United States Government Accountability Office

Washington, DC 20548 

February 6, 2009 

The Honorable Mary L. Landrieu 

Chair 

The Honorable Olympia J. Snowe 

Ranking Member 

Committee on Small Business and Entrepreneurship 

United States Senate 

The Honorable John F. Kerry 

United States Senate 

Subject: GSA Global Supply’s Direct Vendor Delivery Proposal Addresses Declining 

Office Product Sales, but Annual Reviews May Be Needed to Monitor Impact on 

Small Business Participation 

In fiscal year 2007, the General Services Administration (GSA) purchased $853 

million in supplies from businesses—large and small—for its Global Supply system 

for subsequent resale to federal agencies. Of this amount, $194 million was for office 

products sold through the Global Supply Stock Program (Stock Program). The Stock 

Program allows federal customers to purchase thousands of products, ranging from 

office supplies to firefighting equipment, from two GSA distribution centers. In an 

effort to reduce delivery times and cut costs, GSA has worked for several years to 

develop a new business model for the Stock Program. In November 2008, GSA issued 

a solicitation for proposals that would remove one-third, or about 550, of its office 

supply products from the Stock Program and require businesses to ship these office 

products directly to GSA customers. Under the proposed Direct Vendor Delivery 

(DVD) Program, blanket purchase agreements (BPA) would be put in place between 

GSA and vendors, with the aim of allowing customers to receive additional price 

discounts, save time, and reduce paperwork.1

Small businesses and others have raised concerns about the impact of the proposed 

shift to DVD on small businesses’ participation in office product sales. In fiscal year 

2007, GSA purchased $76 million in office products from small businesses, or about 

39 percent of the total purchases of office products under the Stock Program. In 

response to your request, this report addresses three questions: (1) What are the 

 

1

A BPA is a simplified method of filling anticipated repetitive needs for supplies or services by 

establishing an account with a qualified source of supply.

 GAO-09-230R GSA Global Supply Proposal 
factors behind GSA’s proposal to migrate some office products from its Stock 

Program to DVD? (2) How will small businesses likely be affected by GSA’s proposal 

to migrate some office products from its Stock Program to DVD? (3) How will GSA’s 

removal of some office products from the Stock Program affect the ability of agencies 

to meet their needs during emergencies or disasters? 

To assess the factors behind GSA’s DVD Program proposal, we reviewed data from 

GSA’s Federal Supply Service Automated Supply System (FSS-19) on total Stock 

Program office product sales for fiscal years 1996 through 2007 and a study that GSA 

used in developing its DVD Program proposal. Additionally, we reviewed documents 

related to the development of the proposal and conducted interviews with GSA 

officials. We also conducted interviews with federal agency officials regarding other 

federal office product procurement alternatives. We conducted a site visit to one of 

GSA’s two distribution centers, the eastern distribution center in Burlington, New 

Jersey, and interviewed distribution center officials to learn about stocking, 

inventory, and shipping processes. We selected this facility because it is the larger of 

the two distribution centers. To assess how small businesses will likely be affected by 

GSA’s DVD proposal, we reviewed FSS-19 data on small businesses’ participation in 

the Stock Program during fiscal years 2005 through 2007. We also interviewed GSA 

and Small Business Administration (SBA) officials regarding the solicitation for 

proposals and small business participation; reviewed documentation on the DVD 

Program proposal, the DVD Program solicitation for contract proposals, laws related 

to small business participation in federal procurement, and comments that small 

businesses submitted to GSA; and interviewed six small business vendors with 

various levels of office product sales to the Stock Program during fiscal year 2007. To 

assess how GSA’s proposal will affect the ability of agencies to meet their needs 

during emergencies or disasters, we reviewed documents and conducted interviews 

with agency officials at GSA and the Federal Emergency Management Agency 

(FEMA). We also analyzed data from two recent disasters to determine whether the 

products that GSA provided were on the proposed list of products to be removed 

from the Stock Program. We assessed the reliability of the FSS-19 data through 

electronic and manual testing (e.g., examining data for inconsistencies) and 

interviews with GSA officials and found the data to be sufficiently reliable for the 

purposes of this report. We conducted this performance audit from July 2008 to 

February 2009, in accordance with generally accepted government auditing 

standards. These standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on our audit 

objectives.

