GSA was established by the Federal Property and Administrative Services Act of 1949 to serve as a central procurement and property management agency for the federal government. GSA’s diverse activities and programs have governmentwide implications that, according to GSA, affect over $52 billion, which is more than one-fourth of the federal government’s total procurement dollars. Through various revolving funds, GSA buys goods and services from private vendors and resells them to agencies. GSA has four major components—the Public Buildings Service, FSS, FTS, and its Office of Governmentwide Policy (OGP)—to carry out its various programs and activities. FSS provides contract arrangements for commercial products and services worth over $17 billion per year through its four business lines: supply and procurement, vehicle acquisition and leasing, travel and transportation, and personal property management. As previously indicated, we did not focus on the travel and transportation and personal property management business lines. FTS provides reimbursable services for local and long- distance telecommunications. It also assists agencies with acquiring, managing, and using IT systems. FTS accomplishes this through two business lines: network services, for its telecommunications activities; and IT solutions, for its IT systems-related activities. In carrying out their duties, FSS and FTS are to follow the Federal Acquisition Regulation (FAR), which is the uniform set of policies and procedures executive agencies are required to follow in procuring goods and services. The FAR implements various statutory requirements intended to advance national social and economic goals, such as giving preferential treatment in awarding contracts to certain groups, such as the blind and severely handicapped, small and disadvantaged businesses, and the federal prison work program. Governmentwide procurement policy is overseen by the Office of Federal Procurement Policy (OFPP) within the Office of Management and Budget (OMB). OFPP is responsible for prescribing policy and coordinating the development of governmentwide procurement standards. OGP within GSA has a supporting role by creating networks of agency procurement representatives and by providing guidance and policy related to specific areas, such as vehicles, aircraft, and electronic commerce. Each year, the U.S. government spends approximately $200 billion in acquiring goods and services. FSS finances its supply and vehicle activities though the General Supply Fund, which is a revolving fund that is sustained by revenues received from customer agencies for goods and services. Through its supply and procurement business line, FSS offers federal agencies a choice of more than 4 million commercial products and a range of technology-oriented, financial, environmental, management, and administrative services. FSS’ three methods of supply are (1) the stock program, (2) special order sales and (3) federal supply schedules. In the stock program, FSS stores approximately 19,000 common-use items for resale to agencies in 4 major distribution centers, 3 smaller centers, and 19 government stores located throughout the country and overseas. This program had sales of $817 million in fiscal year 1998. The special order program, which had sales of $477 million in fiscal year 1998, provides products for special needs or when stocking is not desirable, such as office furniture and appliances. The federal supply schedules program is similar to a commercial catalog business and provides agencies with access to over 6,800 contracts to obtain various goods and services. In addition to covering a vast range of commercial items, the schedules cover IT products and services. FSS prenegotiates terms, conditions, and ceilings on price with vendors; agencies deal directly with the vendors to negotiate final prices and establish deliveries. Supply schedule sales were about $8 billion in fiscal year 1998. The vehicle acquisition and leasing business line in FSS provides agencies with one-stop shopping for purchasing vehicles or leasing them from the FSS-managed interagency fleet. FSS is the federal government’s mandatory source for the purchase of new, nontactical vehicles. Although leasing vehicles through the interagency fleet is not mandatory, agencies that choose this option get scheduled replacement, full-service management, and a fleet services card for fuel and repairs, for a fixed monthly fee, as well as a cost per mile charged by vehicle type. In fiscal year 1998, the vehicle acquisition and leasing business line purchased about 56,800 vehicles worth about $1 billion; one-half of the vehicles were for the interagency fleet, with the rest reflecting vehicle purchases for agencies. The interagency fleet comprised over 160,000 automobiles, passenger vans, trucks, buses, ambulances, and special-purpose equipment in fiscal year 1998. FSS relies on the private sector for vehicle delivery, fuel, maintenance and repair, and vehicle auctions. FTS finances its telecommunications and IT activities through the Information Technology Fund, which is a revolving fund sustained by revenues received from customer agencies for goods and services. In fiscal year 1998, FTS had revenues of $3.4 billion. The network services business line in FTS provides customer agencies with telecommunication