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85–609 PDF 2003

MAKING SENSE OF PROCUREMENT’S ALPHABET

SOUP: HOW PURCHASING AGENCIES CHOOSE

BETWEEN FSS AND FTS

HEARING

BEFORE THE

SUBCOMMITTEE ON TECHNOLOGY AND

PROCUREMENT POLICY

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

APRIL 11, 2002

Serial No. 107–172

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

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

BOB BARR, Georgia

DAN MILLER, Florida

DOUG OSE, California

RON LEWIS, Kentucky

JO ANN DAVIS, Virginia

TODD RUSSELL PLATTS, Pennsylvania

DAVE WELDON, Florida

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

C.L. ‘‘BUTCH’’ OTTER, Idaho

EDWARD L. SCHROCK, Virginia

JOHN J. DUNCAN, JR., Tennessee

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

JANICE D. SCHAKOWSKY, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

JAMES C. WILSON, Chief Counsel

ROBERT A. BRIGGS, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON TECHNOLOGY AND PROCUREMENT POLICY

THOMAS M. DAVIS, Virginia, Chairman

JO ANN DAVIS, Virginia

STEPHEN HORN, California

DOUG OSE, California

EDWARD L. SCHROCK, Virginia

JIM TURNER, Texas

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

MELISSA WOJCIAK, Staff Director

CHIP NOTTINGHAM, Counsel

TEDDY KIDD, Clerk

MARK STEPHENSON, Minority Professional Staff Member

(III)

C O N T E N T S

Page

Hearing held on April 11, 2002 .............................................................................. 1

Statement of:

Allen, Edward, executive director, Coalition for Government Procurement;

and Dwight Hutchins, partner, USA Federal Government strategy

practice, Accenture ........................................................................................ 54

Cooper, David E., Director, Acquisition and Sourcing Management, U.S.

General Accounting Office; Stephen Perry, Administrator, U.S. General

Services Administration; and Claudia S. Knott, Executive Director, Logistics Policy and Acquisition Management, U.S. Defense Logistics

Agency ............................................................................................................ 8

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

Allen, Edward, executive director, Coalition for Government Procurement,

prepared statement of ................................................................................... 57

Cooper, David E., Director, Acquisition and Sourcing Management, U.S.

General Accounting Office, prepared statement of .................................... 11

Davis, Hon. Tom, a Representative in Congress from the State of Virginia, prepared statement of ........................................................................ 3

Hutchins, Dwight, partner, USA Federal Government strategy practice,

Accenture, prepared statement of ................................................................ 70

Knott, Claudia S., Executive Director, Logistics Policy and Acquisition

Management, U.S. Defense Logistics Agency, prepared statement of ..... 41

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

prepared statement of ................................................................................... 23

Turner, Hon. Jim, a Representative in Congress from the State of Texas,

prepared statement of ................................................................................... 6

(1)

MAKING SENSE OF PROCUREMENT’S ALPHABET SOUP: HOW PURCHASING AGENCIES

CHOOSE BETWEEN FSS AND FTS

THURSDAY, APRIL 11, 2002

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON TECHNOLOGY AND PROCUREMENT

POLICY,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 9:30 a.m., in room

2203, Rayburn House Office Building, Hon. Tom Davis of Virginia

(chairman of the committee) presiding.

Present: Representatives Mr. Davis of Virginia, Schrock, Turner,

and Ms. Davis of Virginia.

Staff present: Chip Nottingham, counsel; Teddy Kidd, clerk;

Mark Stephenson, minority professional staff member; and Jean

Gosa, minority assistant clerk.

Mr. DAVIS. Good morning. I want to welcome everybody to today’s oversight hearing on the GAO’s Federal Supply Service and

Federal Technology Service. Today’s hearing will build on work

that is currently being conducted by the General Accounting Office

for the subcommittee on the structure, management and coordination, or lack of it, between the two Services, which do more than

$30 billion in business each year.

The aim here is to determine whether FSS and FTS ensure that

the American taxpayers receive fair value for their hard-earned

dollars when the government acquires products or services. As

many of you know, through various revolving funds, GAO buys

products and services from the private sector and re-sells them to

Federal agencies. FSS and FTS both fit within this model, but take

different approaches to filling agency customers’ needs.

The Federal Supply Service, through its Schedules Program, provides government agencies with the opportunity to quickly purchase needed products and services, including, of course IT. Customer agencies deal directly with vendors under their FSS Schedule contacts. Used properly, the Schedules have proved to be an invaluable tool for contracting officers. FTS offers Federal agencies a

range of IT and telecommunications services through varied contract vehicles, including the Schedules. FTS views itself as a valueadded reseller of communications and IT.

In addition to its contract vehicles, FTS offers consulting and

more extensive contract solutions to assist Federal agencies with

complex acquisitions that require in-depth technical knowledge.

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Again, used properly, FTS offers Federal agencies a valuable tool.

The recent rapid growth of both Services has been primarily fueled

by sales of IT products and services. Interestingly enough, this

growth has been more substantial for the Federal Supply Service

than for FTS. Both provide a full range of IT service contracts,

often through the same vendors. The overlap is largely the result

of the momentous changes made in 1996 under the Clinger Cohen

Act. Clinger Cohen eliminated GSA’s then government-side IT contracting responsibility through its Information Resource Management Service. GSA reacted by relocating some of its IT contracts

through the Federal Supply Service and others to FTS. With the

approval of the Office of Management and Budget, GSA continues

to play a leading role in the government-wide IT market.

The overlapping and possibly redundant nature of the current

structure—FTS is a major user of Federal Supply Service contracts—raises questions related to the relationship between the

services. Is the relationship a result of inefficiencies, unnecessary

infrastructure, and cost? On the other hand, perhaps the current

structure results in increased opportunities for vendors to capture

Federal business and amplified procurement options for Federal

agencies. Various customer agencies and vendors have differing

views. What is GSA’s view? At this point in time, I don’t know if

you know. It doesn’t appear that GSA has focused on this issue

enough to be able to articulate a clear vision for addressing possible structural problems and the relationship between FTS and

FSS.

The good news is that at the urging of the subcommittee, GSA

has contracted for a study of the structure and efficiency of both

agencies, with the objective of developing a strategy to improve

GSA’s services to its customer agencies. The committee is further

heartened by GSA’s current efforts to build better performance

measures to gauge for the first time its ability to achieve cost savings for the government rather than simply measuring the revenue

growth of the programs themselves.

We look forward to Administrator Perry’s remarks today to further enlighten us on these issues. Whether these efforts will bear

fruit is, I think, still an open question. It is critical for GSA to resolve its structural and management challenges to assure the

American taxpayer that both agencies provide value as suppliers of

IT products and services to the Federal Government. Today we are

going to explore the issues related to the management and structure of the FTS and FSS in the context of the impact on GSA’s customer agencies and the participating vendor community. To help us

gauge the impact, we are going to hear today from distinguished

representatives from both industry and government users. The

GAO is also here today to supply the context for our discussions.

In closing, I want to emphasize that the subcommittee will continue to follow GSA’s efforts to understand and measure the results

of the FSS and FTS programs. The subcommittee stands ready to

support appropriate strategies to improve GSA’s service to the Government IT market.

Let’s get started, and I would yield to my ranking member for

any statements you would want to make.

[The prepared statement of Hon. Tom Davis follows:]

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Mr. TURNER. Thank you, Mr. Chairman.

This subject, like many our committee deals with, is somewhat

mundane. I was a little surprised to see the big crowd when I came

in the room this morning, Mr. Chairman.