Results in Brief 

GSA officials identified declining office product sales to federal agencies, increased 

competition from other procurement alternatives, and the need to update its Global 

Supply business model as the key factors behind its decision to develop its DVD 

Program proposal. Stock Program office product sales to federal agencies dropped 

Page 2 GAO-09-230R GSA Global Supply Proposal 
from about $488 million in fiscal year 1996 to about $162 million in fiscal year 2007, in 

constant fiscal year 2007 dollars. A GSA-commissioned study of Global Supply found 

that Stock Program items (including office supplies) had the highest markups of any 

products sold through the Global Supply system. The study also found that these 

items were often priced considerably higher than the same items in the commercial 

marketplace. GSA officials explained that these high price markups, as well as slow 

delivery times, made the Stock Program a less attractive procurement alternative for 

potential federal customers than other options. GSA officials told us, for example, 

that office product procurement alternatives, such as BPAs and purchase cards, had 

increased competition for office product sales to federal agencies. Although 

purchasing supplies from GSA had previously been required, since 1988, federal 

agencies have been able to procure supplies from other sources. GSA officials told us 

that its Stock Program was based on an outdated business model for procuring office 

products and should be modernized in order to provide products at more competitive 

prices with faster delivery. In addition, the commissioned study of Global Supply’s 

operations suggested that GSA update its Stock Program business model to reduce 

the costs of stocking products. As such, GSA officials told us that the proposed DVD 

Program would reduce the inventory held in the Stock Program, in an attempt to 

lower GSA’s costs; improve delivery time; and encourage federal agencies to procure 

office products through Global Supply. 

While the precise effect is currently unclear, GSA’s proposed DVD Program would 

likely decrease the number of small businesses selling office supplies under Global 

Supply. The Small Business Act requires federal agencies to take steps to ensure that 

small businesses are provided with opportunities to compete for and receive federal 

government contracts. Accordingly, the solicitation for the DVD Program BPAs stated 

that (1) GSA is committed to assuring that the maximum practicable opportunity is 

provided to small businesses to participate in the BPAs and (2) the greatest 

preference will be to award to small prime vendors. During fiscal year 2007, about 60 

small businesses sold to Global Supply the office products proposed to transition to 

the proposed DVD Program. In comparison, GSA officials told us that, going forward, 

they expect to award a limited number of BPAs in order to take advantage of quantity 

discounts offered by vendors. SBA officials with whom we spoke indicated that they 

had concerns regarding potentially limited small business participation opportunities 

for the proposed DVD Program and, as of mid-December 2008, GSA and SBA officials 

were engaged in ongoing discussions regarding SBA’s concerns on the DVD 

solicitation. Our analysis of comments submitted by small business representatives 

during an opportunity to comment on the proposal, and from interviews we 

conducted with six small businesses regarding the proposed DVD program, identified 

four primary concerns—(1) increases in their shipping costs, (2) shortened delivery 

times, (3) a lack of minimum order amounts, and (4) implementation costs of the 

proposed DVD Program. GSA officials told us that they had taken steps to address 

these concerns. For example, to address small businesses’ concern about the 

shortened delivery times, GSA increased the required delivery time by vendors to 

locations within the continental United States from 3 days to 4 days. In its 

solicitation, GSA indicated that it planned to perform annual performance reviews of 

the proposed DVD Program to determine if additional companies should be awarded 

Page 3 GAO-09-230R GSA Global Supply Proposal
BPAs. While GSA officials stated that they expect the overall dollar value for 

purchases from small businesses to remain the same or increase under the proposed 

DVD Program, the agency has not developed a specific plan for monitoring the 

impact of the DVD Program on the current level of small business sales of office 

supplies to Global Supply. To address this concern about small business participation 

levels, we are recommending that GSA establish a monitoring process for small 

business participation in the proposed DVD Program and report the findings to 

Congress for the first three full fiscal years of the program. 

