critical items. That type of system is different, it has a 
different set of metrics than does the Schedules program. And 
then we have the FTS programs, which are sort of, if you will, 
cradle-to-grave type of acquisition services, particularly in 
the technology area.
    And what we were suggesting was that we believe that we 
need to preserve those three types of programs, and they should 
be evaluated as standalone programs, because one set of metrics 
for all three of them would probably lead to misleading 
results. For example, the supply operation, dollar for dollar, 
costs more to maintain than say the General Supply Schedule and 
the Multiple Awards.
    Mr. Lynch. I know we are short on time here. Again in your 
testimony, sir, you reflect the fact that the dollar amount of 
sales has increased dramatically over the last few years, and 
that is some sign of success. I am not sure I buy into that 
rather simple reasoning.
    More to my point, has there been any diagnostic conducted 
by GSA to see what the attitudes and what the perceptions of 
your customers are regarding the services that they receive 
from GSA? Is there something really that goes out to your 
customer that says how do you think we are doing?
    Mr. Perry. Yes. If I may answer that question, sir.
    Mr. Lynch. Sure.
    Mr. Perry. We definitely do that. We do that on an annual 
basis in all of our service areas. We do a number of things. 
First of all----
    Mr. Lynch. I have never received one, and I would love to 
give my opinion of what I think GSA is doing for their 
customers, and I am just completely unaware of that.
    Mr. Perry. Then we will definitely do that.
    We ask very specific questions of people who are in GSA 
facilities or people who order GSA supplies or services what is 
the level of satisfaction they have with our service levels and 
suggestions that they have for our improvement, and we followup 
with each of those customers to make sure that is happening. 
Our customer satisfaction levels are not where we want them to 
be, but they are increasing annually. We do that.
    In addition, we have a number of structured reports--we 
just completed one recently--where we use a third-party. We use 
various third parties, but a different entity did this review 
for us, having more interviews. Instead of a paper survey, we 
used an interview situation with customers to understand where 
we are meeting their expectations and where we are not.
    Aside from those kinds of assessments, we also conduct what 
we call customer service visits, where either people from our 
national office or people from our regional offices meet with 
customers, their management teams, and we go through the 
spectrum of services we are providing for them today, have them 
identify for us where, again, we are meeting their 
expectations, where we are not. Most importantly, in those kind 
of discussions we talk about items that are on the horizon, 
strategic directions in which they are moving where they will 
need our assistance to acquire technology, what have you.
    And based on those customer service visits, we develop 
individual customer account management plans or actions plans 
that talk about what services we are going to deliver and who 
is responsible to do what by when. So that gives us a much 
better opportunity to focus in on individual customer needs and 
have customers hold us accountable for meeting them.
    Mr. Lynch. Well, I appreciate that. I just wish that the 
Members of Congress were part of that survey group that you 
reach out to, because we are actually elected by the taxpayers. 
We have a special status and a different perspective in 
representing taxpayers, so we might have some useful input into 
how you are doing your job, how efficient and how responsive 
GSA is operating, not only with respect to us, but also to your 
customer base as well, your other customer base.
    I am going to yield back to Ms. Norton, if that is all 
right. Thank you.
    Thank you, I appreciate it.
    Ms. Norton [presiding]. Thank you, Mr. Lynch.
    The chairman has generously allowed as how I might want to 
sit in his chair, but I decided not to do it, because if I got 
used to it, I might do a sit-in.
    This hearing is able to go forward for a reason that none 
of us should be proud of: we are not just saving time; I get to 
vote in this committee, I don't get to vote on the House floor, 
so I get to save the committee some time. Anyway, I am glad 
that I am useful at least in that respect.
    Before I ask a few questions to you, Mr. Perry, I would 
like to get on the record the Southeast Federal Center Plan. As 
you know, one of the most important things that another 
committee on which I serve where you report has been the 
breakthrough that the Southeast Federal Center Plan offers as a 
way to use Government profit to the greater benefit of the 
Government and return to the Federal Government. For months now 
we have been waiting for that plan, and it has been like 
waiting for Goudeau. It is coming, it is coming. Then we were 
told it is on the Administrator's desk. Yesterday we were told 
it was actually in the mail. So I said, well, fine, ask the 
Administrator to bring me a copy, and he can hand-deliver it.
    Since the plan has to be sent back to Congress before it is 
signed and finalized, could you tell me exactly where the 
Southeast Federal Center Plan is now as we speak, and could you 
give me a date? I won't ask you for a time, but I do want a 
date when it will be to the committee.
    Mr. Perry. Let me first say, madam, that the work that you 
did in sponsoring that legislation is notable, and we support 
it wholeheartedly. I saw the work that our National Capital 
Region folks and our outside developers did with respect to 
that plan some weeks ago, to be quite candid. I would have 
guessed that it had been delivered to you by now. I know that I 
signed off on it because I felt that it was very quality work. 
I have to admit to you I don't know what final checking had to 
be done----
    Ms. Norton. Who is above you, Mr. Perry? I thought you 
were--the legislation says after the Administrator has signed 
it, it shall be delivered to the Congress of the United States.
    Mr. Perry. Right. And we should be doing just that. I don't 
know. I can't sit here and tell you that I have the answer as 
to why it didn't happen as expected in that case, but I already 
talked to my chief of staff after you brought it to my 
attention this morning, and we are working on getting it to you 
as quickly as that can be done.
    Ms. Norton. Well, will you remind your chief of staff, or 
the OMB, or whoever has a hold of it, that the legislation says 
that after you sign off on the plan, and you now have, that it 
shall be delivered to the Congress, and not to anybody else?
    Mr. Perry. I certainly will.
    Ms. Norton. Thank you very much.
    As I noted, because of my own experiences in the Federal 
Government, I approach with some skepticism structure driving 
change. I think change ought to drive structure. And I say that 
because it was my burden to run an agency that had to be 
completely overhauled, the Equal Employment Opportunity 
Commission under President Carter. It was completely collapsed. 
And the first thing to think about, of course, is since 
obviously a new structure was needed, let us build this 
structure. We were very much afraid to do it that way because 
it had a backlog. So we wanted to do things like look at what 
is the cause of the backlog; what kind of system will keep a 
new backlog from forming.
    Out of that did come some structural changes. For example, 
the lawyers and the investigators were not in the same office. 
But only after we did that kind of analysis. This is going to 
be the import of my questions.
    Mr. Waszily talked about some duplication, duplication of 
administrative services. One wonders why, after so many years, 
that continued. Certainly the duplication, all kinds of 
duplication that you begin with in trying to bring change, 
whether or not through wholesale consolidation.
    I must conclude that the Getting it Right project didn't 
get it right enough. But I would have thought that is exactly 
what it did, it would take things that were duplicative--and 
administrative services is the most service--put them together, 
and then see whether or not the underlying services needed also 
to be changed. Is that what Getting it Right did, or what in 
the world did ``Get It Right'' that wasn't right enough do?
    Mr. Perry. Well, I think your description of how this 
should happen is a good description of how it is happening or 
has happened, that is, that structure isn't driving change, 
change is driving the structure. As we have done some of our 
work, even prior to what is called the ``Get It Right'' 
initiative, we could see that we were not, as I said earlier, 
meeting the requirements of our customer agencies. While our 
customer satisfaction rates are relatively high and increasing, 
they will tell you, including DOD will tell you, that we don't 
meet their expectations with respect to cycle time; we 
certainly did not meet their expectations with respect to 
compliance with acquisition regulations and documenting our 
files. Much of what we did----
    Ms. Norton. And that had to do with the fact that FSS and 
FTS were separate?
    Mr. Perry. It had to do with the fact that we had a method 
of operation which was not ultimately efficient. So what we are 
trying to do now is to say if you step back from that and say 
we are not meeting our expectations of our customers or our own 
expectations that we have for ourselves, what are some of the 
things that we might do in order to build our organizational 
capability to do a bigger, better job, to meet this oncoming 