Mr. DAVIS. That’s why we were in the wrong room. [Laughter.]

Mr. TURNER. I realized later that you and I both had trouble

finding the room, and I gathered you just selected a smaller room.

When you have a smaller room, you always get a bigger crowd.

This subject today is one that there has been some interested expressed in. Our purpose, of course, is to determine whether or not

the Federal Technology Service and the Federal Supply Service are

engaging in overlapping functions and whether or not that needs

to be remedied. I commend the General Services Administration for

looking into it, as well as the GAO. We look forward to hearing

from all of you today to see if there is a need for some reform in

this particular area.

Thank you, Mr. Chairman.

[The prepared statement of Hon. Jim Turner follows:]

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Mr. DAVIS. Thank you very much.

Mr. Schrock, any opening statement?

Mr. SCHROCK. No, thank you, Mr. Chairman.

Mr. DAVIS. Ms. Davis.

Ms. DAVIS OF VIRGINIA. No, thank you, Mr. Chairman.

Mr. DAVIS. We’ll get right to it, then. As you note, we’re going

to hear testimony from Mr. David Cooper of GAO, Steve Perry from

the General Services Administration and Claudia Knott of the U.S.

Defense Logistics Agency on our first panel. We’re also going to

hear from Edward Allen of the Coalition for Government Procurement, and Dwight Hutchins of Accenture, on our second panel. Our

first panel has been called. As you know it is a policy of the committee to swear you in. If you would just rise and raise your right

hands.

[Witnesses sworn.]

Mr. DAVIS. Thank you very much. You may be seated.

To afford sufficient time for questions, please try to limit yourself

to about 5 minutes. I think we have a light up here. When it gets

yellow, that means you have a minute left of your 5 minutes. I’ll

begin with Mr. Cooper then work down to Administrator Perry and

then Ms. Knott. Thank you very much.

STATEMENTS OF DAVID E. COOPER, DIRECTOR, ACQUISITION

AND SOURCING MANAGEMENT, U.S. GENERAL ACCOUNTING

OFFICE; STEPHEN PERRY, ADMINISTRATOR, U.S. GENERAL

SERVICES ADMINISTRATION; AND CLAUDIA S. KNOTT, EXECUTIVE DIRECTOR, LOGISTICS POLICY AND ACQUISITION

MANAGEMENT, U.S. DEFENSE LOGISTICS AGENCY

Mr. COOPER. Thank you Mr. Chairman.

Mr. Chairman and members of the subcommittee, it is indeed a

pleasure to be here again before your subcommittee. I thank you

very much for the invitation to testify on this very important topic,

even though it may be mundane.

The Federal Supply Service and the Federal Telecommunications

Service play a very important role in helping Federal agencies acquire a very wide range of products and services. In fact, everything from paper clips to very sophisticated and complex computer

systems. Sales for the two programs last year exceeded $30 billion.

FTS and FSS are funded primarily through the fees that they

charge the Federal customers when placing orders on those contracts.

In recent years, both programs have experienced significant

growth in sales, principally from information technology products

and services. Just as an example, IT sales under the supply service

contracts increased from $3 billion in 1997 to almost $11 billion

last year. It’s been a phenomenal growth in those kinds of products

and services.

Both programs offer Federal agencies a full range of IT service

contracts, including networking, information systems analysis and

design, installation, operation, anything Federal agencies need.

However, each takes a significantly different approach to providing

and satisfying Federal agency needs.

For example, FSS follows a self service model. Its contracts are

designed to be flexible, simple to use and embody commercial buyVerDate 11-MAY-2000 08:55 Mar 27, 2003 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 D:\DOCS\85609.TXT HGOVREF1 PsN: HGOVREF1
9

ing practices. FSS negotiates master contracts with vendors, seeking discounts off their commercial list prices that are at least as

favorable as those vendors offer their most favored customers. Once

the FSS negotiates these master contracts, personnel in other Federal agencies place orders and buy the things they need from them.

FTS, on the other hand, follows a full service business model. In

fact, it works very closely with Federal agencies helping identify

what the requirements are, coming up with an acquisition strategy

to satisfy those requirements, identifying where those requirements

can be satisfied and actually administering the orders that are

placed on those contracts. FTS contracting officers use a variety of

contract vehicles to meet agency needs. The use their own contracts, contracts other agencies have awarded, the so-called

GWACs, and the FSS schedule contracts.

In fact, FTS is the single largest user of FSS’s IT schedule con- tracts. Last year, it placed orders of about $1.7 billion on those contracts.

Concerns have been raised about the overlap between the two

programs. Both FSS and FTS provide customers agencies with access to similar products and services, and in fact, use many of the

same vendors. In fact, eight of the top ten suppliers of IT products

and services to the Federal Government during fiscal year 2000

held contracts with FSS and non-schedule contracts used by FTS.

Overall, according to data in the Government-wide prime contract

data base, over 300 vendors received awards under FSS schedule

contracts and non-schedule contracts.

Some, noting that duplicative contract vehicles exist throughout

the Government, it’s not solely limited to FTS and FSS, have criticized the overlap between the programs. They believe that duplicative contracting vehicles are inefficient because companies are required to incur additional costs to prepare proposals to compete for

these contracts. They also believe Federal agencies incur additional

costs to award and administer those contracts.

Others, however, favor the overlap. Many vendors are willing to

accept the increased costs of the overlapping contracts because it

provides additional Government business. Agency customers view

the overlapping contracts as providing them greater procurement

choices.

Notwithstanding these diverging views, we believe GSA needs to

take a hard look at how effective its procurement programs are operating and, to its credit, and I think Mr. Perry will be discussing

some of those initiatives. GSA has begun two principal initiatives

that we believe will provide better information on how the programs are operating. First, GSA is encouraging the FSS and FTS

managers to develop better performance measures. Currently what

the are using to measure their performance are sales increases and

customer satisfaction, not specifically focused on the question of

whether quality products and services are being provided at competitive prices and significant savings to the Government. Accordingly, additional measures are being developed to provide that information.

GSA also has chartered a study with a contractor to look at the

mission and operation of the two programs. The study will survey

current and potential customers to identify their needs for IT and

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telecommunications services, analyze GSA’s current approach to

fulfilling those needs, and identify high potential alternative approaches to doing so. The study’s ultimate objective, and it’s due to

be completed in the near future, is to develop strategies to improve

GSA’s capability to serve the Federal technology market. We believe both initiatives are good steps toward answering the questions this subcommittee is asking. It is important for GSA to gain

assurance that its programs are delivering value to the Government and to identify opportunities to increase their efficiency.

That concludes my statement. I’ll be glad to answer any questions.

[The prepared statement of Mr. Cooper follows:]

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Mr. DAVIS. Thank you very much.

Mr. Perry, thanks for being with us.

Mr. PERRY. Chairman Davis and members of the subcommittee,

thank you very much for this opportunity to testify about GSA’s

management reform and performance improvement initiatives,

both in general and as these two steps apply to our Federal Technology Service and Federal Supply Service in particular.

Before I describe the specifics of our efforts at FTS and FSS,

please permit me to outline GSA’s agency-wide management reform and performance improvement initiatives, because I think

that will set the context for the more specific discussion. After I

was sworn in as Administrator of GSA last June, we began a comprehensive review of the agency to ensure that GSA is providing

best value to customer agencies and to the taxpayers. We began a

round of management reviews and strategic planning discussions

within the organization and throughout the organization.

