[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
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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
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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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