Ongoing Reforms of GSA’s Operations

This week’s blog post was to begin a series on “urban myths” regarding GSA’s multiple award schedule program. Instead, this week’s blog post focuses on the ongoing reforms of GSA’s operations.

On Wednesday, Acting Administrator Dan Tangherlini testified before the Committee on Homeland Security & Governmental Affairs on “Moving from Scandal to Strategy.” Acting Administrator Tangherlini outlined the steps taken as part of the “Top to Bottom” review and reform of GSA operations to prevent waste of taxpayer dollars, increase accountability and make GSA a more efficient organization. Specific reforms include centralizing oversight of spending, hiring and information technology (IT) decisions. As a result, oversight of regional budget functions will be consolidated from the regional offices to the Chief Financial Officer. IT functions will be consolidated under the Chief Information Officer. Hiring responsibilities will be consolidated under the Chief People Officer. In addition, Acting Administrator Tangherlini indicated that GSA is working to determine the appropriate reduction to current Federal Acquisition Service (FAS) fees to create more savings for customer agencies across the Federal Government. Finally, Acting Administrator Tangherlini outlined the core outcomes that GSA needs to achieve for long term reform:

• increase GSA’s ability to achieve savings for the federal agencies it serves
• simplify and streamline the delivery of core services
• ensure consistency in how GSA operates across the country
• establish clear lines of authority, and
• make the most of the talent at GSA

The Coalition understands and appreciates these important efforts to improve the efficiency, effectiveness and accountability of GSA operations. GSA’s procurement programs not only support and serve customer agency missions and the taxpayer, GSA’s programs provide business opportunities for contractors that support hundreds of thousands of jobs across America. In particular, the GSA and Department of Veterans Affairs (VA) multiple award schedule (MAS) programs account for $50 billion annually in contract purchases by customer agencies. Indeed, the IT Schedule alone accounts for close to $16 billion in annual purchases, by far the biggest governmentwide IT contract vehicle. It is a testament to the enduring strength of the MAS program that customer agencies continue to recognize the value of commercial solutions. At the same time the MAS program accounts for approximately 10 percent of the federal market place reflecting the untapped potential of the program to further meet customer agency needs, reduce costly contract duplication, and provide greater access and opportunity for commercial firms. To that end, the Coalition provides the following recommendations to achieve the core outcomes outlined above for the MAS program.

1. Consolidate management of the MAS program in a single office within FAS. Currently, the MAS program is managed across three, perhaps four separate business units with FAS. As a result, policies, procedures, solicitations, and contracting strategies differ across the MAS program and its contracts. These differences increase complexity, uncertainty and costs for customer agencies, GSA, and contractors. Uncertainty and complexity increase risk and operational costs for all. A centralized management team will provide an opportunity to enhance consistency and reduce duplication of functions across FAS business lines. It will create the necessary organizational structure to improve the efficiency and effectiveness of the MAS solicitations, contracts and etools which comprise the vital framework for customer agencies and contractor interaction. It will also provide a platform maximizing GSA’s talent base.
2. Implement “Other direct costs” on MAS contracts consistent with the Federal Acquisition Regulation (FAR). As the Coalition has consistently highlighted, the current FAR authorizes ODCs and indirect costs as well as the acquisition of materials at cost in task orders under commercial item contracts. (See FAR Clause 52.212-4, Alternate I). FAR 52.212-4, Alternate I is already in most, if not all, MAS contracts; however GSA has not authorized customer agencies to effectively use the clause. Authorizing use of the clause will allow agencies to acquire complete solutions, whether service or product based, through the MAS program. The failure to use this statutory and FAR based authority increases contract duplication as customer agencies seeking comprehensive solutions to their requirements find that the MAS contract structure will not meet their needs. As a result, agencies are creating their own contract vehicles. Implementing the FAR 52.212-4, Alternate I will enhance MAS order competition, increase efficiency and transactional cost savings while reducing incentives to create unnecessary, duplicative contracts.
3. Empower the MAS “consolidated” or “corporate” contract option. The current consolidated or corporate contract option allows a MAS contractor to combine several MAS contracts into a single comprehensive cross-cutting MAS contract covering all its services and/or products. Although currently available, the consolidated contract option has not been embraced by FAS. The current process is unduly burdensome and time consuming. FAS etools are not structured to encourage migration to, or use of, consolidated contracts. As part of the “Top to Bottom” review and reform, streamlining the consolidated contract process provides a wonderful opportunity to reduce contract duplication costs within the MAS program, increase efficiency and enhance competition.
4. Put commercial back into commercial item contracting. The MAS program is the largest commercial item contracting program in government, which is a testament to GSA’s stewardship of the program. However, across government and within the MAS program, commercial item contracting has been hampered by the layering on of additional requirements and clauses that are inconsistent with commercial practice. These requirements add costs to MAS contracts—costs that are ultimately passed on to the taxpayer in some form. The “Top to Bottom” review provides an opportunity to conduct a review of all MAS solicitations to remove unnecessary, burdensome requirements that are inconsistent with commercial practice. The focus of the review should be to identify and remove processes, procedures and requirements that increase contractor costs while adding no value to the customer. GSA also has an opportunity to reform the commercial pricing practices and policies governing the MAS contract negotiations to better reflect the commercial market place and the statutory/regulatory task order competition requirements that now drive pricing under the program. Such reform can increase efficiency, save time, and improve access to the latest commercial services and products.

These changes can have a profound impact on reducing costs and improving program performance for GSA, its customer agencies and its contractors. As a final note, with regard to any future reduction of the industrial funding fee, the Coalition believes that review and analysis of the background information, documentation and lessons learned from the last fee adjustment provide a foundation for smooth implementation of any future adjustments.

The Coalition looks forward to working with Acting Administrator Tangherlini and the entire GSA team on these reforms.

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