GSA’s proposal to shift hundreds of office products from its Stock Program to the 

proposed DVD Program would likely not affect the ability of federal agencies to 

respond to emergencies or disasters. GSA’s proposed DVD Program does not include 

any products the agency considers emergency or “insurance” items, such as fire 

suppression items and tool kits. GSA officials also stated that they currently do not 

have plans to migrate any items the agency considers to be emergency or insurance 

items to the proposed DVD Program. Finally, a GSA review of products purchased 

from Global Supply for the federal response to Hurricanes Ike and Gustav, compared 

with those products proposed to be transitioned to direct vendor delivery, found that 

the items purchased were not on the list of products transitioning to the proposed 

DVD Program. 

Background 

GSA’s Global Supply system provides federal agencies with the ability to order office 

and computer products, tools, firefighting equipment, and other items through a 

variety of delivery programs—Stock Program, Special Order, and Expanded Direct 

Delivery. In fiscal year 2007, Global Supply purchased $853 million in products from 

businesses, of which $194 million was for office products provided through the Stock 

Program. For Stock Program items, Global Supply obtains products from its 

contracted vendors and later ships the products from GSA’s distribution centers in 

New Jersey and California.2

 For Special Order and Expanded Direct Delivery orders, 

GSA receives the agencies’ requests for products and places the orders directly with 

vendors, rather than keeping the products in the distribution centers and issuing the 

products from that inventory.3

 Agencies can also purchase Global Supply products 

from customer supply stores located worldwide.4

 2

When a single order quantity exceeds a predetermined threshold for Stock Program products, the

items are delivered directly from the vendor through Stock Direct Delivery. 

3

The Special Order and Expanded Direct Delivery Programs both deliver items directly to customers. 

The Expanded Direct Delivery Program is an arrangement that utilizes more recent advances in

electronic commerce transaction methods which provide faster processing and delivery for the

vendor’s commercial, largely part-numbered catalog. The Expanded Direct Delivery Program is a 

forerunner of the proposed DVD Program.

4

In addition to domestic locations, GSA maintains customer supply centers in international locations 

such as Japan, Korea, Germany, Belgium, the Netherlands, and Djibouti. 

Page 4 GAO-09-230R GSA Global Supply Proposal 
Vendors typically have contracts with GSA to provide inventory for the Stock 

Program. Small business vendors accounted for almost 40 percent of office product 

sales to the Stock Program during fiscal year 2007 (see fig. 1). 

Figure 1: Sources and Costs of Stock Program Office Product Purchases, Fiscal Year 2007 

a

AbilityOne, previously known as the Javits-Wagner-O’Day (JWOD) Program, provides employment opportunities 

for people who are blind or have other severe disabilities in the manufacture and delivery of products and 

services to the federal government. Federal agencies are required to purchase certain supplies and services 

from designated nonprofit agencies serving people with disabilities. 

GSA’s proposed DVD Program would remove from the Stock Program about 550 

office supply products (or about one-third of the office products) that are considered 

to be readily available commercially such as pens, copier paper, and tape. Under the 

proposal, GSA would contract with vendors using BPAs to deliver these products 

directly to federal agencies. In order to be eligible to participate, vendors must 

already have a multiple award schedule contract.5

 According to the DVD solicitation 

issued on November 7, 2008, BPA winners would be required to (1) offer nearly all of 

the 550 items that would no longer be stocked in the distribution centers, as well as 

an array of products from the vendor’s catalog; (2) package, label, and ship items 

according to GSA specifications; (3) provide electronic order tracking information; 

(4) deliver items to continental United States customers within 4 business days of 

receiving the order; and (5) offer a discount from its multiple award schedule 

contract prices for items purchased under the BPA. 