need of increasing acquisition requirements? Among those 
things, one is to ask ourselves why do we have these two 
separate operations? What is the value that they are deriving? 
If we exploit the synergies that exist in those two separate 
operations and operate them as one, will we be able to 
accomplish more?
    So the reason I hesitate to use the term merger, which the 
chairman and others have used, is that typically the 
connotation in a merger situation is one where you have two 
organizations and the demand for services of those two 
organizations exceed their total capability, so you merge them 
and shed your excess capacity to match up capacity with demand. 
Our situation is different. We actually have more demand than 
we can handle at GSA as a whole. As a result, some agencies 
have to go elsewhere or do it themselves in terms of 
acquisition activities. We think that is wasteful from a total 
Government point of view.
    Our effort is to try to bring things together so that we 
actually increase our capacity or our capability to do more, 
and the reason for doing this is primarily driven by that 
reason.
    Ms. Norton. Well, increasing your capacity means that 
somehow the agency will have greater capacity simply by 
structure?
    Mr. Perry. Well, by the assignment of people, as opposed to 
having, as we do today, certain people in the global supply 
business calling on customers with respect to providing them 
with certain products and services, certain other people in 
commercial acquisition, to some extent, doing the same thing. 
We are saying aren't there ways in which we can exploit those 
synergies and find a way to do things on time and do it better, 
without any diminution of services, in fact, with an 
improvement in services?
    Ms. Norton. You have made something of a business case, 
which is of course what I was looking for. And perhaps you 
could provide this for the record, examples of improvements 
from agencies' point of view would be just very useful for me 
to have. I don't know if Ms. Lee has examples of how going 
somehow to a consolidated GSA, FSS, FTS would help or not, but 
that is what I am lacking now.
    Do you have examples?
    Ms. Lee. No, ma'am. Specific examples. One of the things 
that we hear, and it is very anecdotal, is that people get good 
service from FTS, so in some cases where they could have gone 
directly to the Federal Supply Schedule, which is a different 
rate of cost to the agency to use, they go to FTS because that 
is the people they know. So perhaps if Administrator Perry 
finds that is a good solution, then you could still go to the 
same service and they could direct the customer a little bit 
more clearly as to where they should attain their acquisition 
support. That is the kind of example that I have heard.
    Ms. Norton. Ms. Shelton, did you have an example you wanted 
to give?
    Ms. Shelton. I was just thinking that a couple of years ago 
I was a customer. Although I was a regional administrator in 
Philadelphia, I was a customer for both FTS and FSS. I was 
having a conference room redone; I needed furniture and I 
needed video teleconferencing equipment. I had to have a number 
of what I thought were extraneous meetings because the 
furniture is handled by FSS and the video conference equipment 
is handled by FTS. Because of the two different funding 
streams, I had to have accounting people who understood the FSS 
accounting and people who understood the FTS accounting. So 
just for me----
    Ms. Norton. And there is going to be one accounting stream 
now.
    Ms. Shelton. There will be only one accounting stream once 
we get done. And I think that will help our customers, because 
they won't have to spend as much of their time trying to 
understand how GSA operates.
    Ms. Norton. What would be the impact on small businesses 
who are perhaps more reliant on GSA's advice and counsel?
    Mr. Perry. I don't think the reorganization would have any 
adverse impact or any direct impact. We will still have to meet 
our obligations in those areas, and we will continue to do that 
no matter how we are organized.
    Ms. Norton. How does consolidation advance the Government's 
interest in having many choices? Won't there be fewer choices 
of products, of services if there is consolidation?
    Mr. Perry. No, I would suggest there won't be any change in 
the number of sources. For example, the type of thing comes up, 
as you are very familiar with, the Networx contract. Agencies 
could buy certain IT products through Networx if they chose to, 
because those companies could provide that, although Networx is 
primarily a telecommunications contract. We have another 
contract that is called Alliant, where agencies could buy and 
should buy their IT through that one.
    So we will still have those multiple contracts. We will 
obviously try to rationalize them so they are not overly 
duplicative and wasteful and provide a degree of choice that is 
not even what customers want. But this change does not impact 
the breath of offerings that we would provide to our customer 
agencies.
    Ms. Norton. We have had a hearing on the Networx contract, 
and you face a great challenge with respect to that contract 
alone. Does consolidation enhance or at this time complicate 
what you have to do with Networx alone? And now Networx is part 
of a merged or consolidated organization.
    Mr. Perry. Well, that is a very fair point, and one of the 
points I refer to in my remarks is those kinds of initiatives 
that we have underway, like Networx, we just absolutely have to 
make sure that we continue to devote the management time and 
other resources to that so that we don't have any missteps. And 
we believe that we can do that, we can in fact accomplish this 
initiative while at the same time continuing a successful 
Networx procurement.
    Ms. Norton. One final question. I am trying to figure out 
what ``Get It Right'' tried to do and failed to do that led to 
your testimony today that consolidation should take place.
    Mr. Perry. Well, not surprisingly, I wouldn't characterize 
it as ``Get It Right'' failed to do. I would say this is a 
``Get It Right'' initiative. This is an outgrowth of the ``Get 
It Right'' direction. The ``Get It Right'' direction was----
    Ms. Norton. Well, wasn't the ``Get It Right'' direction 
supposed to, in fact, get it right so that nothing more was 
needed, or did you always contemplate that there would be 
consolidation?
    Mr. Perry. Well, the ``Get It Right'' was a drive to make 
sure that we were complying with Federal acquisition 
regulations, primarily. That was the first thing. The second 
part of it was that we were also using best practices with 
respect to any acquisition. But at the same time, or another 
element of ``Get It Right'' is to make sure that we were 
providing customer agencies with the products and services they 
need on a cycle time that they found to be acceptable. So this 
is an effort to improve in that area.
    I think as the audit reports are showing, that in terms of 
documenting our price evaluations and documenting sole source 
or have documenting competition, all of those steps with 
respect to our ``Get It Right'' efforts, those are happening, 
and they are happening better and better each time they are 
assessed.
    On the issue of are we improving our cycle times, are we 
putting agencies in lease space within X number of days of 
their requests, are we completing an information technology 
acquisition within X number of days of the customer's request, 
those kinds of things are a part of what we are addressing by 
improving our organizational capability. So, in my mind, it is 
really an extension or another step in the overall ``Get It 
Right'' process.
    Ms. Norton. Mr. Perry and the other witnesses, I am 
certainly not opposed to consolidation. In fact, efficiencies 
of scale I find very appealing. I do think that they are 
difficult, and that there is a burden in a consolidation to be 
driven by not only cost, but by improved customer service and 
greater efficiency. When all is said and done, that is what you 
have to look at. You have to look to see if all of these things 
got improved. You may find that you saved a lot of money and 
the customers aren't faring as well, or you may find it costs 
you more money now that you have a consolidated operation, even 
though you have less duplication.
    The efficiency, or shall I say the inefficiency of running 
a larger organization is often underestimated, and I hope that 
as you look through these task forces at what should occur 
next, you bear all of that in mind.
    I very much appreciate what was very helpful testimony, and 
we are recessed until the full committee returns. Thank you 
very much.
    [Recess.]
    Chairman Tom Davis [presiding]. Thank you for everybody's 
forbearance here.
    We have our second panel. We have Mr. Tom Hewitt--welcome, 
Tom--the CEO of Global Government, on behalf of the Information 
Technology Association of America; Vic Avetissian, the 
Corporate Director of Northrop Grumman, on behalf of the 
Contract Services Association; Mr. Mike Davison, Director and 
General Manager, Canon Government Marketing Division, on behalf 
of the Coalition for Government Procurement; we have Elaine 
Dauphin, who is the vice president of GSA Programs, Computer 
Science Corp., on behalf of the Professional Service Council; 
and we have Richard Brown, the National Federation of Federal 
Employees [NFFE] accompanied by Jack Hanly, who is the council 
president of NFFE.
    And we very much appreciate everybody being here.
    As you know, it is our policy we swear everybody in before 
you testify, so if you would raise your right hands and rise 
with me.
    [Witnesses sworn.]
    Chairman Tom Davis. Mr. Hewitt, we will start with you. 
Thank you.