As an agency, we redefined or refocused upon our mission. We

established six specific agency-wide goals, all of which are supplemented by individual goals for respective units under those categories. We established or defined for ourselves five GSA-wide values that we will conduct ourselves by. And we developed performance plans, laying out the strategies and tactics of how we are

going to achieve success.

This process, which we call creating a successful future at GSA,

is the foundation from which we will achieve a higher level of performance at the agency. We determined that our mission is to help

other Federal agencies better serve the public by offering to them

at best value superior work places, expert solutions, acquisition

services and management policies. In line with that mission statement, we determined that the values of our organization which

exist are as follows. First and foremost, ethics and integrity in everything we do. Second, respect for our fellow GSA associates,

which leads to the third value of teamwork, which is critical, really,

to our success. Fourth, results orientation and fifth, professionalism.

After having determined and refocused upon our agency’s mission and values, we then outlined the six GSA-wide goals that we

would hold ourselves accountable to achieve. Those goals are first

and foremost, to provide best value for our customer agencies and

the taxpayer. Second, to achieve responsible asset management.

That’s particularly relevant in our property management arena.

Operate effectively and efficiently. Four, ensure financial accountability. Five, maintain a world class work force and a world class

work place, which speaks to the issue of human capital development and training. And sixth, carry out our social and environmental responsibilities as a Federal Government agency.

Mr. Chairman, in addition to establishing clear and challenging

goals for ourselves, we are also instituting a rigorous performance

management process at GSA. We’re establishing measures which

will allow us to track our performance achievements or lack thereof

in every important area within GSA. It was during this process of

review that we identified similar functions were being administered by the Federal Supply Service and the Federal Technology

22

Service. These initial findings were consistent with what we were

hearing from this subcommittee and from others.

The Commissioners of FSS and FTS and I decided at that time

to conduct an objective, third party review of the two Service areas

in order to determine if the current policies, procedures and structures of these two Service areas were in fact providing best value

to customers. On January 22nd of this year, we engaged Accenture,

and they began assisting us in this review. Our study of FTS and

FSS policies, procedures, structures and operations include a focus

on non-value adding activities, duplication or overlap between

these two organizations. The study will also determine if there are

any gaps, that is in addition to duplication and overlap, are there

any voids where FSS and FTS should be adding or providing additional information technology and telecommunications services to

our customer agencies.

Accenture’s team has been given full access to the FSS and FTS

management and to all the other associates and to all the other information with respect to these issues in those two organizations.

They are using that information to analyze our organization’s policies, procedures, structures and operations. Accenture is also interviewing customer agencies and industry partners to determine if

they perceive that FSS and FTS are operating in a manner that

provides best value in procuring products and services that our customers agencies need to meet their missions.

After a detailed business analysis of these facts, Accenture will

provide GSA with the results of its study and its recommendations

or alternative solutions which could be used to improve our performance and to better meet our goal of providing best value to our

customer agencies and the taxpayers. We have set a very aggressive time table for the completion of this study. We expect it to be

completed by the end of this month. The study is moving along at

a good pace. Once it is concluded, we will review the results and

we will consider and evaluate all of the recommendations or alternative solutions and determine what steps, if any, should be taken.

Mr. Chairman, by taking an independent assessment of the FTS

and FSS business lines, GSA hopes to evaluate and if necessary,

make changes to the current policies, procedures and activities that

might significantly enhance our ability to provide best value to our

customer agencies. Our work in the FTS and FSS IT solutions

arena is just one part of our overall performance improvement initiative to improve GSA’s performance in providing best value to our

customer agencies.

I certainly want to thank you for your interest in this issue and

for the opportunity to testify before you and this subcommittee. At

this time or at a later time, I will be happy to answer any questions you may have.

[The prepared statement of Mr. Perry follows:]

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Mr. DAVIS. Thank you very much.

Ms. Knott.

Ms. KNOTT. Good morning, Mr. Davis, Mr. Turner and other

members of the committee.

I also appreciate the opportunity to appear before this committee.

This morning I will briefly discuss DLA’s use of the services provided by the General Services Administration Federal Supply Service and Federal Technology Service. This is also a timely occasion

for comments from DLA pertaining to Section 803 of the National

Defense Authorization Act for fiscal year 2002.

DLA has directly awarded contracts using Federal Supply Service schedule contracts in the past. In fact, in fiscal year 2001, we

awarded $389 million and in fiscal year 2000, we awarded $343

million. We have found the schedules offered by GSA to be efficient

and consistent with our agency’s goal to ensure that the best value

is obtained for the Government.

DLA also utilizes the Federal Technology Service primarily for

telecommunications. All of our telecommunication requirements go

through the Defense Information Systems Agency, who functions as

the single DOD agent in this area. Using what we call military

inter-departmental purchase requests, in fiscal year 2002 we provided $15.4 million to DISA for telecommunications requirements.

And in fiscal year 2001, the amount was $14.1 million.

In a brief overview of the specific questions raised by your committee, let me say that I am unaware of any DLA issues associated

with competing contracts issued by FTS and FSS. We have found

the schedules offered by GSA are consistent with our agency’s goal

of acquiring best value solutions. The information and training provided by GSA through its Web sites and seminars provide valued

information into their products and services and how we can best

utilize them.

As to the provisions of Section 803 of the National Defense Authorization Act for fiscal year 2002, under this proposed rule, each

order for services exceeding $100,000 made under a multiple award

schedule will be made only after all contractors offering such services under the schedule are notified of the intent to make a purchase, or the contracting officer must inform as many scheduled

contractors as practical, and the contracting officer must ensure

that proposals are received from at least three schedule contractors

to be considered for award. This new process is a departure from

current rules for awarding orders under the schedules. The current

rules require a contracting officer to contact only three schedule

contractors that are capable of performing the requirement. We

will be implementing this section 803 upon receipt of the DOD implementation guidance.

Thank you very much, and I stand ready to answer your questions.

[The prepared statement of Ms. Knott follows:]

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Mr. DAVIS. Thank you very much.

I’ll start the questioning with Mr. Schrock.

Mr. SCHROCK. Thank you, Mr. Chairman, and thank you all for

being here today.

I just have a couple of brief comments. Mr. Cooper, one of the

things that struck me that you said, you talked about overlap,

which to me means duplication of efforts, and you said businesses

like that. You have to help me through that, something doesn’t

sound right about that.

Mr. COOPER. The overlap that exists is in the IT area. What’s

happening is, as Federal agencies need more and more services, IT

services, to keep their systems operating, help desks, so on and so

forth, they turn to either the schedule or to FTS for a solution in

that area.

What we see, the overlap, is that there are contractors under

both of those arrangements that provide similar types of services.

Services is a very difficult issue. A lot of people, we’re in a new era

of contracting because of the explosion in service contracting in recent years. Services aren’t as easy to buy as products have been in

the past, particularly off the schedules. In the past, on a schedule,

you could go in with a description, in fact, a national stock number

for a product. Then you could see which vendors were offering that

product, it’s very defined, and then pick three and then place your

order.

Services are a little bit different. Services vary from contractor

to contractor and it needs a little more deliberation and understanding of what the requirement is and what those contractors are

providing to satisfy that requirement. So the overlap is——

Mr. SCHROCK. Not overlap?

Mr. COOPER. It’s not the exact duplicate thing, like you would

find in the product area.

Mr. SCHROCK. So four different vendors may offer similar things,

the Government agency can say, hey, this best fits what we want

to do and pick from that?

Mr. COOPER. Exactly.

Mr. SCHROCK. It’s not overlap. I understand.

Mr. COOPER. The overlap is not synonymous with duplication as

you would find in products.

Mr. SCHROCK. OK. That’s what we’re trying to do away with.