 5

Under the GSA Multiple Award Schedule Program, GSA establishes long-term governmentwide 

contracts with businesses to provide access to over 11 million commercial supplies (products) and 

services that can be ordered directly from GSA Schedule contractors. GSA Schedule 75 offers federal 

agencies access to purchase a wide array of office products (such as pens, pencils, markers, shredders,

and printer paper). Vendors may offer their entire commercial catalog or a limited line of products. 

Page 5 GAO-09-230R GSA Global Supply Proposal
GSA Developed the Proposed DVD Program in Response to Declining Sales, 

Market Competition, and an Outdated Business Model 

GSA developed its DVD Program proposal to respond to declining office product 

sales to federal agencies, competition from other procurement alternatives, and the 

need to update its business model. Stock Program office product sales to federal 

agencies have declined in recent years, in part because of high product markups and 

slow delivery times, relative to other procurement alternatives. According to GSA 

data, office product sales through the Stock Program dropped from about $488 

million in fiscal year 1996 to about $162 million in fiscal year 2007, in terms of the 

cost of merchandise sold to customers (cost of goods sold) in constant fiscal year 

2007 dollars (see fig. 2). Over the same period, sales of other Global Supply product 

lines (general products and hardware) did not encounter a similar drop in sales. 

Similarly, a GSA-commissioned study of Global Supply’s operations found that 

although the Stock Program (which includes office supplies) was the largest 

contributor to Global Supply sales, it had high operating costs in comparison with 

other delivery alternatives.6

 The study further found that markups on products were 

applied across the Stock Program to help cover operating costs and attempt to break 

even on sales. As a result, products in the Stock Program had the highest markups of 

the products sold by Global Supply and were often priced considerably higher than in 

the commercial marketplace. According to GSA, the markups for office products 

were in the range of 45 to 48 percent. In addition, delivery of Stock Program items 

from the distribution centers to the customer generally took about 7 to 10 business 

days, which is longer than other procurement alternatives available to potential 

federal customers, according to GSA officials. 

 6

Deloitte Consulting LLP, General Services Administration, Office of Global Supply: New Business 

Models and Business Case Analysis (Washington, D.C.: Nov. 9, 2006). 

Page 6 GAO-09-230R GSA Global Supply Proposal 
Figure 2: Stock Program Office Product Sales to Federal Agencies (in Cost of Goods Sold), Fiscal Years 

1996 through 2007

Procurement alternatives, including federal strategic sourcing initiatives, have 

increased Global Supply’s competition for office product sales to federal agencies. 

Previously, GSA was a mandatory source of supply but, since 1988, federal agencies 

have been able to procure supplies from other sources. A 2005 memorandum from 

the Office of Management and Budget’s (OMB) Office of Federal Procurement Policy 

required agencies to analyze their spending and identify commodities that could be 

purchased more efficiently through strategic sourcing.7

 As a result, GSA began the 

Federal Strategic Sourcing Initiative (FSSI) in November 2005 and established 13 

FSSI BPAs for office supply procurements under the initiative in 2007.8

 Although GSA 

awarded the FSSI BPAs for use by other federal agencies, these BPAs are separate 

from the BPAs that would be awarded as part of the proposed DVD Program. Since 

the FSSI BPAs were awarded before GSA had moved forward with its proposed DVD 

Program, a Global Supply official said that the FSSI BPAs established under the 

initiative represented competition for Global Supply. Office product sales under the 

FSSI BPAs have increased, accounting for $3.2 million between October 2007 and 

March 2008, and a total of $4.1 million between April 2008 and June 2008. 

Additionally, some federal agencies have established their own purchasing 

 7

OMB, Implementing Strategic Sourcing (Washington, D.C.: May 20, 2005). This memorandum defined 

strategic sourcing as the collaborative and structured process of critically analyzing an organization’s 

spending and using the resulting information to make business decisions about acquiring commodities 

and services more effectively and efficiently.

