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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

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

GINNY BROWN-WAITE, Florida

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(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

(III)

C O N T E N T S

Page

Hearing held on March 16, 2005 ............................................................................ 1

Statement of:

Hewitt, Thomas, CEO, Global Government, on behalf of the Information

Technology Association of America; Vic Avetissian, Corporate Director,

Northrop Grumman Corp., on behalf of the Contract Services Association; Mike Davison, director & general manager, Canon Government

Marketing Division, Coalition for Government Procurement; Elaine

Dauphin, vice president, GSA programs, Computer Sciences Corp., on

behalf of the Professional Service Council; and Richard Brown, president, National Federation of Federal Employees ....................................... 51

Avetissian, Vic ........................................................................................... 60

Brown, Richard .......................................................................................... 90

Dauphin, Elaine ........................................................................................ 84

Davison, Mike ............................................................................................ 68

Hewitt, Thomas ......................................................................................... 51

Perry, Stephen, Administrator, U.S. General Services Administration, accompanied by Donna Bennett, Commissioner, Federal Supply Service;

and Barbara Shelton, Acting Commissioner, Federal Technology Service; Deidre Lee, Director of Defense Procurement and Acquisition Policy, U.S. Department of Defense; and Eugene Waszily, Assistant Inspector General for Auditing, U.S. General Services Administration ...... 12

Lee, Deidre ................................................................................................. 31

Perry, Stephen ........................................................................................... 12

Waszily, Eugene ........................................................................................ 31

Letters, statements, etc., submitted for the record by:

Avetissian, Vic, Corporate Director, Northrop Grumman Corp., on behalf

of the Contract Services Association, prepared statement of .................... 62

Brown, Richard, president, National Federation of Federal Employees,

prepared statement of ................................................................................... 93

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 108

Dauphin, Elaine, vice president, GSA programs, Computer Sciences

Corp., on behalf of the Professional Service Council, prepared statement of ........................................................................................................... 86

Davis, Chairman Tom, a Representative in Congress from the State of

Virginia, prepared statement of ................................................................... 3

Davison, Mike, director & general manager, Canon Government Marketing Division, Coalition for Government Procurement, prepared statement of ........................................................................................................... 71

Hewitt, Thomas, CEO, Global Government, on behalf of the Information

Technology Association of America, prepared statement of ...................... 53

Perry, Stephen, Administrator, U.S. General Services Administration,

prepared statement of ................................................................................... 14

Waszily, Eugene, Assistant Inspector General for Auditing, U.S. General

Services Administration, prepared statement of ........................................ 33

Waxman, Hon. Henry A., a Representative in Congress from the State

of California, prepared statement of ........................................................... 7

(1)

SERVICE ORIENTED STREAMLINING:

RETHINKING THE WAY GSA DOES BUSINESS

WEDNESDAY, MARCH 16, 2005

HOUSE OF REPRESENTATIVES, COMMITTEE ON GOVERNMENT REFORM, Washington, DC.

The committee met, pursuant to notice, at 10:21 a.m., in room

2154, Rayburn House Office Building, Hon. Tom Davis (chairman

of the committee) presiding.

Present: Representatives Davis of Virginia, Shays, Gutknecht,

Souder, Platts, Westmoreland, Foxx, Waxman, Cummings,

Kucinich, Davis of Illinois, Watson, Lynch, Ruppersberger, Higgins,

and Norton.

Staff present: Ellen Brown, legislative director and senior policy

counsel; Rob White, press secretary; Drew Crockett, deputy director

of communications; Edward Kidd, professional staff member; John

Brosnan, GAO detailee; Teresa Austin, chief clerk; Sarah D’Orsie,

deputy clerk; Mark Stephenson, minority professional staff member; Earley Green, minority chief clerk; and Jean Gosa, minority

assistant clerk.

Chairman TOM DAVIS. The committee will come to order. Good

morning, and welcome to the Government Reform Committee’s

oversight hearing on restructuring the General Services Administration’s operations, particularly its Federal Supply Service [FSS],

and the Federal Technology Service [FTS], in order to meet the demands of the modern government market and to address GSA’s

management challenges.

GSA each year buys products and services from the private sec- tor 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 deVerDate 11-MAY-2000 12:05 May 02, 2005 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 D:\DOCS\20379.TXT HGOVREF1 PsN: HGOVREF1
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mand. 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.

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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.

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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.

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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

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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

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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

41

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?

42

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

43

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

44

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

45

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.

46

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 handdeliver 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

47

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

48

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

49

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.

50

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.

51

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-bedefined 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.

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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.

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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.

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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 Governmentonly 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

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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.

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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 inhouse 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

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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

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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

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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?

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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.,

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ing 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 inhouse 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.

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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.

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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.

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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

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solidation 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?

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[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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