STATEMENTS OF THOMAS HEWITT, CEO, GLOBAL GOVERNMENT, ON BEHALF 
   OF THE INFORMATION TECHNOLOGY ASSOCIATION OF AMERICA; VIC 
  AVETISSIAN, CORPORATE DIRECTOR, NORTHROP GRUMMAN CORP., ON 
  BEHALF OF THE CONTRACT SERVICES ASSOCIATION; MIKE DAVISON, 
    DIRECTOR & GENERAL MANAGER, CANON GOVERNMENT MARKETING 
DIVISION, COALITION FOR GOVERNMENT PROCUREMENT; ELAINE DAUPHIN, 
   VICE PRESIDENT, GSA PROGRAMS, COMPUTER SCIENCES CORP., ON 
BEHALF OF THE PROFESSIONAL SERVICE COUNCIL; AND RICHARD BROWN, 
      PRESIDENT, NATIONAL FEDERATION OF FEDERAL EMPLOYEES

                   STATEMENT OF THOMAS HEWITT

    Mr. Hewitt. Mr. Chairman and members of the committee, I am 
pleased to be here today to testify regarding the potential 
reorganization of GSA.
    Mr. Hewitt. I am here today representing members of ITAA, 
the Information Technology Association, as Chairman of its 
newly created Government Advisory Board. ITAA is particularly 
interested in the restructuring of GSA since the ITAA member 
companies are heavily involved in FTS and FSS programs.
    My comments today are based on my 40 years of experience in 
the Federal procurement business. In addition, I am 
representing the members of the ITAA Government Advisory Board, 
which is composed of retired ITAA executives who had senior 
level responsibilities in major IT firms or the Government. 
This Board was created to serve as an industry advisory group 
to both industry and government.
    Earlier this year, in an interview with Federal Computer 
Week, Chairman Davis was quoted as saying, ``GSA is not that 
badly run when you compare it with other agencies. But GSA 
needs to be setting the example and leading the way.'' ITAA 
could not agree more. In fact, ITAA commends GSA on the role it 
has played in modernizing the Federal Government's procurement 
vehicles, the techniques, and the leadership it has provided 
Government-wide in the management of IT contracts, 
telecommunications, and many products and services used by the 
Federal agencies. ITAA encourages the GSA and the committee to 
adopt three principles as it embarks on this important effort 
of restructuring GSA.
    First, although ITAA recognizes that GSA is a Government 
organization operating in a political environment, ITAA 
recommends that GSA take a step back and revalidate its 
customer-focused business model. This effort should be 
undertaken by a representative body comprised of customers, 
industry, and the experienced GSA staff who represent the 
totality of the current and the to-be-defined organization.
    Second, GSA's reorganization approach should establish 
business metrics or goals for measuring accomplishments 
appropriate to the business model and the customers, consistent 
with best practices outcomes.
    Third, finally, ITAA believes that the restructuring should 
focus on establishing direct lines of authority and 
responsibility, complementing the business model that assigns 
accountability for the execution and the success of the 
business model.
    GSA consists of numerous organizations that together act as 
a catalyst for nearly $66 billion in Federal spending, an 
annual budget of over $16 billion, 13,000 employees. 
Organizations of this size and scope must approach any 
reorganization carefully and with an open mind. Private sector 
companies of similar size would generally approach a 
reorganization effort as a performance-based exercise. That is, 
the company would first examine its business model, ensure that 
it is accurately defining its customers' needs, and then design 
processes and reporting channels to fit around that model.
    ITAA recommends the restructuring of GSA be based on a 
similar performance-based approach, beginning with a thorough 
review of its customers' needs. This approach would allow GSA 
to examine the way in which the procurement world has changed 
and develop a business model to better fit the Federal 
Government's needs.
    ITAA therefore believes that the committee should ensure 
that GSA is devoting the right type and amount of resources to 
that effort. For instance, Administrator Perry recently 
announced the members of a steering committee that will oversee 
three task forces to develop recommendations for merging two of 
GSA's three service units. At this point in time, there is no 
indication that those task forces will be broadened to include 
any representatives from outside of GSA.
    While ITAA applauds the creation of the steering committee 
and the accompanying task forces, it is concerned that these 
bodies will not provide diverse points of view that are 
imperative for a successful reorganization effort. Thus, ITAA 
recommends that the steering committee and accompanying task 
forces be expanded to include members of other Government 
agencies, the GSA customer base, members of the private sector, 
and GSA's vendor base. These additional participants should be 
invited to contribute to the steering committee's deliberations 
from the beginning, rather than simply comment post hoc on the 
recommendations developed by an internal steering committee.
    ITAA believes that the important functions performed by FTS 
should be well represented in the organization discussions. If 
this is not possible, ITAA alternatively recommends that GSA 
establish a customer and industry advisory group to assist 
Administrator Perry and the steering committee as they develop 
approaches to the reorganization of GSA.
    In conclusion, ITAA supports the committee's desire to 
restructure the management and operations functions of GSA. 
ITAA would be pleased to provide resources and industry 
expertise to this important undertaking.
    I would be pleased to respond to any questions.
    [The prepared statement of Mr. Hewitt follows:]

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    Ms. Norton [presiding]. Thank you very much, Mr. Hewitt.
    Yes, Mr. Avetissian.