8

Twelve federal agencies met regularly with GSA to develop the BPA solicitation and signed a formal

project charter agreeing to participate in the FSSI. The 12 agencies are not required to use the BPAs, 

and other agencies may use them. The BPAs provide additional discounts to the negotiated prices 

already available through the GSA Schedule Program due to the expected increase in the volume of 

sales to the business receiving the BPA. 

Page 7 GAO-09-230R GSA Global Supply Proposal
arrangements directly with businesses providing office products. An official 

representing one of these agencies told us that it established its own BPAs because 

such contracts would lower the cost of the office products that its employees 

typically needed. Other procurement alternatives available to federal agencies 

include in-person and online purchasing using government purchase cards and the 

Department of Defense’s DOD E-Mall—an Internet ordering site for military and 

other federal customers to order various parts and supplies. 

Global Supply officials told us that the proposed DVD Program is designed to replace 

the Stock Program business model for certain office products, in order to improve 

prices and delivery times for federal customers. A GSA memorandum stated that the 

business model for supplying certain products through their distribution centers was 

outdated and needed to be changed in order for GSA to stay competitive in the office 

products marketplace. The memorandum also stated that the proposed DVD Program 

would allow Global Supply to rely on more efficient channels to provide certain 

products. Similarly, the GSA-commissioned study of Global Supply suggested that the 

agency update its business model to reduce costs of stocking products and to 

respond to customer expectations for competitive prices and faster delivery. It 

suggested that the Stock Program should continue to store and deliver items that are 

not readily available in the commercial marketplace, such as government forms and 

items with military insignia, but shift to direct delivery from the vendor for items that 

are easy to ship and readily available commercially. 

According to GSA officials, many office products have these characteristics and 

should be transitioned to the proposed DVD Program. GSA officials stated that the 

cost savings they have identified through the proposed DVD Program will allow the 

agency to reduce office product markups to approximately 17 percent. GSA officials 

stated that this reduction in costs and markups will make the prices of Stock 

Program office products more competitive. 

GSA’s Proposed DVD Program Would Likely Decrease the Number of Small 

Businesses Selling Office Supplies to Global Supply, but GSA has Taken 

Some Steps to Address Small Businesses’ Concerns 

While the precise effect is currently unclear, GSA’s proposed DVD Program would 

likely result in fewer small businesses selling office products through GSA’s Global 

Supply system. During fiscal years 2005 through 2007, about 100 small businesses 

sold to Global Supply the office products that would transition from the Stock 

Program to the proposed DVD Program.9

 For fiscal year 2007, specifically, about 60 

small businesses sold these products to GSA. Small businesses accounted for 

between 47 and 56 percent of the annual sales for these products during these three 

fiscal years (see fig. 3).

 9

The total number of small businesses reflects the number that sold the transitioning office products 

during any of the three fiscal years (2005, 2006, and 2007). The total number of small businesses selling

these products in each of those years was less than 100. Some small businesses participated only for 1 

or 2 years. 

Page 8 GAO-09-230R GSA Global Supply Proposal 
Figure 3: Vendor Sales, by Business Size, for Office Products Proposed to Transition to the DVD 

Program, Fiscal Years 2005 through 2007 

 Note: The rounding for fiscal years 2005 and 2007 sales caused the total to be different than the sum of the 

dollar values for small and large businesses. 

GSA plans to award a limited number of BPAs for the office products that would be 

sold under the proposed DVD Program and expects prices to be discounted because a 

smaller number of vendors would be supplying larger quantities.10 GSA officials told 

us that the specific number of BPAs to be awarded was unknown because the agency 

would need to evaluate received bids, but the purpose of BPAs is to leverage the 

federal government’s buying power by establishing an agreement with fewer vendors 

for multiple products in order to obtain quantity discounts. 