Mr. COOPER. Right.

Mr. SCHROCK. Mr. Administrator, you mentioned that FTS and

FSS do the same things, and this report is going to come out on

30 April. Once the report is out, how long is it going to take to implement? I’ve been in Government long enough to know sometimes

I’ll have several birthdays before that happens. I’m just wondering

how long something like that will take to implement.

Mr. COOPER. In our overall performance improvement initiatives,

we are focusing on quick action and quick implementation. The

specific answer to your question, Congressman, of course will depend upon the nature of the recommendations that we receive. But

we have taken this on as a priority. We know it’s a priority to this

subcommittee, and I can assure you that we will address those recommendations as a high priority.

48

Mr. SCHROCK. I guess the thing about it, at the State level I remember they used to do these magnificent reports and pay hundreds of thousands of dollars, somebody stuck them in a drawer

and that’s where they stayed.

Mr. COOPER. That will not happen in this case.

Mr. SCHROCK. Ms. Knott, I certainly agree with your comment

about best value. As a retired military guy, I think the Department

of Defense is doing a great job with inter-operability to make sure

that the Services are working more in concert with one another

and not at cross purposes. I hope that’s what this is all going to

come out to be. But I have to compliment the Defense Department

for doing that. I’d be remiss if I didn’t.

Ms. KNOTT. Thank you very much.

Mr. SCHROCK. Thank you. Thank you all for being here.

Mr. DAVIS. Mr. Turner.

Mr. TURNER. Thank you, Mr. Chairman.

Mr. Cooper, I’m trying to read between the lines here, but I’m

getting the sense that you have not perceived a great problem here.

Mr. COOPER. I think when people see and hear some of the

things being said, it’s in large part a perception right now, and

there’s very little data, we say that in our statement, there’s very

little data that defines this overlap.

Let me give you an example. The GSA Inspector General did

what they called a limited review back in the summer of 2000. At

that time, they identified 139 contractors that were both FTS and

FSS. And when they went and looked at the 139, what they found

was that 109 of those, or 78 percent, were SBA 8(a) firms that were

part of FTS’s Federal Acquisition Services for Technology, FAST,

program. They were graduating from that program, and in anticipation of graduating from that program they also went and got on

the FSS schedule.

So if you just looked at the numbers, you would say, that’s duplication. Well, when you get behind that a little bit, it is not as much

duplication as it might appear to be.

Mr. TURNER. Mr. Perry, when you first heard about this possible

duplication and you began to look into it, did you end up with the

sense that there was a problem here?

Mr. PERRY. Well, that’s what this study will determine. We really

haven’t got to that answer. But there was enough discussion of it,

there was enough perception that we believed that the only way to

really get to the root of the problem here was to have a third party

objective review of the facts. That’s what is going to answer that

question.

Mr. TURNER. So the study that you are initiating through the

contract with Accenture is initiated just a few months ago and supposed to be completed?

Mr. PERRY. Yes, we initiated it in January, we gave them 90

days, which also addresses your question, Mr. Schrock. The 90 days

is an indication of the priority level that we’re putting on this in

order to come to some conclusion.

Mr. TUNER. What’s the cost of that contract with Accenture to do

the study?

Mr. PERRY. I have to admit, Congressman, I don’t know the answer to that. I’d be happy to provide that information to you.

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Mr. TURNER. Why don’t you do that, I’d like that. Thank you, Mr.

Chairman.

Mr. DAVIS. I’m going to ask who gives the better deal, since

they’re both out there. But I guess it really depends, doesn’t it, on

the vehicle?

Mr. COOPER. That’s an excellent question and that I think is

where GSA needs to place some emphasis. I think they’re beginning to with some of the measures that we’ve talked about.

Right now, there is no information that will tell you whether in

fact we are getting the best value. The study, I think, is going to

get at that and identify some ways to maybe promote leveraging

of the buying power between the two Services.

Mr. DAVIS. I kind of have an open mind. Maybe this gives the

consumers out there, the Government, because there are more

choices, the option of being able to go in a couple different directions on this. I don’t know. That’s what we want to try to find out.

And you don’t have an opinion one way or the other yet, do you?

Mr. COOPER. Definitely it gives the buyer tremendous choice.

And it’s not just with FTS and FSS. You can go to the NIH GWAC

and get the same kind of services from the same vendors. So the

issue that the subcommittee is looking at is an issue that really is

broader and is across the Federal Government.

Mr. DAVIS. You can obviously also go, NASA also has a Schedule.

Mr. COOPER. NASA, DOT.

Mr. DAVIS. You don’t have to be NASA to go to the NASA Schedules, do you?

Mr. COOPER. No, you don’t. There are lots of opportunities.

Mr. DAVIS. I don’t mean to be picking on GSA, because there are

many schedules out there that are overlapping. I don’t know how

it all works out, except that there are many choices right now.

Mr. Perry, let me ask a few questions. OMB has noted that sales

growth is not a particularly good performance measure, although

I think it’s relevant. With other Schedules out there, outside of

GSA, the fact that they’re coming to you still in droves instead of

others, I think, is indicative of something. But one look at the savings that are generated for the agency customers, I mean, at the

end of the day, that’s kind of another bottom line you want to look

at on this.

Do you have any strategies right now for reorienting the performance measures for the FTS and FSS?

Mr. PERRY. Yes, Mr. Chairman, we certainly do.

Mr. DAVIS. Those are the ones you read off earlier?

Mr. PERRY. That’s the general and overall concept. It gets back

to the mission objective that we have where we describe our mission to provide best value to customer agencies. So the question

you’re raising then is, what is best value. And best value can’t completely be measured just by the fact that our sales growth is going

up.

Now, I agree with you, it certainly is an indication, because

clearly if our sales volume was going way down, that would be an

indication that customers are not satisfied with our service. The

fact that the reverse is true is a valid vindication.

Mr. DAVIS. And ought to be included, absolutely.

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Mr. PERRY. Absolutely. But we do want to go beyond that, in addition, and we have. One of the things we are already doing is to

conduct customer satisfaction surveys, where we give the customers the opportunity to fill out a form and tell us specifically

areas where we are meeting their needs and areas where we are

failing to meet their needs, so that gives us a blueprint for performance improvement. A third thing we’re doing, which is relative to

that, is that we also are conducing what we call customer service

visits.

At the national level, myself and the commissioners as a team

visit the agency management and talk with them about, first of all,

the short term things, how are we doing with respect to meeting

your current needs. We have that discussion. Then we talk about

what I believe is more important, that is their longer term programmatic needs. How are we doing, or what are some of the

longer term programmatic things that you are embarked upon, and

how can we support that effort. So that again gives us, as we leave

those meetings, a couple of pages of to-do items with respect to performance in the short term areas and a couple of pages of to-do

items with respect to the longer term issues.

So the customer service visits at the national level is another indication, the information we get out of that dialog. And then at the

regional level, we’re doing the same thing. We’re asking each of our

regional administrators and their respective teams to visit the customer agencies in their location and to have that discussion. Then

last, with respect to this, we are doing that as it relates to our

groups of customers in groups in each of our 11 regions around the

country. This group is known as the Federal Executive Boards. We

meet with them, I go to those meetings myself as often as I can

to engage in this dialog, and we document the results.

So all of those are additional parts of determining whether or not

we are providing best value. But they are also not precise measurements. So in terms of precise measurements, we are trying to do

a couple of things. Right now, the data is not really reliable

enough. But we’re nevertheless stepping into this.

