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> Statement of
>
> Alan Chvotkin
>
> Senior Vice President and Counsel
>
> Professional Services Council
>
> On Behalf of Professional Services Council and Contract Services
> Association
>
> On
>
> GSA's Proposed Integration of FTS and FSS At
>
> GSA Second Industry Day

June 13, 2005

> **Introduction**
>
> Thank you for the holding this second public meeting to solicit
> further public input on the GSA Administrator's May 31 draft
> organizational design for the combined FTS and FSS organizations and
> for providing me an opportunity to present the views of the
> Professional Services Council (PSC) and the Contract Services
> Association (CSA). PSC is the leading national trade association
> representing professional and technical services firms providing
> services to the federal government. CSA is the nation's oldest and
> largest association of service contractors that provide a wide array
> of services to federal, state and local governments.
>
> Both of our associations are also members of the One GSA Coalition,
> created in April
>
> 2005 and comprised of four leading organizations, to facilitate vendor
> communications with GSA by providing the agency with a simple,
> collective point of contact through which industry input can be
> provided on issues relating to the reorganization and restructuring of
> GSA and for offering GSA's key integration team members a means to
> discuss issues in greater detail with industry representatives. Our
> mission and outreach to GSA remains.
>
> As you recall, the One GSA Coalition provided testimony at the April
> 21, 2005 public meeting; that presentation was supported and
> supplemented by the presentations from each of the four associations
> in the Coalition. Our message then was that GSA must first consider
> both the market shifts taking place in the federal government and the
> broader business processes in use before undertaking a major agency
> restructuring. We reaffirm that message today.
>
> Through the three working groups our Coalition formed, covering the
> same topics as the three integration teams that GSA created to help
> plan the restructuring, we have identified a wide range of critical
> business issues we believe still need to be addressed in this
>
> 2 reorganization, but which are not covered in the proposed
> reorganization plan. As such, the Coalition looks forward to our
> continued engagement with GSA as this important process moves forward.
>
> **GSA's May 31 Draft Reorganization Plan**
>
> We appreciate the Administrator's release of the May 31 draft
> organizational design and his acknowledgement that more needs to be
> done and that further opportunities exist for input. In our view, most
> issues relating to the FSS and FTS integration are not driven by
> organizational design and cannot be solved simply with organizational
> changes. Organizational design must follow an agreement on the
> strategic mission approach for the organization -- but we have not
> heard that mission articulated and do not believe it has been
> validated with key stakeholders inside and outside government.
>
> The Administrator's May 31 plan reaffirms that the new FAS will
> operate as a "cost recovery" organization, with accounting for cost
> and revenue for each business line, coupled with a capital planning
> process for strategic investments. This organizational design will
> demand a high degree of administrative and accounting processes and
> supervision, and internal and external checks and balances on the
> incentives that such a structure drives. We are confident that the
> agency is aware of the importance of these issues and is prepared to
> address them in the detailed implementation plans, but there is no
> indication that these key financial issues have been addressed.
>
> But missing from the guiding principles the Administrator included in
> the draft plan was the element of compliance with the laws, rules and
> regulations that govern the agency, the programs and contracts, and
> the services the agency provides. It could be that such
>
> compliance is an understood foundation for all that GSA does and does
> not directly relate to the reorganization design. We believe the "Get
> It Right" program is an appropriate essential element of the current
> compliance initiative and should be added to the core guiding
> principles. In fact, adherence to this principle might impinge on
> accomplishing some of the other principles.
>
> The May 31 plan proposes the creation of five sub-organizations within
> the new Federal Acquisition Service -- three business portfolios and
> two support entities, plus integrated financial management and
> information technology functions. The plan also provides for five FAS
> field activities (and regional executives) but the roles of these
> field activities are not otherwise described in the plan. Finally, the
> draft plan notes the continued role of the eleven GSA regional
> administrators but these roles are not further described and the
> interrelationship between their larger GSA role, the FAS role, and the
> role of the FAS field activities needs to be more clearly discussed
> and defined.