The Small Business Act of 1958 requires federal agencies to take steps to insure that 

small businesses are provided with opportunities to compete for and receive federal 

government contracts.11 GSA’s solicitation for proposals for the DVD Program’s BPAs 

stated that GSA is committed to assuring that the maximum practicable opportunity 

is provided to small businesses to participate in the BPAs and that evaluation for the 

awards would be made on four factors, in order of importance: socioeconomic status, 

technical and price (with technical and price being equal in importance), and past 

performance. The solicitation further stated that business size would be an evaluation 

factor for consideration of award, and that "[t]he greatest preference will be to award 

to small prime vendors." However, GSA officials told us that the agency plans to 

award a limited number of DVD Program BPAs. While the precise outcome remains 

unclear, it is likely that fewer small businesses would be able to sell office products 

to GSA under the proposed DVD Program than under the current Stock Program. 

SBA officials with whom we spoke stated that since the number of small businesses 

selling office products to the proposed DVD Program would likely be smaller than the 

number currently participating in the Stock Program, fewer small businesses would 

have opportunities to sell these products to GSA. They added that small businesses 

already compete for a multiple award schedule contract to sell these office products 

through Global Supply and that the proposed DVD Program would represent an 

impediment to these small businesses’ efforts to continue selling these products since 

they would have to compete for a BPA. SBA officials told us that they had 

communicated these concerns verbally to GSA before it issued its DVD solicitation 

 10The BPA would be for one base year, with the possibility of four 1-year options, for a total of 5 years. 

At the end of the base period and for each option period, GSA may consider awarding additional BPAs. 

11Pub. L. No. 85-536, § 2(a), 72 Stat. 384 (1958), codified at 15 U.S.C. § 631(a). 

Page 9 GAO-09-230R GSA Global Supply Proposal
but had not provided formal written comments. As of mid-December 2008, GSA and 

SBA officials were engaged in ongoing discussions regarding SBA’s concerns on the 

DVD solicitation. 

Similarly, representatives of small businesses raised concerns when GSA provided an 

opportunity to comment on the proposed DVD Program before the solicitation was 

issued. Our analysis of those comments and the interviews we conducted with small 

business representatives identified the following four primary concerns: 

• Increased shipping costs. Small businesses’ representatives stated that the 

proposed DVD Program would require vendors to ship office products to various 

locations instead of the two distribution centers that they currently ship to under 

the Stock Program. The representatives raised concerns that shipping to various 

locations would be more costly, particularly since vendors are less likely to be 

able to consolidate shipping to one location. 

• Increased costs to meet shorter delivery times. They further stated that the 

requirement to have shorter delivery times for products ordered through the 

proposed DVD Program would lead to the vendor incurring additional costs for 

faster shipping. Initially, GSA planned to require that vendors deliver items 

procured through the proposed DVD Program within 3 days to customers within 

the continental United States. For vendors, this would be a decrease from their 

delivery times to the GSA distribution centers under the current Stock Program, 

where according to GSA officials, GSA monitors the stock levels and places 

orders (replenishments) against contracts far enough in advance to allow for 

ample delivery time of the products to the distribution centers. The most common 

time frame for vendors to deliver products to the distribution centers is generally 

around 30 days. 

• Lack of a minimum order size. Small businesses’ representatives commented 

that, without a minimum order requirement, a vendor could lose money on lowvolume orders since shipping could cost more than the revenue generated from

the sale of the products. Some also suggested that they would incur further costs 

because they would need to maintain larger inventories in order to offer the 

required 95 percent of the office products available from the Stock Program and 

deliver them directly to the customer. While small businesses can partner with a 

wholesaler of office supplies to obtain products quickly to meet delivery time 

requirements and avoid maintaining larger inventories, small business 

representatives told us that this can be costly to the vendor. They explained that 

wholesalers’ prices are typically higher than manufacturers’ prices, and they 

would have to offer these products to GSA at higher prices (than under the Stock 

Program) in order to account for the increased cost of obtaining them. According 

to GSA officials, however, the majority of office product vendors with a multiple 

award schedule contract currently utilize wholesalers as a source for the office 

products they sell. 