services, including global voice, data, and video services, supporting both the local and long-distance needs of the federal government. According to FTS officials, the network services business line had revenues of about $1 billion in fiscal year 1998. Until the end of 1998, FTS long-distance services—under its FTS2000 arrangements with AT&T and Sprint—were a mandatory source for federal agencies. Under the FTS2001 arrangements with MCI and Sprint that were recently awarded, agencies are able to select their own service provider. According to FTS officials, these are the largest non-Defense government contracts, valued at between $5 and $8 billion over 8 years. FTS local telecommunications services also used to be mandatory; however, FTS now offers a range of nonmandatory services in this area, where revenue totaled $266 million in 1998. The IT solutions business line in FTS provides agencies with a range of assistance related to acquiring, managing, and using IT. In fiscal year 1998, the IT solutions business line had revenues of about $2.4 billion. FTS prides itself in this area on being an objective and trusted third party that can provide independent assistance to agencies. For a fee, FTS acts as a consulting agent for agencies in the acquisition of large IT systems and related services, systems integration, software definition and design, and office systems development. It also supports federal systems through risk analysis and information security support. Its Federal Acquisition Services for Technology (FAST) program is intended to provide quick procurement assistance for IT products and services. The FAST program had revenues of $973 million in fiscal year 1998. According to FTS officials, FTS services differ from the IT products and services offered by FSS under the supply schedules in that FTS is involved as a third party. Agencies deal directly with vendors under the FSS schedules. An FTS official added that FTS views its role as that of a value-added reseller of telecommunications and IT. In addition, this official said that FTS recognizes the significance of the evolving integration of telecommunications and IT in meeting customer agency needs, now and in the future. The federal government has undergone reform and downsizing in response to efforts like the National Performance Review and congressional initiatives to promote efficiency and economy in contracting, such as the Federal Acquisition Streamlining Act of 1994. More recently, the Federal Activities Inventory Reform Act of 1998 (FAIR) required executive agencies to identify functions they perform that are not inherently governmental and could be performed by the private sector. This environment of reform has affected FSS and FTS. GSA, as a whole, has gone from 39,000 employees in 1971 to fewer than 14,000 employees in 1999. It also realigned itself organizationally to mirror the private sector and incorporated commercial practices to improve the level of service provided to agencies and to enhance its relationships with the private sector. These changes were evident in FSS and FTS with the establishment of the aforementioned business lines. The changes also manifested themselves in the shift from being a mandatory to nonmandatory source for agencies in such areas as supply procurement, vehicle leasing through the interagency fleet, telecommunications services, and IT acquisition. Also, the Government Performance and Results Act of 1993 increased FSS’ and FTS’ focus on performance measurement as a vital component of operating in a more business-oriented environment. Despite the changes that occurred, FSS and FTS believe that several barriers still exist that impede their ability to compete in this new environment and operate in a businesslike manner. Barriers cited by FSS were the inability to recruit and train top-level staff because of various federal personnel requirements, prohibitions on its ability to enter into cooperative purchasing arrangements, the extensive bid protest processes available to federal contractors, and its inability to deal effectively with poor-performing vendors. FTS also cited personnel-related barriers but had more concerns about financial-related barriers, such as the inability to consider accounts receivable the same as cash in managing the Information Technology Fund. An FTS official said this limits FTS’ ability to commit to new business opportunities because payments to FTS from some agencies can take up to 90 days. Another barrier FTS cited was that federal rules related to disposal of property can make agencies less efficient because they cannot exchange the equipment they own for like services. FTS also cited being prohibited from using the standard of “adequate” competition as an alternative to “full and open” competition, which is required by law, in certain multiple award contracting situations as another barrier to operating effectively. In the past, Congress has amended laws to allow agencies to overcome various barriers when they were shown to impede effective performance. For example, government corporations, including the Tennessee Valley Authority (TVA), and dozens of others, serve public functions of a business nature and were given some flexibility related to the applicability of federal statutes to overcome barriers caused by the laws and implementing regulations.