In the case of FSS, we’re looking at trying to collect information

that shows the discount from lists that our customer agencies are

being able to receive as a measure of the real value that’s being

derived by that agency. In the case of FTS, we’re trying to do similar things, that is to make a statement as to what would it have

cost the agency to procure that particular IT solution had they not

used an FTS approach versus what they actually did. That will be

a numerical measure.

I think it’s a useful one, but still, we will not be at what in my

judgment is the biggest measure of the value to the customer agency. In order to get that information, the customer agency itself

would have to present it, namely that is, once I put that integrated

system into my operation, what was the ongoing productivity improvement or cost savings that the agency is generating as a result

of that.

Clearly, some of the credit for that savings would belong to the

agency itself who made the decision to go forward with that. But

in fact what we find is that, in FTS in particular, where they are

providing value added services, very often the agency will say, we

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would not have come to that solution without FTS’s direct involvement. So in that kind of a situation, you could say that FTS was

a part of deriving that value. Candidly, that information is difficult

to obtain, because it takes time to obtain it. In the case of some

agencies, they even have concern about showing what their savings

are, for fear of losing it.

But we are at least on an anecdotal basis looking at individual

cases. Just last, there was one recent article in the news of an

agency who indicated that by converting from its prior approach to

a GSA approach, they were now saving $400,000 a year annually

on this particular system. Now, those are the kinds of savings that

today most agencies don’t measure very precisely. We’re working to

try to move in that direction. And until we get to that point, which

I suspect is down the road, we’re going to do more in terms of

measuring, continue to measure the soft items, if you will, that I’ve

mentioned, the customer satisfaction, the customer interaction, the

customer service visits, but then also move to measuring this discount from list savings on schedules and the savings of using FTS

versus not having used FTS for a solution, at least the unit cost

reduction.

Mr. DAVIS. In my experience and observation, both of these are

pretty well-run agencies. We’re just trying to take it, particularly

for government agencies with all the rules and regulations that we,

the transparency that goes with that. But clearly, if we can take

this to the next level, we want to be able to do that. I think it’s

with that in mind. So we’re not coming into this with any direct

criticism of the people running it. I think they do a pretty good job.

But they are growing very rapidly and there are always ways to

fine tune this and make it better and more efficient. I think that’s

what we’re trying to get at. And I think you’re the guy to do it.

Mr. PERRY. Well, now, let me say too, on behalf of the commissioners, when we talked about this review and the need to explore

as to whether or not there were opportunities for improvement,

there is no hesitation in our management group in terms of moving

forward to do just that.

Mr. DAVIS. I think the staff feels the same way.

A couple of other questions. Some folks have reported to us that

they think there may be problems in the implementation between

headquarters and the regional offices, particularly with FTS. Do

you detect any of that at all, have you had any problems brought

to your attention?

Mr. PERRY. Well, I wouldn’t say that we have any extraordinary

or significant problems. What we do have, or what we have had in

the past, is that we did not have clear performance expectations or

goals set that would cover both what we’re doing, for example,

we’re trying to do from an FTS national perspective and regional

perspective. So when there wasn’t a clear set of goals, there was

certainly the potential for various regions to be going in different

directions and to be not in synch with the national direction.

One of the things that we’re doing is forging a much closer working relationship among our national commissioners and our regional administrators, so that we only have one performance plan.

Everyone is on the same page with respect to that. That’s No. 1.

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No. 2, that closer working relationship among that group, taking

those two things together, having one plan and a close working relationship among the national people and the regional people will

drive us to minimizing, if not eliminating, any issues such as that

if they otherwise would have occurred.

Mr. DAVIS. Just one last question. Have you given any thought

to maybe establishing a position under you that would have the authority to oversee both services as well as the regional structure

within each service?

Mr. PERRY. That will be, again, a subject of the study. We are

looking at a number of things of that nature.

Mr. DAVIS. Just an option?

Mr. PERRY. That would be an option. Today, as our present structure exists, as you know, the Commissioner of FTS and the Commissioner of FSS report directly to me. So I’m the integrating force,

and it’s my responsibility and my role to make sure that they are

collaborating, that they are eliminating any non-value added duplication, and they’re doing all the things they should do together to

meet the needs of our customer agencies.

And I’ll just add, additionally one other thing that we’re doing,

in addition to what I believe is a more active role by the Administrator in this area, we also have a much more active executive committee. The executive committee consists of myself, our chief of

staff and the commissioners and the heads of our major staff offices, the chief financial officer, the chief information officer and so

forth. That group comes together, not as representatives of our respective areas, but as the management team for the GSA enterprise. In those discussions, that team talks about how our units

need to work together and collaborate to provide the total product

offerings that our agency can provide to give our agencies best

value.

So in the course of the study, all of those subjects will be reviewed, and I’m sure recommendations will be made along those

lines.

Mr. DAVIS. Thanks.

Ms. Knott, let me ask you a few questions. Your statement focused mainly on the telecommunications purchasers under FTS.

Does your agency do much business under the FTS for IT products

or services?

Ms. KNOTT. We do some. But it’s not significant in comparison

to the telecommunications.

Mr. DAVIS. That makes sense. You cite the new provision that recently was included in Section 803 of the 2000 DOD Authorization

Act, which I think started off far worse that it ended up, in my

opinion, under which all these schedule contractors have to be informed of task order opportunities over $100,000. You indicate

these provisions should strengthen competition practices under the

Schedules. Do you think these provisions will provide benefits to

offset additional burdens that are placed on the system, in balance?

Ms. KNOTT. Yes. I think competition is the key to a lot of success

in the acquisition arena. So any time that you are improving your

opportunity for competition, then I think that you do have opportunities to improve the result.

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Mr. DAVIS. You also mention in your statement that GSA offers

a variety of training and communications options to assist customer agencies like yours to make smart acquisition decisions.

Training is something that I’ve tried to focus on and Mr. Turner

has tried to focus on. What’s your view as to the quality of those

training options for the customer? Do you think they adequately

prepare agency contracting officers to make the best-value choice?

Could they be improved?

Ms. KNOTT. I haven’t had any personal experience with the training opportunities. But I do know that their Web site there, the information they provide in their publications, it’s readily available.

It does provide valuable information to the person who is looking

for a choice of products available to them and what the right one

may be.

The training, again, I don’t have any personal knowledge of that,

but I haven’t heard anything negative concerning it. I would certainly be the one to hear that from the procurement officials within

our organization.

Mr. DAVIS. I’m going to ask you a tough question. In your experience as a customer agency, do you think that the Federal Supply

Service or the FTS provide the best value to you as an agency?

[Laughter.]

Ms. KNOTT. I think it really depends on what you’re looking for.

[Laughter.]

Mr. DAVIS. Very good.

Ms. KNOTT. Again, it’s your needs.

Mr. DAVIS. She’s going to be a survivor.

Mr. TURNER. May be in your seat some day. [Laughter.]

Mr. DAVIS. Exactly.

Ms. KNOTT. It so much depends on your specific requirement and

matching the requirement to the services that are available. And

again, we haven’t had any issues. We enjoy the benefits from both

of the Services. So that kind of sums up my feeling about that.

Mr. DAVIS. Frankly, that’s what I think; it’s going to depend on

the deal and what you do, and it just gives you another shopping

option.

Ms. KNOTT. Right. And having more sources is always good.

Mr. DAVIS. Well, almost always. That’s what we’re trying to find

out, in terms of what is the duplicate; can you do it a little more

efficiently? Because there is a cost to doing it.

Ms. KNOTT. From a customer perspective.

Mr. DAVIS. I hear you. I understand.

Anything anybody else wants to add? Mr. Schrock.