Page 10 GAO-09-230R GSA Global Supply Proposal
• Additional costs of implementing the proposed DVD Program. Small businesses’ 

representatives indicated that incorporating information system requirements, 

implementing packaging and shipping requirements, and restructuring facilities 

could also result in additional costs if they participate in the proposed DVD 

Program. They stated that such implementation costs could affect the ability of

some small businesses to participate. Further, they noted that small businesses 

awarded a BPA may not be able to sustain their sales because these additional 

costs could affect their ability to price their products competitively or could lead 

to unsustainable pricing. 

GSA has taken some steps to address small businesses’ concerns regarding the DVD 

Program proposal. For example, our review of GSA documentation on the proposal 

showed that GSA changed the required delivery time from 3 days to 4 days, in 

response to small businesses’ concerns about shipping costs associated with the 

faster delivery time. GSA officials told us that a 4-day delivery requirement continues 

to provide a reasonable delivery time for customers, while helping to lower shipping 

costs for small businesses since some shipments can be shipped by ground 

transportation within 4 days. To address concerns about the lack of a minimum order 

amount, GSA included a stipulation that it would compensate vendors incurring an 

average order amount of less than $50 for the first year of the proposed DVD 

Program. After the first year, if a business’s average order is less than $50, GSA would 

pay a $10 handling fee for each order that was less than $50, and would make these 

payments up to a total of $50,000 in handling fees. However, some small business 

officials with whom we spoke stated that while an extra day for required delivery 

could lower some shipping costs, cross-country shipments would still be costly under 

this time frame, and that an annual payment to offset the lack of a minimum order 

requirement may be too infrequent since the vendor would have to absorb any losses 

on small orders throughout the entire year. GSA officials also told us that the agency 

would assist DVD Program vendors with the costs incurred in implementing certain 

information system requirements. GSA also anticipates providing additional 

opportunities for businesses to participate in the BPAs. Specifically, the agency plans 

to conduct annual performance-based reviews to determine whether there is a need 

for allocation readjustments among BPA vendors, new BPA awards, or both. Finally, 

GSA officials stated that the 13 FSSI BPAs for office products previously discussed in 

this report had similar requirements to the DVD BPAs (for example, discounted 

prices and shorter delivery times), and small businesses were awarded 11 of the 13 

FSSI BPAs and currently provide office products under these requirements. 

The potential effects of these steps by GSA notwithstanding, the dollar amount of 

future sales to small businesses participating in the proposed DVD Program remains 

uncertain. As mentioned previously, the Small Business Act requires agencies to 

provide small businesses with opportunities to compete for and receive federal 

government contracts. GSA officials indicated that small businesses could 

collectively account for the same or a greater amount of office product sales (in 

dollars) after transitioning to the proposed DVD Program; but, the agency would 

award fewer BPAs for the Program, relative to the number of small businesses 

recently providing these products to GSA. While GSA officials indicated that they 

Page 11 GAO-09-230R GSA Global Supply Proposal
plan to review purchases under the individual DVD Program BPAs annually to 

determine whether the BPAs provide a best value to the federal government, they did 

not have a specific plan for monitoring and reporting on the extent of small business 

participation in the proposed program. 

The Proposed DVD Program Should Not Affect the Ability of Agencies to 

Obtain Necessary Products During Emergencies or Disasters 

The ability of agencies to meet their readiness needs during emergencies or disasters 

would not likely be affected by GSA’s proposed DVD program since products 

designated as emergency or insurance items would remain in the Stock Program at 

the two distribution centers. According to GSA officials, the proposed DVD Program 

would only include office products that GSA has identified as readily and 

commercially available. The officials explained that GSA designates products as 

emergency and insurance products (e.g., fire suppression items and specific tool kits) 

based on its experience and analyses of Stock Program products that are not readily 

available commercially. GSA officials also explained that, currently, the agency has 

no plans to migrate any of the items it considers to be emergency or insurance 

products to the proposed DVD Program in future years. 