                  STATEMENT OF VIC AVETISSIAN

    Mr. Avetissian. Mr. Chairman and members of the committee, 
thank you for this opportunity to testify on the ways to 
improve GSA's operation. My name is Vic Avetissian of Northrop 
Grumman Corp., and I am here today on behalf of Contract 
Services Association of America, but I serve as Chair of the 
Association's Public Policy Council.
    Now in its 40th year, CSA is the Nation's oldest and 
largest association of Federal services contractors, 
representing a wide diversity of more than 200 firms that do 
over $40 billion annually in Government contracts and employ 
nearly 500,000 workers with nearly two-thirds of them being 
private sector union labor.
    Let me start by stressing, Mr. Chairman and members of the 
committee, that what we must first and foremost ask ourselves 
today is what is good for America and for U.S. taxpayers. In my 
view, what is good for America is the opportunity to capitalize 
on the agility and innovation that the private sector offers to 
the Government. The private sector brings the best value to the 
table, which in some cases may be more expensive initially, but 
always is less costly in the long run.
    What we should be focused on is allying industry and 
Government to work as a partner, bringing continued improvement 
to the procurement process to support our warfighters and the 
U.S. taxpayers. A few missteps along the way should not cause 
us to dismantle the gains we have made to date. We should not 
throw out the baby with the bath water.
    With that said, let me suggest that any review of GSA 
operation should not be about simply moving organizational 
boxes or chairs. Instead, GSA should need to consider the 
following steps, in my opinion.
    First, GSA should determine what is the customer services 
needs and the business model that will be needed to support it? 
To achieve this, GSA should ask for and rely upon the input and 
insight from their customers and private industry. Such a 
performance-based review would facilitate GSA's acting more as 
a commercial business rather than typical Government entity.
    Second, GSA should establish the business processes, 
business systems, policies and procedures, internal control and 
oversight that must be put in place to make the agreed upon 
business model work.
    These steps are critical to success of GSA becoming the 
preferred provider for commercial services to all Federal 
agencies.
    Now I would like to speak to the use of Schedules. I have 
detailed several specific areas of concern in my written 
statement, let me just speak to a few of those.
    We should consider whether the services on the Schedules 
are truly commercial in nature, as they are supposed to be. If 
they are not, then perhaps those services should be subject to 
separate contract vehicles involving specific capabilities and 
technical requirements.
    This leads me to suggest that we should consider the 
feasibility of consolidating all individual agency Schedules 
under the jurisdiction of GSA. This could provide uniform 
internal control and oversight of Schedule use. Perhaps the 
recent problems could have been avoided if there were uniform 
internal management control and oversight.
    The only stumbling block I see to such a consolidation is 
that, even with the GSA, some of the regional offices appear 
not to be in sync with the overall GSA policy and guidance, 
especially as it relates to common practices in awarding and 
managing Schedule contracts.
    I would recommend that it would be more effective if all 
the regional offices were coordinated under the auspices of a 
headquarter office, which currently it is not. This would 
ensure that the regional offices operate under the consistent 
rule and guidance, and not as a lone ranger.
    However, let me stress that I do not advocate abolishing 
the regional offices. These offices are truly the face of 
Federal Government into the regions of the country, and as such 
provide needed access for those outside of the Beltway.
    Another area of consideration is a cultural diversity among 
GSA offices, customer community, and should be taken into 
account when reviewing any proposal for consolidation or 
merging Schedules. Within industry, this often has been the 
most difficult and time-consuming aspect of the process for any 
mergers and acquisitions. As they go through this process, GSA 
should consider using the best practices from multiple offices, 
agencies, and locations to adopt a GSA standard. That would 
provide buy-in by various offices. This has proven to be very 
helpful with industry mergers and consolidations.
    Finally, let me just throw out a few key points to consider 
for improving GSA Schedules, which are more fully outlined in 
my written statement. No. 1: training on proper use of 
Schedules for all parties involved, that includes GSA 
contracting community, GSA customers, and industry; 
establishing or identifying best practices; improving 
transparency in placement of GSA task orders; establishing 
Schedule ombudsman to receive and correct complaints; and, 
finally, conducting a cost-benefit analysis on Schedule use 
versus normal FAR contract process to determine which benefits 
agency mission and to the U.S. taxpayers.
    In closing, let me stress that we are all partners in this 
endeavor. Sometimes we might disagree, as often happens in 
partnership. But that does not mean the partnership should be 
dissolved; rather, that we must try harder to find common 
ground. In the end, our main objective in this undertaking 
should be based on what will allow Federal agencies to get best 
value for the taxpayers and in support of our warfighters.
    Thank you very much for your time, and I would be happy to 
answer any questions.
    [The prepared statement of Mr. Avetissian follows:]

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    Mr. Souder [presiding]. Thank you very much for your 
testimony.
    We will now go to Mr. Mike Davison, director and general 
manager of the Canon Government Marketing Division.
    Thank you for coming.

                   STATEMENT OF MIKE DAVISON

    Mr. Davison. Thank you. Good morning, Mr. Chairman and 
members of the committee. I am Mike Davison of the Canon 
Government Marketing Division. Canon is the leading GSA 
Schedule contractor, with more than $76 million in Schedule 
sales in fiscal year 2004.
    Today I represent the Coalition of Government Procurement. 
The Coalition is particularly well suited to testify today on 
the reorganization of GSA's Federal Supply Service and Federal 
Technology Service. No outside organization has the depth and 
breadth of experience in working with FSS and FTS as does the 
Coalition.
    The Coalition supports GSA's mission. The agency's current 
contracts and services play a vital role in supporting our 
troops in Iraq and Afghanistan, and in meeting critical 
domestic needs. We believe the agency must take the most of 
this opportunity to reorganize and move forward so that it can 
continue its important work.
    GSA is in a critical position today. The actions of a few 
have allowed to set a chilling tenor for the entire agency. 
Routine business has dramatically slowed. Continued reliance on 
``Get It Right'' now means that some parts of GSA simply 
``won't get it.'' The climate must be moderated to allow the 
business of government to proceed.
    The Coalition believes that the GSA reorganization process 
can be an opportunity to create a positive and stimulating 
model acquisition environment. It can be the catalyst to put 
last year's problems behind us and focus on empowering 
associates. What was lost in last year's headlines was that GSA 
overall does a fantastic job of meeting customer needs 
efficiently and properly.
    Approximately $40 billion flowed through GSA Schedules and 
GWAC's in the fiscal year 2004. This is testimony to the fact 
that the agency has built a solid, popular program and gets 
customers what they need, when they need it, at great values.
    The Coalition urges, however, that the mere process of 
reorganization not become an end to itself. We are concerned 
that there has been too much emphasis on the process, at the 
expense of customer service. As one of the members put it, not 
even the best flower grows if you pull it up every 10 minutes 
to see how it is doing.
    The Coalition again calls on GSA to work with its committee 
and other interested parties to realign its organization. As we 
have voted in previous testimony, there is inherent 
inefficiency in maintaining both a central office and regional 
reporting system. The Coalition strongly supports a realignment 
that changes the managerial organization so that all GSA 
acquisition professionals in FSS and FTS report up through 
their central office organizations for policy and operational 
guidelines. Today, this means that GSA acquisition associates 
would be overseen by the commissioners of their respective 
services for all aspects of job performance. The Coalition 
believes that centralization is mandatory if associates are to 
receive clear guidance and be held in consistent standard.
    We continue to believe that creating an office to oversee 
the integrated operations of a combined service is important. 
Our previous testimony called for the creation of an associate 
administrator of acquisition. This position would be and have 
full authority to make the best use of resources for each 
service and provide oversight for all associates involved. The 
Coalition again recommends creating such a position, and would 
be pleased to work with Administrator Perry and this committee 
to make it happen.
    The Coalition supports recommendations to consolidate GSA's 
Informational Technology and General Funds. Today's complex 
Federal projects cannot easily be classified as all IT or all 
not IT. GSA and its customer agencies today must jump through 
Government-only hoops to ensure that these projects are 
conducted properly. This slows the business of Government. 
Merging IT and General Funds will allow GSA to better continue 
its tradition of helping agencies.
    Another issue that must be addressed is the financial 
soundness of each service. Any integrated service must ensure 
that all of the rooms of its financial house are in order if it 
is to function properly. No one operation should consistently 
be relied upon to support the others. The Coalition believes 
that the existing Schedule Industrial Funding Fee should not be 
lowered. We strongly recommend that the agency use IFF funds to 
hire and maintain and train needed contracting officers, and 
educate customers so that we get the most out of the Multiple 
Award Schedule program.
    The Coalition believes that the Government saves time, 
reduces overall overhead, and gets great solutions when it 
makes maximum use of Schedule contracts. These benefits are 
enhanced when Schedules are negotiated in as timely a manner as 
possible. We recommend that GSA use existing funds to provide 
training, internally and externally, on these issues. The 
Coalition believes that steps already taken by GSA to 
consolidate all Schedule and GWAC contracts inside the Federal 
Supply Service has begun to achieve its desired results. The 
Coalition now recommends that GSA give serious consideration to 
moving the project management services conducted by the 
Schedule focused FSS acquisition centers to FTS, as FSS 
specializes in contract implementation and management. A large 
part of FTS specializes in project management. We believe this 
move is consistent with steps already taken to have each 
service focus on the core mission.
    We are ready to work with the committee and GSA to examine 
how consolidation could be in the best interest for all 
involved. The Coalition believes that while GSA faces 
substantial challenges as it reorganizes, it also has 
tremendous opportunity. By moving now to integrate FSS and FTS, 
the agency still controls most of its own destiny. GSA must 
move assertively to develop organizations and programs that 
continue to meet the needs of an evolving Federal Government.
    We want to be an important partner in this process. We 
believe the agency has a lot to offer its customers and we 
stand ready to
work with Administrator Perry and this committee and others to 
see that GSA retains and enhances its important work.
    We appreciate again the opportunity to testify, and look 
forward to answering any questions.
    [The prepared statement of Mr. Davison follows:]

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    Mr. Souder. Thank you very much.
    Our next witness is Ms. Elaine Dauphin, vice president of 
GSA Programs Computer Sciences Division, on behalf of the 
Professional Service Council. Thank you for coming.