Mr. SCHROCK. Let me make one comment. I think what you’re

doing is great. I think the report is going to shed some light on it.

Let me use an analogy.

After September 11th, we wondered, how could this happen to

us, why didn’t somebody know about this. Then the President took

Tom Ridge out of the Pennsylvania Governor’s office, brought him

into town and we discovered there were 47 Federal agencies that

did intelligence. My agency didn’t talk to Mr. Nottingham’s, his

didn’t talk to the chairman’s, the chairman’s didn’t talk to Mr.

Turner and so on. Ridge came to town and said, everybody put

your notes and papers on the table. They put the pieces of this puzVerDate 11-MAY-2000 08:55 Mar 27, 2003 Jkt 000000 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 D:\DOCS\85609.TXT HGOVREF1 PsN: HGOVREF1
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zle together, consequently we’re killing the Taliban everywhere, all

the cells in this country. That’s the way I look at this, trying to figure out the right way to do it so the puzzle will all make sense and

it can work. Not that they’re a terrorist organization, I certainly

hope not. [Laughter.]

But I think you’re going to benefit, and I think this report will

do that. So I commend you for what you’re doing.

Mr. DAVIS. Thank you, Congressman.

Thank you all very much. We’ll take a brief recess and move to

the next panel.

[Recess.]

Mr. DAVIS. Mr. Edward Allen of the Coalition for Government

Procurement, Mr. Dwight Hutchins of Accenture, if you would just

stand and raise your right hands.

[Witnesses sworn.]

Mr. DAVIS. Thank you. If you can try to limit it to 5 minutes,

we’ve read your testimony and we’re ready to go with just a few

questions. Your entire testimony is in the record.

Mr. Allen, we’ll start with you, and thank you for being with us.

STATEMENTS OF EDWARD ALLEN, EXECUTIVE DIRECTOR, COALITION FOR GOVERNMENT PROCUREMENT; AND DWIGHT

HUTCHINS, PARTNER, USA FEDERAL GOVERNMENT STRATEGY PRACTICE, ACCENTURE

Mr. ALLEN. Thank you, Mr. Chairman and members of the committee. It’s an honor to be here this morning.

I am Larry Allen, also known as Edward, the Executive Director

of the Coalition. The Coalition appreciates the opportunity to testify on the operations of GSA’s Federal Supply and Federal Technology Services. We have a background of working very closely

with the entire GSA, but especially with these two entities.

While the Coalition represents companies in the technology and

service industries, we also have members in office equipment, furniture, pharmaceutical and other commercial areas. It is this diverse nature that gives us a unique perspective to comment on the

current operations of FSS and FTS. When GSA was created, no one

could have contemplated the significant role information technology

would play in the operation of Government. Few could also have

seen that both the Government and commercial marketplaces

would become service dominated. GSA has had to adapt to these

changes, and to its credit, it has met each challenge and helped

other Federal agencies adapt.

At the start of the 1990’s, GSA was under strong consideration

for dissolution. Today, however, the agency is held up as an example of a Federal organization that has thoroughly reinvented itself.

It plays an important role in helping Federal agencies get what

they need at great values. The leadership of FSS and FTS has been

responsible for much of this transformation.

Government procurement changed dramatically for the better in

the 1990’s. It is important to note, however, that the agency today

is under assault from some who do not share this view. It is the

Coalition’s belief that those who criticize the competitiveness and

efficacy of today’s GSA are not looking at the whole picture. Rather, they are using analytical tools that, unlike procurement, have

55

not changed. As a result, critics are missing part of the important

picture and are devising perceived remedies for ills that do not

exist.

Our members’ experience show that reforms are working well.

The schedule’s program is the best, most effective acquisition tool

that exists today. Competition has never been stronger, and without efficient access to schedule contracts, acquisition costs and lead

times will rise. This is no way for the 21st century Government to

operate.

The Coalition believes that FSS and FTS both play important

roles in the acquisition process. Agencies turn to these organizations daily to fulfill a variety of acquisition needs. At the same

time, critical management issues have arisen that must be addressed. In short, the agency must continue to evolve in order to

continue its success.

The Coalition is concerned that GSA’s substantial growth has resulted in overlap between the two Services. Virtually every technology solution FTS has contracted for through its own contracts

can also be found through FSS schedules. IT services, products,

seat management solutions and more are available from large, medium and small schedule businesses. Even FTS buyers acknowledge the wide array of schedule offerings as FTS as among the

largest customer of FSS contracts.

There are duplicative contracts even within FTS. Many companies have multiple FTS vehicles with similar offerings. A review by

the Coalition showed that seven companies have at least two FTS

contracts with some holding more than three. Businesses are in

business to do business and not chase after a parade of overlapping

contract methods. While you will rarely have an individual company comment on this concern, privately they tell us that the existing overlap takes valuable time away from customer service, and

inevitably increases acquisition costs.

Another problem with duplicative services is customer confusion.

More than one Coalition member has likened the current situation

to the television show, What’s My Line, complete with the tag line,

will the real GSA please stand up. Some customer agencies have

become so frustrated that they chose to conduct their own procurement.

These observances are not meant to be criticisms of GSA leaders.

The senior GSA leadership is strong. Administrator Perry, as well

as Commissioners Bennett and Bates, are capable leaders. We feel

that some of the agency’s operational difficulties, however, stem

from its organizational structure. GSA maintains a strong central

office and an organization of regional headquarters. These dual

structures make it difficult, if not impossible, for the commissioners

to make the best use of their resources. The competition that exists

between regional offices and the central office and among differing

regions can be intense. Each region seems to operate on what is

perceived to be the best course of action for itself, and the two management lines meet only within the GSA Administrator’s office.

This structure, in our opinion, does not lend itself to the efficient

operation of the agency.

The need to eliminate duplication and increase efficiency is especially critical when you look at the aging Federal work force. A subVerDate 11-MAY-2000 08:55 Mar 27, 2003 Jkt 000000 PO 00000 Frm 00059 Fmt 6633 Sfmt 6633 D:\DOCS\85609.TXT HGOVREF1 PsN: HGOVREF1
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stantial number of managers either are or will become retirement

eligible over the next decade. Without a reorganization, it may be

impossible for GSA to continue its efficient operation.

We believe that the existing overlap between FSS and FTS must

be eliminated, and that the key to a successful future of the agency

lies in making the best use of the combined resources of each Service. One way to do this is to create an associate administrator for

acquisition operations at GSA. The creation of this position and the

endowment of it with the ability necessary to make the best use

of agency resources is an important first step. Such a position will

help create a results oriented buying force that allows FSS and

FTS to eliminate duplicative programs and utilize the expertise of

each.

The Coalition has discussed these and other ideas with this subcommittee, the General Accounting Office and GSA. We share a

common goal in making sure that our Government has a state-ofthe-art procurement system. And we look forward to continuing our

work with you and other stakeholders to attain this goal.

On behalf of the Coalition, thank you for the opportunity to testify, and I look forward to your questions.

[The prepared statement of Mr. Allen follows:]

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Mr. DAVIS. Thank you very much.

Mr. Hutchins.

Mr. HUTCHINS. Thank you, Mr. Chairman, Mr. Turner, members

of the subcommittee.

My name is Dwight Hutchins. I’m a partner in Accenture’s Federal Government Strategy Practice.

I appreciate the opportunity to testify today on the study

Accenture is conducting for GSA which is aimed at enhancing customer service and improving internal efficiencies. Accenture, the

world’s leading management and technology consulting organization, employs more than 75,000 people in 47 countries, and generated more than $11 billion in revenues for fiscal year 2001.