Items that agencies procured from Global Supply during two recent hurricanes were 

not included on the list of products transitioning to the proposed DVD Program. A 

GSA review of the items ordered for Hurricanes Ike and Gustav in 2008 showed that 

none of the items were proposed to transition to the DVD Program. Further, a FEMA 

official we interviewed stated that, in cases of emergencies or disasters, FEMA 

typically only orders office supplies when it establishes a joint field office at the 

disaster or emergency site location. The official added that these products, however, 

are typically delivered through prepositioned contracts that GSA has established with 

vendors and not through the Stock Program. 

Conclusions 

According to GSA officials, the Stock Program’s outdated business model has 

resulted in high product markups and slower delivery times for readily available, 

commercial office products offered under Global Supply, when compared with other 

purchasing alternatives for these products. GSA has proposed transitioning some of 

the office products offered under the Stock Program to a direct vendor delivery 

model—excluding items and products that are used by federal agencies to respond to 

emergencies and disasters. Any changes to the Stock Program would, however, need 

to be made with due consideration to the Small Business Act, which requires federal 

agencies to provide small businesses with the opportunity to compete for and receive 

federal government contracts. Small businesses have raised concerns, such as shorter 

delivery time requirements and the lack of minimum order quantities, with GSA’s 

DVD proposal that could impact their price competitiveness. GSA revised its 

solicitation before it was issued in an attempt to mitigate these concerns. GSA’s

solicitation for proposals for the DVD Program’s BPAs stated that GSA is committed 

to assuring that maximum practicable opportunity is provided to small businesses to 

Page 12 GAO-09-230R GSA Global Supply Proposal
participate in the BPAs and that the greatest preference will be to award to small 

prime vendors. However, GSA officials told us that the agency plans to award a 

limited number of DVD Program BPAs. While the precise outcome remains unclear, it 

is likely that fewer small businesses would be able to sell office products to GSA 

under the proposed DVD Program than under the current Stock Program. GSA’s 

solicitation for the proposed DVD Program stated that GSA plans to annually review 

individual DVD Program BPAs, but it does not explicitly call for the monitoring and 

reporting of small business participation levels. The absence of these important 

components could result in limited transparency in terms of small businesses’ 

participation in the proposed DVD Program.

Recommendation for Executive Action

To increase oversight and transparency, GAO recommends that the GSA 

Administrator monitor and report to Congress on the annual level of small business 

participation in the proposed DVD Program for the first three full fiscal years of the 

program. This action could be accomplished, for example, as part of GSA Global

Supply’s annual performance review of the DVD BPAs. 

Agency Comments and Our Evaluation 

We provided a draft of this report to GSA’s Acting Administrator for review and 

comment. GSA provided written comments that are summarized below and reprinted 

in the enclosure to this report. GSA agreed with our findings and recommendation. In 

its response, GSA stated that it was committed to monitoring and providing reports to 

Congress annually on the level of actual small business participation in the DVD 

Program for each of the first full three fiscal years of the program. 

- - - - - - - - - - - 

As we agreed with your office, unless you publicly announce the contents of this 

report earlier, we plan no further distribution of it until 30 days from the date of this 

letter. The report also will be available at no charge on the GAO Web site at 

http://www.gao.gov. 

Page 13 GAO-09-230R GSA Global Supply Proposal
If you or your staffs have any questions about this report, please contact me at 

(202) 512-8678 or edwardsj@gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. Major 

contributors to this report were Harry Medina, Assistant Director; Tania Calhoun; 

Emily Chalmers; Philip Farah; Dana Hopings; Tarek Mahmassani; Carl Ramirez; and 

William Woods. 

Jack E. Edwards 

Acting Director, Financial Markets 

and Community Investment 

Enclosure 

(250402) 

Page 14 GAO-09-230R GSA Global Supply Proposal
Enclosure: Comments from the General Services Administration 

Page 15 GAO-09-230R GSA Global Supply Proposal