                  STATEMENT OF ELAINE DAUPHIN

    Ms. Dauphin. Thank you, Mr. Souder.
    Members of the committee, thank you for inviting the 
Professional Services Council to be represented here today. PSC 
is the principal national trade association of companies large, 
medium, and small that provide services to virtually every 
Government agency. Like my company, Computer Sciences Corp., 
member companies hold various GSA Schedule contracts, as well 
as Government-wide acquisition contracts [GWACs], and other GSA 
contracts through which these services are many times 
delivered. Therefore, the future structure of GSA, and in 
particular its role in Government acquisition, is vitally 
important to PSC and its members.
    While PSC takes no formal position on any specific 
organizational structure, PSC applauds your interest in the GSA 
reorganization and the actions Administrator Perry and his team 
are taking to merge FTS and FSS. However, as others have 
mentioned here today, PSC believes that the necessary precursor 
steps to reorganization, that of assuring that the business 
models through which the agency operates are in place, is that 
it is far more important to the continued success of GSA. A 
review to ensure that the agency is properly aligned with 
today's needs of its clients and can continue to deliver the 
value-added services that we have all come to expect; and that 
its work force can uniformly execute performance-based 
acquisitions and other innovative acquisition strategies, such 
as share and savings, that drive value and enhance contract 
performance for its clients.
    We believe that this review and analysis must occur early 
in the planning process and be open to and involve all 
stakeholders to include external Federal agency users and 
industry. PSC strongly encourages GSA to implement the 
stakeholder involvement soon, as their draft is apparently 
coming out in May and, to our knowledge, these stakeholders are 
not currently involved. As we are rethinking the organization 
of GSA, it is imperative that we keep in mind that through the 
FSS and FTS contract vehicles and the client support centers, 
GSA has provided and continues to provide vital acquisition 
support and assistance to agencies across Government.
    In the past decade, their buying roles have increased 
significantly, driven largely by the quality of support the 
services provide and a significantly streamlined procurement 
environment. In an effort to satisfy clients' requirements 
quickly, we have seen in IG reports that some administrative 
shortcuts have taken place. GSA's response has been 
appropriate. Yet, there is a growing pressure within the DOD, 
as the chairman mentioned, to avoid using GSA contracts in 
favor of internal contracts. Part of this pressure stems from a 
concern over the fees being transferred from DOD to GSA. 
However, to our knowledge, no DOD component has looked at or 
evaluated the cost or timeline of replicating inside DOD the 
infrastructure that is currently in place in GSA, and whether 
these costs are less, equal to, or greater than the fees being 
paid to GSA.
    We are certainly not against DOD contracts. We strongly 
believe that the Government benefits greatly from a competitive 
marketplace of contracts. It is advantageous, for example, for 
program and contract offices to choose the vehicle that best 
suits their needs from a wide array of vehicles. But current 
DOD efforts to arbitrarily limit access to non-DOD contract 
vehicles could have a deleterious effect both on GSA, and more 
importantly, DOD meeting its mission needs. These are critical 
issues that drive to the heart of DOD's mission efficiency, as 
well as the role and mission of GSA. We cannot ignore these 
facts as we focus attention on GSA's organizational structure.
    Chairman Davis, in summary, GSA plays a singular role in 
Government as its legislatively designated buyer of goods and 
services. It is important, as this reorganization moves 
forward, that the resulting organization reflect the needs and 
realities not only of GSA, but also of its customers and its 
vendor partners. We believe it is necessary to engage all three 
components fully in the discussions. The billions of dollars 
that flow through the GSA Schedules and GWACs representing a 
significant portion of PSA's member companies' revenue and, 
therefore, the economic health of our industry.
    Thank you for this opportunity to provide the Professional 
Services Council's views on this important matter. I look 
forward to questions.
    [The prepared statement of Ms. Dauphin follows:]

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    Chairman Tom Davis [presiding]. Thank you very much.
    Mr. Brown, last but not least. We are happy to have NFFE 
here.

                   STATEMENT OF RICHARD BROWN

    Mr. Brown. I was going to say considering what is going to 
go on here tomorrow, I guess it is only befitting that the 
union should back cleanup.
    Chairman Tom Davis. Well, we hope you will touch all the 
bases in your comment, OK?
    Mr. Brown. I knew this was going to start something.
    Mr. Chairman, distinguished members, I am here today 
certainly representing the thousands of members that the 
National Federation of Federal Employees represents throughout 
the GSA.
    I would like to address a regretful situation that exists 
at GSA, a series of actions that the agency has recently taken 
which have been either ill advised or highly inappropriate, 
have left the agency a haven of wasteful spending. The actions 
have also disenfranchised and demoralized department employees 
to a great extent, making it increasingly more difficult for 
GSA workers to provide the high quality services they are 
capable of and that the taxpayers of this country deserve.
    The most significant egregious action taken by the agency 
that I would like to address is the railroading of the proposed 
merger between Federal Technical Service [FTS] and the Federal 
Supply Service [FSS]. This merger, which stands to affect 
approximately 7,000 employees, is scheduled for implementation 
in July, and to this point there has been absolutely no direct 
communication with the employees through their exclusive 
representative on this issue.
    Under the current schedule for implementation, the 
employees at the agency should have been consulted at least a 
year ago. This dismissive approach on the part of management 
toward the elected employee representatives is unacceptable. It 
is a shame that the employees at GSA should have to make use of 
this venue, at this late date, to communicate their position on 
the major overhaul of the department. Yet, I will take this 
opportunity to publicly state the position of the employees on 
this merger.
    The rank and file employees at GSA vehemently oppose the 
merger between FTS and FSS. Although we have little information 
about the specifics of the proposed merger, we can speculate 
that the fusion of agencies with such vastly different missions 
would be problematic for the agency as the Government as a 
whole. Assuming the merger would result in whole or partial 
elimination of FTS, we envision that there will be widespread 
erosion of essential in-house expertise necessary to ensure 
cost-effective contracting for information technology products 
and services.
    Alert reports from the GSA Inspector General's Office 
indicate numerous problems in contracting practices. Our 
conclusion is that those problems encountered in procurement 
resulted primarily from a lack of autonomy between the 
procurement office and the program office. This knee-jerk 
merger does nothing to address those problems. A plan to simply 
move the problem around is conceptually flawed. In the end, we 
believe that the merger will make the problem worse and will be 
more costly to the American taxpayer. A more appropriate 
solution would be to restore FTS office of acquisition as an 
autonomous organization free from the influence of FTS program 
offices.
    The next issue I would like to address is the relocation of 
employees at two major headquarters buildings, the central 
office headquarters building in Washington, DC, and the Federal 
Supply Services building in Crystal City, VA. We believe that 
this unnecessary move will needlessly be disruptive to the 
department employees. Equally as important, this location has 
the potential to be extremely wasteful.
    Uncertainty about staffing levels indicated in the fiscal 
year 2006 budget and the possibility of the FTS-FSS merger make 
brick and mortar facility needs impossible to predict at this 
time, and any relocation would be imprudent. A major move such 
as this should be delayed until staffing levels can be 
accurately forecasted. Any deviation could result in millions 
of dollars in wasteful spending.
    The last major issue I want to address is the downsizing of 
the GSA Office of Government-wide Policy [OGP]. NFFE is the 
exclusive representative of all bargaining units in this 
organization, a total of about 130 people. GSA has announced it 
is currently implementing plans to eliminate 22 percent of the 
employees in the department by April of this year. They plan to 
reassign another 21 percent to the department in addition to 
that, for a 44 percent overall reduction. GSA has cited 
constraints in the 2006 budget as grounds for pursuing these 
reductions.
    Given the fact that Congress has not yet approved the 2006 
budget, we believe it is premature and inappropriate to act on 
a speculation of what the budget might be. We ask this body to 
intervene and insist the administration follow due course on 
this issue. Any action to the contrary would circumvent the 
authority of Congress. If, and only if, Congress approves the 
cutbacks in the President's budget proposal, a proposal that we 
do not endorse, the agency would then follow the appropriate 
reduction in force [RIF] rules.
    The agency is currently pursuing a career management 
profile [CMP] assessment, an unfair alternative to RIF 
procedures that allow managers to cherry-pick retention of 
personal favorites, to the detriment of others who would get 
preference based on legitimate discriminatory such as veteran's 
preference, seniority, and career status.
    Finally, management is implementing the CMP without 
spending 1 minute with employee representatives at the 
bargaining table to date, in our opinion a clear violation of 
the Federal Service Labor Management Relation Statute.
    Taken as a whole, agency actions on these three issues 
indicate that GSA leadership is not committed to a cohesive 
business plan based on execution of agency mission. Dismissive 
approach toward employee representatives and mandates of 
Congress is unacceptable. The simultaneous attempts to adjust 
staffing and relocate to new facilities leave the agency open 
to millions in wasteful spending. The apparent plan to 
eliminate hundreds of full-time employees leave the work force 
terrorized with uncertainty.
    The GSA would stand to benefit from taking their 
initiatives one logical step at a time, while showing regard to 
due process and the needs for the department employees. 
Anything less should not be tolerated by this committee.
    Mr. Chairman, that concludes my statement. I appreciate the 
opportunity, distinguished members, and I would be happy to 
answer questions.
    [The prepared statement of Mr. Brown follows:]