Accenture’s U.S. Federal Government practice services many of the

Federal agencies and departments.

This January, GSA awarded Accenture a contract to study its

current performance, service offerings and service delivery. We will

be evaluating the Federal Technology Service and the Federal Supply Service to determine how GSA can provide best value to the

Government and to the American taxpayer. Accenture’s 12 week

study will be completed at the end of April.

Accenture has a diverse set of credentials that we are applying

to this study. We are a global leader in providing strategic planning and implementation assistance to the private and public sectors. We serve 86 of the global Fortune 100 and have served the

majority of Federal departments and numerous international organizations and governments worldwide. Our Federal practice has

deep experience in assisting Government agencies with the planning and implementation of major agency-wide transformation initiatives. Our strategy practice focuses on engaging senior executives in the articulation of organizational aspirations and the identification of best practice solutions to help them achieve those aspirations.

Recent examples of our work include, for HUD and the Department of Treasury, we’ve helped the CIOs at those departments develop e-Government strategic plans and organizational strategies

that both GAO and OMB have ranked among the best in Government. For the Department of Education, Accenture developed and

is helping to implement a modernization strategy for the Office of

Student Financial Aid that is the basis for an agency-wide transformation effort.

The purpose of our study with GSA is straightforward. We are

to determine if GSA’s current service offerings, processes and organizational structure are providing best value to the Government

and the American taxpayer. We are also to help GSA improve its

ability to deliver value to customers by increasing its understanding of customer needs, identifying high value support services, and

identifying internal improvement priorities.

GSA asked Accenture to focus on its two main business organizations, FSS and FTS. For each organization, we are assessing offerings, business processes and procurement activities and providing

recommendations for improved performance and cost efficiencies.

GSA requested that Accenture focus particular attention on the potential overlap between FSS and FTS in information technology

and telecommunications. We are using proven methodologies supVerDate 11-MAY-2000 08:55 Mar 27, 2003 Jkt 000000 PO 00000 Frm 00072 Fmt 6633 Sfmt 6633 D:\DOCS\85609.TXT HGOVREF1 PsN: HGOVREF1
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ported by structured analytical tools and business best practices.

Our 90 day study at GSA comprises three phases: customer and

market analysis, internal capabilities assessment, and improvement strategy development.

In the first phase, we focused on GSA’s customers in the Federal

technology market. This phase addressed two key questions: What

do customers need? Why are customers using or not using GSA’s

services? The objective was to understand the market conditions

surrounding Federal technology services, including an analysis of

customers needs, competitor offerings, substitutes and business

value. The analysis involved numerous interviews with GSA senior

executives and managers, customers within Federal agencies and

industry partners. It also involved market research and an assessment of the value proposition of GSA services.

In the internal capabilities phase, we identified areas of potential

improvement within GSA. The objective was to understand GSA’s

strengths and general improvement needs relative to other procurement options available to the Government. During this phase, we

augmented our interviews with assessments of internal data on effectiveness and efficiency, and conducted a workshop with key GSA

executives to increase understanding and facilitate a discussion of

GSA’s capabilities and needs.

In the final phase, we’re helping GSA executives develop an improvement strategy. The objective is to develop actionable strategies to improve GSA’s performance. To develop the improvement

plan, we’re reviewing best practice organizational design models

and recommending solutions based on the opportunities and challenges our study has identified. These proposed performance improvement strategies were the focus of a second executive workshop that was held earlier this week. After synthesizing the results

of the workshop, we will develop an integrated plan for GSA. Upon

completion of the study, we will provide GSA with program management and implementation services, as needed and requested, to

achieve the identified goals and improvements highlighted by our

analysis.

The 90 day project began on January 22nd and will be completed

on April 30th. The final results will be delivered to GSA at the

close of the project.

Mr. Chairman, thank you again for the opportunity to testify

today on the approach Accenture is taking to determine how GSA

can enhance its service to customers and improve internal efficiencies.

[The prepared statement of Mr. Hutchins follows:]

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Mr. DAVIS. Thank you very much.

Mr. Allen, you are in a great position, not representing any particular company, so you can say whatever you want. That’s good.

To address concerns raised by your organization and others with

the overlap, duplication of FSS and FTS, GSA has commissioned

your study. How do you envision the outcome? What would you like

the outcome of this study to show?

Mr. ALLEN. I think one of the things we would like to see come

out of this, and I was made very hopeful by Mr. Perry’s testimony,

is that we would find a way for the business lines of FSS and FTS

to work together to provide total solution to GSA customers. That

would be perhaps a cross-sectional team of FTS and FSS elements

that works together to make the most use of each agency.

What we’ve seen in the current situation is that sometimes you

will have one organization promote its solution at the expense of

the other, and they may not even make the customer aware that

within the same agency, there’s another program that perhaps

might be a slightly better fit. I think if we can eliminate those instances and have them working together as one GSA, we’d all be

better off.

Mr. DAVIS. You say businesses are in business to do business, not

to chase after a continuing parade of duplicative contracting methods. Obviously a sophisticated buyer who understands this, the

more options they have, they can set a match. But that takes a lot

of training, a lot of experience and frankly, from the people I deal

with, not everybody is a sophisticated buyer on this. I guess you’re

getting it, the occasional and the mid-level buyer who just can’t

somehow negotiate this maze that they have to work their way

through of duplication.

Do you think there are too many different contracting vehicles,

both within GSA and outside the agency? And do you believe that

the proliferation of fees for service entities offering governmentwide contracting vehicles help firms looking to do business with the

government or hurts them by increasing their cost of doing business and diluting the government market?

Mr. ALLEN. Good questions. The Coalition represents over 330

member companies, most of them in the information technology

and professional services areas. What our members tell us on these

accounts that you asked about is that the answer is not as easy to

arrive at as you might hope. Generally they tell us that the right

number of contract methods falls somewhere between one and less

than we have now. And I think there is some frustration among

some of our member companies who have spent considerable

amount of resources on multiple FTS vehicles with the need to feel

like they are being responsive to various FTS agencies when

they’re not really sure what type of business they’re going to get

out of it.

In most cases, the companies involved have done pretty well.

Mr. DAVIS. It’s like a hunting license, right?

Mr. ALLEN. Yes, sir. But in other cases, we’ve had companies go

to great lengths to obtain contracts, only to see very little if any

business. That is, as you alluded to, not by any means reserved to

GSA. It is a phenomenon that is Government-wide. Companies tell

us that they chase down difficult and myriad contract vehicles on

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the hope that the next one will be the one that brings in the business and develops the relationships they want to develop. Of

course, after a while, when some of them don’t pan out, they’ve

sunken their resources in. And at the end of the day, the company

is going to find a way to recover what its investment has been. So

yes, I think in the long run, the Government does pay the price for

both diluting its contracting power and increasing the overhead to

contractors by having as many vehicles as it has today.

Mr. DAVIS. You have so many vehicles and so many people on.

But in point of fact, in some of the other hearings we’ve heard

some of the largest producers of IT products in the world don’t sell

to the Government still. I think you want to try to bring them in.

And there are a lot of problems with that. Some of them go back

to the Bayh-Dole Act and other issues of copyright and trademark

protection and the like. But it’s difficult for a lot of companies in

the old mold to understand how this works. It used to be you had

your bookings, you’d go to the marketplace with your bookings,

bookings don’t mean anything now for the most part, because everything is competed with regularity. As I said, it’s like a license

to hunt in these areas.

Mr. ALLEN. Right.