>
> In addition, we have critical unanswered questions about the role of
> the contracting officers under this plan. We clearly see the planned
> Acquisition Management organization within FAS and understand and
> support its charter to "ensure that there are clear, consistent and
> enforceable processes in place to award and administer contracts." We
> understand and support the linkage between the Acquisition Management
> organization and GSA's chief acquisition officer. But nowhere in the
> draft plan is there a discussion of the placement of the agency's
> contracting officers; no discussion of their
>
> 3 role in ensuring that contracts are properly solicited, awarded and
> administered; no discussion of their responsibility for the
> acquisition solutions to be employed by each of the business
> portfolios; and only limited information on the intent behind the
> contract planning and management function to be included in each of
> the business portfolios,
>
> including the meaning of one of each portfolio's primary function:
> overseeing contracting for nationally-operated programs. These are
> critical functions to protect the government's interest and their
> primacy in the new organization cannot be left out or left to chance.
>
> **GSA's Three Integration Task Forces**
>
> As I noted earlier, GSA created three integration task forces:
> Acquisition Management, Financial Services and Information Technology
> Management. Our One GSA Coalition created similar working groups; we
> also added fiscal law issues to the topics covered by our financial
> management task force.
>
> Since we formed the One GSA Coalition, our task forces have met to
> discuss our key issues and concerns in each of these areas and to
> develop our preliminary recommendations for attention.
>
> Acquisition Management
>
> The May 31 draft organization plan charters the acquisition management
> division to support a Contract Review Board for standard practices and
> terms and conditions (and even have responsibility for creating
> "cross-portfolio" acquisition vehicles), but nowhere is there a check
> and balance on the business portfolio's authority to create
> acquisition vehicles or determine whether any of the existing or
> proposed acquisition vehicles are necessary and properly meeting their
> goals.
>
> Furthermore, there are numerous existing GSA acquisition policy issues
> affecting either FTS or FSS that remain open and unresolved, but that
> will continue to adversely affect the success of any future FAS until
> satisfactorily addressed. These include payments for subcontractor
> performance, various matters relating to "other direct costs", the
> implementation of the industrial funding and other contractor fees,
> and whether changes are necessary or appropriate to the scope and the
> terms and conditions of existing and future acquisition vehicles in
> the existing and successor organizations.
>
> Financial Services
>
> The integration of the two services into the new FAS involves issues
> relating to user fees, contractor fees, cost recovery approaches and
> fiscal accountability for spending. We encourage the GSA Administrator
> to address spending limitations for the new FAS and to return any
> over-recovery ("surplus") funds held in the single Fund proposed by
> the President and supported by the House-passed legislation (HR 2066).
> There must be full consultation with all stakeholders about these
> important financial matters, not simply between the FAS Commissioner
> and the FAS controller and GSA's chief financial officer as the plan
> suggests. We are also reviewing the fiscal law issues associated with
> the planned integrated organization and the recommended single
> acquisition fund proposed by the agency and created by the
> House-passed legislation.
>
> 4
>
> Information Technology Management
>
> Our One GSA Coalition focused on the critical need for a GSA customer
> needs assessment, for accountability/transparency in the business
> systems reporting and for performance measures and the essential job
> competencies of and training for employees, customers and vendors. We
> are addressing both the internal information technology issues as well
> as the customer access to information technology solutions.
>
> **Congressional Action**
>
> As you know, PSC, CSA and others testified before oversight hearings
> of the House Government Reform Committee on March 16, 2005. Since that
> hearing, the House has passed HR 2066, the "GSA Modernization Act,"
> that addresses critical issues such as the new FAS Fund that are not
> addressed directly in the May 31 organization plan but that are
> critical elements of the future of an FAS. Our One GSA Coalition's
> Financial Services Task Force has addressed some of these issues and
> is developing details around the fiscal law challenges ahead. Our
> associations are also working with the Congress on other details of HR
> 2066 and on other GSA-related matters.
>
> **Next Steps**
>
> We will finalize our recommendations on the draft organizational plan
> and our recommendations on the three integration task force matters
> and share those with GSA leaders as quickly as possible since we
> recognize that the integration teams are under very tight deadlines.
>
> We appreciate GSA\'s efforts to garner input from interested
> stakeholders and providing PSC and CSA an opportunity to participate
> in today's public meeting. We appreciate the opportunity for us to get
> together shortly and to continue the dialogue regarding key industry
> issues. On behalf of the Professional Services Council and the
> Contract Services Association, I would be pleased to provide any
> additional information or respond to any questions.