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    Chairman Tom Davis. Thank you all very much.
    Let me start, Mr. Hewitt, with you.
    I am sorry I wasn't here for everybody's testimony--I had 
to go back for a couple minutes--but I have read it prior to 
being here.
    Do you think that the proposed merger of FTS and FSS is 
going to make it easier for you to do business? Will that be 
easier for you to do business if they merge these two?
    Mr. Hewitt. The question is do you think it will be easier 
to do business? Yes, sir. I think there is some uncertainty 
today, some duplication which is confusing, and ITAA does 
support the merger.
    Chairman Tom Davis. Has GSA solicited any comments from 
your organization in terms of what a merger might entail?
    Mr. Hewitt. No, Mr. Chairman, they haven't, and we would 
love to be involved at ITAA.
    Chairman Tom Davis. How would you recommend GSA include 
industry and customer representatives as part of the process? 
It wouldn't have to be formal, just informally?
    Mr. Hewitt. Any way they want to do it is fine with us. We 
would prefer to be involved earlier rather than later, and we 
do have that Government Advisory Board now that is retired 
executives around town--Dan Young, Ken Johnson, Mel Cooper, 
Bill Deronchec and others--that are prepared to help, and they 
are not working with any particular company right now, so they 
should be able to provide experience in an unbiased fashion.
    Chairman Tom Davis. Do you have any thoughts on the 
regional offices?
    Mr. Hewitt. Have I talked to the regional?
    Chairman Tom Davis. Have you thought through that? Does 
your organization have any thoughts on consolidation of 
regional offices, or a different role at this point? Do you 
find it helpful to keep them or----
    Mr. Hewitt. I haven't discussed that.
    Chairman Tom Davis. You don't want to go off script on 
that.
    Mr. Hewitt. I don't know the answer to that.
    Chairman Tom Davis. OK. Thanks.
    Vic, let me ask you. I think in your testimony you note 
that before GSA goes forward with plans to reorganize, it 
should get input and insight from both its customer agencies 
and industry partners. Do you think that reorganization plans 
provide for that as you see it right now?
    Mr. Avetissian. I didn't hear that.
    Chairman Tom Davis. Do you think that the GSA is providing 
for input from its customer agencies and its industry partners 
right now?
    Mr. Avetissian. It has been done informally. We have been 
in a couple of meetings that this issue was discussed, most 
recently with them last week. But I think it should be more 
formal, because there are other people that should be involved 
in providing guidance, that have experience in different areas. 
We provided some guidance. We think that they are on the right 
track, but more information will be helpful.
    Chairman Tom Davis. You state that the current management 
of the GSA regional office is broken. Do you favor the 
elimination of any of the regional offices? You said you don't 
favor the elimination of them, but you suggest that the 
management and reporting relationships between the GSA 
headquarters and the regions should probably be changed. Do you 
think it would be helpful to have GSA's management authority 
over the regional offices in the statute? Have you thought 
about how that should be done?
    Mr. Avetissian. No, I don't think it should be statute. I 
think that the management headquarters, working with the 
regional offices, could develop appropriate reporting 
requirements that will make sure that they follow the same 
guidance and same policies in performing the contracts and 
awarding contracts and managing the contracts. I think that is 
where the differences are. There will be some areas, because 
the culture will be different, and they should follow that 
culture. But again, major policies should be the same.
    Chairman Tom Davis. Are you concerned that the 
reorganization efforts at GSA will adversely impact GSA's 
ongoing operations?
    Mr. Avetissian. No, I don't believe so. I think that the 
people in GSA are very well familiar with what they are doing. 
I think this reorganization will enhance their capability to 
provide their services to all the agencies. And I think that 
with this reorganization the committee should consider merging 
other civilian agencies schedule under GSA so there won't be 
schedules that are used by DOD through Interior schedule, that 
it will be managed in a formal manner under the same authority 
as GSA.
    Chairman Tom Davis. Now, you advised that GSA should 
consider cultural diversity among its various offices and its 
customers and its plans to merge the services. Could you 
elaborate on that a little bit?
    Mr. Avetissian. As an experienced industry, and I had that 
opportunity during our numerous mergers and acquisitions that 
Northrop Grumman had done, and the most difficult part was 
trying to get the cultures to merge. You can always get the 
offices to merge and things like that, and benefits merge and 
all that, but the culture----
    Chairman Tom Davis. But agencies have their own cultures is 
what you are trying to say.
    Mr. Avetissian. Yes, they sure do. And what I would 
suggest, and what we have done, and other companies have done, 
you don't impose--whoever the parent is going to be--their 
processes as the best; you go around and take a look at and 
pick the best processes and best policies. And by incorporating 
all that in one single policy, I think then the buy-in will be 
much easier from other agencies, and also regional offices, 
that they do have some good practices that can be adopted by 
the headquarters.
    Chairman Tom Davis. Thank you.
    Mr. Davison, you state that GSA needs to change its 
regional managerial organization so that control of acquisition 
associates in the regions come from GSA headquarters. Are you 
concerned that the regional management issues don't appear to 
be addressed in GSA's reorganization plan? Is that a concern of 
yours?
    Mr. Davison. Am I concerned that the reorganization would 
have an adverse effect?
    Chairman Tom Davis. No. Right now, in GSA's reorganization 
plans, they don't appear to be addressing the regional 
management issues.
    Mr. Davison. Our representation of that is that there seems 
to be a different--you spoke about cultures. There is a 
different standard associated with each of the regions, and it 
seems like it would be improved to have a central 
responsibility for all policies and standards.
    Chairman Tom Davis. Now, you recommend that creating the 
position of an associate administrator for acquisition to 
oversee the integrated operations of a combined FSS-FTS. Do you 
think that position ought to be in statute? Do you have any 
strong feelings about that?
    Mr. Davison. I don't. I am not familiar enough about what 
the difference in the statutory regulation would be.
    Chairman Tom Davis. Statute means that this is bound on the 
next GSA and the next and the next. If you do it from 
regulatory scheme, the next group can come in and decide to do 
it differently. It gives them more flexibility, but it also 
lets them slip back if you think that this should be a 
permanent position.
    You don't have to address that, I am just trying to give 
you----
    Mr. Davison. Thank you.
    Chairman Tom Davis. I liked your suggestion that GSA 
consider using a portion of its Multiple Award Schedule 
Industrial Funding Fee to hire and train badly needed schedule 
contracting officers. It is a little similar to the training 
fund that we put into the Services Acquisition Reform Act. Have 
you suggested this to GSA?
    Mr. Davison. Yes, we have.
    Chairman Tom Davis. Have they had any response to it at 
this point?
    Mr. Davison. Their response is not clear to me, it is clear 
to the Association. There has been some hesitation. At the last 
decrease we had suggested that they don't decrease it, but use 
those funds to improve the agency's response.
    Chairman Tom Davis. OK, thanks.
    Ms. Dauphin, do you think GSA has been forthcoming with 
industry stakeholders on the direction of its reorganization?
    Ms. Dauphin. No, I think that there has been limited 
interaction. The PSC has had some meetings with Mr. Perry's 
office. We are meeting with the IG next week, where we will 
have additional discussions, but not to the level that we are 
recommending. We really believe that industry should be more 
engaged right now, prior to their even coming out with their 
