Contract Management: Roles and Responsibilities of the Federal	 
Supply Service and Federal Technology Service (07-JUN-02,	 
GAO-02-821R).							 
                                                                 
GAO reviewed the roles and responsibilities of the General	 
Services Administration's (GSA) Federal Supply Service (FSS) and 
Federal Technology Service (FTS). Specifically, (1) the possible 
impact of the current FSS/FTS overlap on the prices paid for and 
quality of the services provided customer agencies by FSS and	 
FTS, (2) whether the use of streamlined practices and procedures 
could result in savings and increases in service effectiveness,  
and (3) whether the statement of work that governs the study of  
the FSS and FTS that GSA has under contract will likely result in
the kind of information needed to assess whether the current	 
organization needs to be restructured.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-821R					        
    ACCNO:   A03557						        
  TITLE:     Contract Management: Roles and Responsibilities of the   
Federal Supply Service and Federal Technology Service		 
     DATE:   06/07/2002 
  SUBJECT:   Management information systems			 
	     Performance measures				 
	     Cost control					 
	     Internal controls					 
	     General management reviews 			 

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GAO-02-821R
     
GAO- 02- 821R Contract Management

United States General Accounting Office Washington, DC 20548

June 7, 2002 The Honorable Tom Davis Chairman Subcommittee on Technology and
Procurement Policy Committee on Government Reform House of Representatives

Subject: Contract Management: Roles and Responsibilities of the Federal
Supply Service and Federal Technology Service

Dear Mr. Chairman: You asked me to provide additional comments on several
issues relating to my April 11, 2002, testimony before your subcommittee on
the roles and responsibilities of the General Services Administration?s
(GSA) Federal Supply Service (FSS) and Federal Technology Service (FTS). I
am pleased to submit the following comments for your consideration.

1. You point out in your statement that there is in fact overlap between the
FTS and FSS programs and that some think this may be beneficial while others
think it is wasteful and duplicative. You also note that there appears to be
no comprehensive analysis of the impact of this overlap on the cost paid by
the government for products and services. In the course of conducting your
study, did you come to any preliminary conclusions about the possible impact
of the current FSS/ FTS overlap on the prices paid for products and
services? On the possible impact on the quality of the services provided
customer agencies by GSA through FSS and FTS?

Both FSS and FTS have conducted customer surveys that indicate customers
believe these two purchasing programs provide good value. The opinions of
individual customers, however, do not provide a measure of how much value
FSS and FTS deliver to agencies. As I noted in my testimony, GSA?s
performance measures for FSS and FTS do not focus specifically on the
question of whether quality products and services are being provided at
competitive prices and significant savings to the government. Our review of
GSA management information systems showed that existing systems do not
provide the information GSA would need to answer such questions.
Consequently, we did not come to any preliminary conclusions concerning

GAO- 02- 821R Contract Management Page 2 how the overlap between FSS and FTS
programs had affected the price or quality of

products and services for customer agencies. To its credit, GSA has embarked
on initiatives that should provide better information on how well its
procurement programs are operating. In particular, GSA is encouraging the
managers of its procurement programs to develop performance measures that
will shed light on whether they are achieving customers? quality and cost
goals. As I noted in my testimony, this initiative will be challenging in
view of the potential reluctance of customers to comply with any additional
reporting burdens and the difficulties of developing good measurement
benchmarks. But it is important for GSA to work through these issues in
order to get the data it needs to assess whether FSS and FTS are delivering
good quality and good prices to customers. Once GSA has worked through these
issues, GSA will be in a better position to assure itself that its programs
deliver value to the government.

2. In our hearing just a few weeks ago examining the Services Acquisition
Reform Act (SARA) of 2002, we heard from a private sector witness
responsible for acquisition at a multi- billion corporation who told us that
he was able to increase the effectiveness and reduce the cost of the
company?s acquisition activities by strategically managing and consistently
applying streamlined practices and procedures. Do you think that GSA?s
employment of these practices could result in similar savings and increases
in service effectiveness?

The traditional purchasing environment that the private sector witness
described as having existed in his company bears some resemblance to the
current purchasing environment in the federal government. According to the
witness, each business unit or location in the company established one or
more supplier relationships for a given service requirement, and contracting
processes for services varied by department and location. In the federal
government, agencies- and many individual bureaus, offices, and
installations- maintain their own contracting staffs to fill their
requirements. Further, many agencies promulgate supplements to the
governmentwide acquisition regulations in order to tailor contracting
processes to the agency?s unique needs.

According to the witness, his company embarked on a multi- year effort
intended to change the traditional environment and create more consistent
and disciplined acquisition processes throughout the company. Through this
effort, the witness reported, his company was able to reduce costs and
create a more competitive environment for acquiring services. In concept, it
would appear reasonable to assume that implementing more consistent and
disciplined acquisition processes throughout the government would produce
similar benefits.

Implementing consistent and disciplined purchasing processes in government
agencies would require senior agency leadership to commit to reform. GSA
could not, however, direct such an endeavor. Federal managers do not depend
solely on GSA?s purchasing programs to acquire the products and services
they need. Federal managers can use either their own contracting staffs or
any of the other interagency contract vehicles that I mentioned in my
testimony. GSA could play a supporting role by assuring that its purchasing
programs deliver value to the government.

GAO- 02- 821R Contract Management Page 3

3. Did you have an opportunity to review the statement of work that governs
the study of the FSS and FTS that GSA has under contract? If so, do you
think that it focuses on the real issues? Do you think it will likely result
in the kind of information needed to assess whether the current organization
needs to be restructured?

We have reviewed the statement of work for the contract GSA awarded to a
consulting firm to study its FSS and FTS purchasing programs, and have
reviewed the firm?s recently issued report. The report discusses concerns
vendors have voiced about overlap between FSS and FTS contracts, and the
value customers attach to FSS and FTS offering a range of procurement
services tailored to the needs of individual buyers. The report recommends
that GSA restructure its purchasing programs by combining several aspects of
FSS and FTS operations. Further, the report outlines why these recommended
actions could increase GSA?s capacity to deliver best value to customers.

We believe the real issue, however, lies in the question posed in your
opening statement at the April 11, 2002, hearing- how can FSS and FTS be
sure that ?the

American taxpayers receive fair value for their hard- earned dollars when
the government acquires products and services?? GSA?s performance measures
for FSS and FTS do not focus specifically on whether quality products and
services are being provided at competitive prices and significant savings to
the government. Consequently, GSA is not yet in a position to provide an
answer to the question you posed. And, without better performance measures,
GSA will not be in a position to assess whether any restructuring
initiatives it might undertake have resulted in better value for the
government and the taxpayers. For this reason, we believe that GSA?s
initiative to build performance measures that will shed light on whether its
purchasing programs are achieving customers? timeliness, quality, and cost
goals are of critical importance.

If you have any questions about this letter or need additional information,
please call me on (202) 512- 4841. Copies of this letter are also available
at no charge on GAO?s homepage at http:// www. gao. gov. Key contributors to
this letter included Ralph Dawn, Monty Peters, and Jeffrey V. Rose.

Sincerely yours, David E. Cooper Director Acquisition and Sourcing
Management

(120154)
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