Mr. DAVIS. It brings my question: You indicated that companies spend anywhere from tens of thousands to over $1 million to respond to a single FTS solicitation. That’s a lot for a hunting license, basically.

Mr. ALLEN. Yes, it is.

Mr. DAVIS. Do you have any suggestions how such costs could be

reduced or avoided from your perspective?

Mr. ALLEN. One of the things we like to see is have there be

fewer vehicles. And again, this isn’t unique to within GSA, it just

happens that GSA is the focus of our hearing this morning. If there

are fewer vehicles, then contractors will incur fewer costs in having

to run down each one.

We also think that the further implementation of technology,

electronic Government, elctronic contracting will probably be a

great cost savings in this process.

Mr. DAVIS. It doesn’t cost that much to get on the FSS Schedule,

does it?

Mr. ALLEN. Not usually, no. There’s a process that people have

to go through and fill out the paperwork. But it’s not the same sort,

usually it’s not the same sort of technical proposal, the depth of

which can really run into the project management cost.

Mr. DAVIS. Right. And I’m not sure, but looking at some of these

other Schedules out there, a lot of these Schedules aren’t that expensive to get on. Now, to get onto a GWACs and these others, it

costs a lot of money sometimes to go through all that. As you say,

there are so many different purchasing options at that point for the

government, companies may decide they don’t want to participate

everywhere, because it’s an overhead cost that you have to absorb.

I think I understand where you are. I have more questions, but

I’m going to yield to Mr. Turner and let him ask some questions

for a few minutes.

Mr. TURNER. You go ahead, Mr. Chairman.

Mr. DAVIS. Thank you.

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You stated that the overlap between the Federal Supply Service

and the FTS has grown so over the years that Federal buyers and

vendors are not sure which entity is the real GSA. Given this state

of affairs, do you think that the creation of a new position of associate administrator with authority over both of them could be an option? Mr. Perry said it was an option.

Mr. ALLEN. Yes, sir, in fact, we recommended the creation of a

position, both in our testimony this morning and in a letter we sent

to Mr. Perry in October 2001. The two entities today, the commissioners of each Service we feel do a fine job. The problem that they

have is that they are not really fully empowered to manage their

agencies because there is a regional power structure within GSA as

well. What we are envisioning by the creation of an associate administrator position is someone within the office of the Administrator who will be able to deal with the day to day management

issues that arise because of those conflicting organizational structures, making the best use of each.

What we said in our prepared remarks is that right now, the

only place that all those organizational structures come to a head

is in the office of the Administrator. As a practical matter, given

its current staffing capabilities, staffing levels, they can only really

handle the big macro issues when major conflicts develop. By creating this position, you get a little bit better day to day management.

Mr. DAVIS. My last question: Would you agree that since Clinger

Cohen the whole operation works a lot more efficiently for the taxpayer?

Mr. ALLEN. Oh, absolutely, yes, sir.

Mr. DAVIS. And that both these agencies, for government agencies, do a pretty good job? We’re just talking about taking it to the

next level?

Mr. ALLEN. Absolutely, Mr. Chairman. There is no question that

GSA as an agency today is viewed very much more favorably and

is a much stronger agency than it was prior to Clinger Cohen. The

current management does a fine job and we are talking about making it even better.

Mr. DAVIS. I agree with that. I don’t want to be beating up on

them, because when you compare it with other agencies, in particular, I think they do a great job. But we can always try to do better.

We try to do better, that’s our job, is to oversee that.

Mr. ALLEN. That’s right.

Mr. DAVIS. Mr. Hutchins, let me ask, I’m tempted to ask you preliminarily what do you think in your study, but I’m not going to

do that. I think you want to get everything in. So I’m just going

to kind of get around it a little bit with three quick questions. GAO

found there is an overlap within FSS and the FTS structure, but

they didn’t find a consensus among vendors or user agencies as to

whether the current structure is beneficial or not. Is this consistent

with your findings, that there’s no consensus, that it depends on

who you talk to?

Mr. HUTCHINS. That’s right, Mr. Chairman. We’ve talked to over

a dozen Federal agencies and a dozen major vendors that are on

the schedules or in the contracts. There is a wide variety of opinion.

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Mr. DAVIS. One of the goals of your study is to determine if GSA

structure is providing best value to the Government and the taxpayer, whatever best value is. I think we have an idea of what that

is. Could you share with us the criteria you would use in best

value, in that determination?

Mr. HUTCHINS. Our criteria falls along two lines. We found this

out during the workshops. That is, a combination of ensuring that

every customer that GSA serves is able to deliver on their aspirations with regard to their technology buys.

Mr. DAVIS. Gets the product they want, in other words.

Mr. HUTCHINS. Get the product they want, but as Mr. Perry said,

ultimately to get an IT solution that enables their agency to

achieve its mission. So GSA is looking past just the purchase and

making sure that the money they are spending, the taxpayer

money they are spending, actually delivers value. The other part

of it is, given that GSA offers so much value to Federal agencies,

to make sure that they are making that available to as many agencies as needed.

Mr. DAVIS. Great. As you know, the constant debate up here is,

do we want to have everything run by central rules and regulations

on every procurement to make sure that you have all of these protections, or do you want to trust the buyers out there with these

agencies, given appropriate training, to go out and get what they

need. They are often in conflict. I just remember so many of the

years when we would have page after page of rule or regulation

that drove the outcome. And you’d end up certainly meeting the

criteria, but you didn’t get the product you needed at the end of

the day. The goal, I think, ought to be, as you stated, to make sure

that they can fulfill their mission and get the product that fulfills

their mission and have the flexibility and the contracting vehicles

to do that. I think we’ve come a long way over the last 6 or 7 years.

But I think in the hearing today we’re trying to see how we can

do a better job. Because there is still, when you look at saving

money, a lot of waste in Government on the procurement side, although a lot less than there was. I just would say that’s so because

you’ve got the lawyers out of it, to a great extent. Any time you’re

not giving to the lawyers, that means somebody benefits. [Laughter.]

Last, you noted in your statement that during the progress of the

study you’ve had extensive engagements with senior GSA executives and managers. Have you found them to be pretty open to suggestions for change or do you see any barriers within GSA to implementing the recommendations?

Mr. HUTCHINS. They’ve been very open to the ideas and generating ideas. We’ve found them to be very committed and aggressive

at making GSA a better place.

Mr. DAVIS. Yes, I think some of them, we lose sight, are extraordinary public servants who want to do the right thing. They have

been pretty innovative in some of the things they have come up

with over the last few years. So yes, I’m hopeful that when the

study comes through that we can make this even better.

Mr. Turner.

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Mr. TURNER. I just had one. Mr. Allen, is there a trend toward

more or less litigation in this particular area among contractors

and the Government?

Mr. ALLEN. We’ve seen over the last decade with the procurement reforms put into place a market trend toward less litigation.

We think that is very beneficial to the process. It reduces procurement lead times, it reduces the costs associated with acquisition,

and it has the happy consequence of getting the Government today’s technology today.

Mr. TURNER. Thank you, Mr. Chairman.

Mr. DAVIS. Thank you very much.

Before we close, I want to take a moment to thank everybody for

attending today’s hearing. I want to thank the witnesses, and Congressman Turner, I want to thank you, thank Mr. Schrock and Ms.

Davis who are upstairs at a briefing our full committee is doing

now, for participating. I want to thank our staffs for organizing

this, I think it’s been very productive. The record will remain open,

if any one has comments, for the next 10 days.

Thank you very much.

[Whereupon, at 10:47 a.m., the subcommittee was adjourned, to

reconvene at the call of the Chair.]

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