draft reorganization, as well as other Government agencies end 
users.
    Chairman Tom Davis. And I gather, Mr. Brown, that you don't 
think the GSA has been very forthcoming in dealing with the 
employees and the unions in this as well, sir?
    Mr. Brown. That would be correct, Mr. Chairman. And I think 
you would have to agree when you don't have information before 
you, when you have no business plan, when you have no ``who is 
it going to affect,'' you are forced to speculate; and 
certainly speculation is not something that the union wants to 
do. We are getting questioned by various employees in different 
office buildings, etc., how is that going to affect them, what 
are their collective bargaining rights. You know, we are not 
here to manage GSA; that is not our position. But as you are 
elected by your constituency, so are we.
    Chairman Tom Davis. Well, it is not your position to 
manage, but, on the other hand, a lot of the knowledge in any 
organization is at the guy who is right there at the window.
    Mr. Brown. Who knows better what is going on than the man 
and woman doing the job?
    Chairman Tom Davis. Even if you may not know the big 
picture in every case, they have a story to tell that is 
important.
    To go back to you, Ms. Dauphin, you note that the DOD has 
considered bypassing GSA contract vehicles for internally 
awarded managed contracts. How would that action affect 
businesses that routinely use these vehicles to sell to the 
Government? Do you have to change your marketing plans? Would 
they be less efficient?
    Ms. Dauphin. It has already been impacting us in that we 
have had existing task orders that were in the middle of a 
period of performance under GSA vehicles that have been 
terminated and then re-competed on a DOD vehicle. It happens 
that we are on the DOD vehicle, but we are still spending money 
to re-compete. The Government is spending money to reacquire 
these same services and, as a taxpayer, that is offensive.
    Chairman Tom Davis. It is just a waste, right?
    Ms. Dauphin. It is.
    Chairman Tom Davis. You also note that the fees that are 
charged by GSA for the different Government-wide contracting 
vehicles--and I will ask you and I will ask anybody else. Do 
you think the melding of the Technology and Supply Funds and 
the increased accountability will result in lower and more 
targeted fees from GSA? Is there that expectation?
    Ms. Dauphin. Yes, I really do.
    Chairman Tom Davis. Do you all agree with that?
    Mr. Avetissian. Yes, I agree with that.
    Chairman Tom Davis. Mr. Hewitt? That is certainly the hope, 
isn't it? OK.
    Mr. Brown, I have a couple more questions.
    Mr. Brown. Sure.
    Chairman Tom Davis. You are nervous that the melding of the 
FSS and the FTS will result in widespread erosion of essential 
in-house expertise at FTS.
    Mr. Brown. Yes.
    Chairman Tom Davis. But the Administrator and the GSA IG, 
and most of the witnesses here, seem to think the merger would 
be beneficial in terms of overall productivity. Why do you 
think that?
    Mr. Brown. Let me just state--and part of it goes back, 
again, to information that has been handed out. And I would 
even go back to some of the comments that Mr. Perry had made. 
It didn't seem--where this was really driven from. I didn't 
really hear today very specific problems that would cause this 
or drive this merger. Whether there is or not I do not know, as 
an employee representative. And what impact that will have is 
going to have various impacts.
    What I was saying, getting back to just to paraphrase what 
I just said, it is going to have different impacts on different 
employees. And what that impact is going to be we are duty 
bound and certainly legally bound to advise the folks that we 
represent. How that is all going to shake out, we have been 
unable to either reassure or say, OK, you are going to get 
affected this way, this is going to affect more people in FTS 
than FSS, like I said in part of my testimony.
    Again, I will give the fact that some of it is speculation, 
but also been advised through my council president and our 
other employees, which many of them are here today sitting in 
these chambers from the Greater D.C. area and Virginia and so 
forth, that these are going to affect. And I would have to say 
that I have yet to hear and I did not see that there was any 
documentation to that effect. Mr. Perry said there has been 
some discussion amongst managers and a few key individuals, but 
that was primarily it.
    And would this merger be better? I don't really see, based 
on the testimony here. There are some people that say that it 
would, and everyone is entitled to their opinion, and I am not 
being disrespectful, but at least from the elected 
representatives side of the House, that the people in the 
trenches are going to be affected, I can't see where this would 
be good or bad. I would believe at this juncture it would be 
more bad because there is not enough information, there is no 
business plan, there is no long-range goal, there has been 
nothing documented.
    Chairman Tom Davis. Right. Well, look, at the end of the 
day, everybody here plays a different role. I mean, your role 
is to protect your employees, make sure they are treated 
fairly; and the efficiency of the department, although it is 
not unimportant to you, at the end of the day that doesn't 
drive you if you are losing employees and those kind of issues. 
From the people that are selling to the Government, they have 
their own bent; they can give suggestions into what works most 
efficiently for them in being able to sell to the Government. I 
know there is a great frustration on the part of contractors 
sometimes of doing work and the Government not telling exactly 
what they want, not being able to articulate; a lot of waste 
goes in some of these areas. And I think all of you need to be 
a part of the reorganization process so that everybody is 
heard.
    But at the end of the day, GSA's job, from my perspective, 
is to make sure that when they go off and buy something, they 
are getting the best deal for the American taxpayer. That may 
not be exactly what the contractors want or the employees want, 
but I think that is what the taxpayers expect. But they can't 
do it without talking to you and without consulting with you.
    I think each of you have an important role to play in that, 
so we want to do everything we can to make sure that, as this 
moves forward you are at the table and that all of your views 
are considered in this. And for that, I appreciate everybody 
being here, sharing those concerns. We want to continue to work 
with GSA to make sure that even though it may be a contracted 
period that these decisions are made, that you are made full 
partners in terms of your input into this thing; and we want to 
hear from you if that is not the case.
    Ms. Norton.
    Ms. Norton. Thank you very much, Mr. Chairman. I came back 
because I have a couple of questions.
    I just want to indicate how much I agree with your last 
comments. Nothing is more threatening to employees than a 
change in structure in an organization, whether it is 
consolidation, whether it is dealing only with one part of the 
organization. And when they hear about merger, even before you 
know exactly what you are going to do, you have to begin to 
talk with people. So I am very concerned. I was very concerned 
in reading, Mr. Brown, your testimony about how there has not 
been any consultation whatsoever. Again, these people are 
management; they have to do what they have to do. But the 
notion of not trying to reduce anxiety is very troubling to me.
    You indicate that, for example, assuming that merger would 
result in whole or partial elimination of the FTS. See, you 
don't know that and I don't know that, and when he talked about 
how they, by bringing everybody together, because they have so 
much demand, they will be able to meet this demand. They left 
the impression that maybe they need all the folks they have but 
maybe they don't. Perhaps, for example, in consolidating the 
administrative part, parts of FTS and FSS there would be a 
redundancy, and there is no case to be made for redundancy. I 
am very concerned, though, that nothing is known.
    You indicate, Mr. Brown, that you are against the 
consolidation. You offer a number of reasons. Obviously one of 
them has to be the anxiety that employees have about what is 
going to happen to them. But as I said in the beginning, if the 
consolidation is to occur, I believe the committee has to 
insist that, in fact, business reasons fitting the normal 
business model must be in fact used to justify such a 
consolidation and that the burden is on who wants to bring 
people together to move around the chairs on the Titanic to 
show that when the chairs are at a different place, something 
different is going to happen.
    Would you oppose, for example, if there are duplicative 
operations at the administrative level, the consolidation of 
those operations so that at least at that level you don't have 
customers, agencies, contractors dealing with duplicating 
parties doing the same thing essentially?
    Mr. Brown. First, let me state definitely the record the 
union, the National Federation of Federal Employees stands 
behind what is going to be most efficient for the American 
taxpayer. Don't misconstrue our message.
    But if you also notice in some of my testimony, that if 
there are--and let me say for the record myself I was laid off 
from the Federal Government. I worked for the Department of 
Defense for 14 years. I know what it is like to lose my job in 
the Federal Government, and there are RIF rules and procedures 
that were followed. And if there are duplicative jobs or jobs 
that are no longer needed, I would go back to my testimony that 
those rules and regulations that are in place now be used. It 
affords everyone their proper rights and entitlements as an 
employee that may lose their job due to various circumstances 
within the Federal Government.
    Again, I hate to beat a dead horse, but at least from a 
national level and/or local level--and like I said, there are 
many constituents not only from this area, but employees that 
are on the ground working at GSA here today--that don't know 
what is going on. And they are all professional people, and 
should something happen where they do lose their job, they 
should be treated with dignity and respect and afforded their 
rights and entitlements. That is our position on that.
    Ms. Norton. Well, I appreciate that position, because 
obviously the committee can't make its decisions based only on 
employee concerns. But normally those concerns are not that far 
off from one another.
    I believe that the notion of letting something as bold and 
big and unprecedented as a consolidation of two major parts of 
the GSA occur or be in the works without talking with employees 
is a major flaw in the process itself. I intend to write to 
Administrator Perry, whom I know and whose work I admire, to 
indicate that, and I will try to see if I can convince the 
chairman to join me in such a letter; not because we think 
bargaining should take place. There are different points in the 
procedure where employees have a right of course to be 
involved. Quite apart from that, given the magnitude of what is 
being undertaken here, the total absence of community starts 
the process off in the wrong way. And if I may say so, I served 
on the boards of three Fortune 500 companies. None of them 
would have ever attempted to begin a consolidation of major 
parts of their operation without beginning to talk to employees 
at some level. Talking about elementary communication now, not 
necessarily the kind of communication that you will have and be 
entitled to at some point in the process anyway.
    I have one question for Mr. Hewitt, because, Mr. Hewitt, 
your testimony rang very true to me from my own experience in 
dealing in the private sector as a director of companies, when 
you talked about a performance-based approach that first you 
look to a business model, then you go on and do what you have 
to do. In your testimony on page 5, I was troubled that somehow 
the GSA, at least at this point, has not seen the value of what 
you recommend. You say that these first task forces essentially 
have all insiders on them. In other words, people who know the 
operation from the inside, who are indispensable to the 
operation are talking to one another.
    At this hearing, over and over again the notion of what is 
first and foremost in our minds, serving the customer, making 
sure that the taxpayer benefits, doesn't seem to be a part of 
such task forces, particularly customer service, since that is 
essentially what the GSA does. And you recommend expanding the 
task force in ways that seem to me to be almost self-evident, 
because you talk about GSA's vendor base. You recommend 
expanding to include members of other Government agencies and 
the vendor base, and you indicate some concerns about the 
representations of FTS on the steering committee.
    I just want to know if anybody thinks that--let me preface 
this question by saying such a task force is only that, it is a 
task force; it doesn't get to decide the issue. By definition, 
it is advisory. I just have to ask you if anybody knows of a 
situation where a major consolidation within a company would be 
attempted without going to some advice from those who use the 
customer services. If you think it is wise to proceed only with 
insiders. And perhaps to get Mr. Hewitt to elaborate on how a 
company, a private company would in fact would deal with this 
situation. You say by expanding the task force base, but I 
would just like you to give some rationale for why you think 
others should be brought into the process besides those inside 
GSA who, of course, know GSA and FTS and FSS best.
    Mr. Hewitt. Well, first, we have a great deal of respect 
for the success of FSS and FTS, and we think over the last 20 
years they have done some tremendous things. And at this point 
what we are looking for is to simply re-evaluate to consider, 
can we improve the efficiencies of productivity, the 
responsiveness of the two organizations? And the success we 
think is based on the partnership that has existed between 
industry, which really relies on FTS and FSS, and the 
Government clients. And that is why the other agencies, we 
think, are vital to have them involved. And I can understand 
Administrator Perry's point of view and getting it started with 
internal people, but I would hope that he would soon buy into 
bringing some others in. We think that the other Government 
agencies, the people that are actually getting the services, 
and the vendors providing the products and services, have 
something to offer, and it will bring a better result.
    Ms. Norton. Do the rest of you agree with that? Do you?
    Mr. Hewitt. Pardon me?
    Ms. Norton. I am asking if the other witnesses agree with 
the view that those who use the service would be helpful as 
part of the task force.
    Ms. Dauphin. Absolutely. The industry and the Government 
end clients are all stakeholders in this process and should be 
included.
    Mr. Avetissian. I agree. The more advice you get, it is 
better than none at all.
    Mr. Davison. I agree as well, but I think there has been a 
great deal of cooperation and communication over the past 
years. The big changes in GSA structure from a Government-
funded to an industrial-funded organization has brought a 
partnership between the Federal Government and GSA and the 
contractors that we haven't had before, both with a similar 
motive, to do what is best for the Government customer, open up 
a channel of dialog that we have enjoyed over the last several 
years. But certainly it shouldn't be minimized, we ought to 
continue to be a part.
    Ms. Norton. Here, of course, we are not talking about 
anything that would be definitive; GSA can take the advice or 
not take the advice. But the notion of moving ahead without 
talking to the people who are going to use the service does 
seem to me to be elementary. Same way with employees. All we 
are talking about here is communication: hey, tell me what you 
know and let me see if what you know will help me do what I 
have to do. I think they have to do that with employees; I 
think they have to do that with the customer base, the vendors, 
the contractors, the Government agencies themselves. So I have 
been very much assisted by your testimony and very much 
appreciate it.
    Thank you, Mr. Chairman.
    Chairman Tom Davis. Anybody want to add anything?
    [No response.]
    Chairman Tom Davis. It has been very helpful to us. The 
committee appreciates it. Thank you very much.
    I want to again thank our witnesses for appearing before us 
today.
    [Whereupon, at 1 p.m., the committee was adjourned to 
reconvene at the call of the Chair.]
    [The prepared statement of Hon. Elijah E. Cummings and 
additional information submitted for the hearing record 
follow:]

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