GSA reorganization gains momentum

The Bush administration is moving forward with a significant reorganization of government procurement, proposing to merge the two agencies responsible for buying billions of dollars in information technology goods and services.

President Bush's fiscal 2006 budget, released Monday, calls for the merger of the General Services Administration's Federal Technology Service and the Federal Supply Service, each of which maintains separate management structures and contracts for IT. The administration believes having two agencies in essentially the same business has created redundancies and inefficiencies. The budget stated that because technology has become such an integral part of commonly purchased services, separating the two agencies created "artificial boundaries."

GSA management is wasting no time on the reorganization and has formed three task forces to oversee key aspects of the plan, according to a memo sent to employees on Monday. The task forces will "develop detailed reorganization implementation plans" in the areas of acquisition services, financial management and information technology systems, according to the memo.

Those task forces are part of a larger steering committee GSA Administrator Stephen Perry created to guide the reorganization. The task forces will be chaired by senior agency officials. Donna Bennett, the Federal Supply Service commissioner, and Barbara Shelton, the acting Federal Technology Service commissioner, will lead the acquisition services team. GSA's Chief Financial Officer Kathleen Turco will head the financial management group. And the agency's chief information officer, Michael Carleton, will chair the information technology systems team.

The memo gave no specifics on what policy changes the teams might consider: "Right now, GSA is in the process of appointing task force team members."

It remains to be seen whether the task forces will consider changes to GSA's regional structure, which some observers believe is a key to truly reshaping the agency. The regional offices are overseen by political appointees and operate with a significant degree of autonomy from headquarters in Washington. The GSA inspector general, in a series of investigations over the past year, found that regional indifference to Washington within the Federal Technology Service helped contribute to that agency running afoul of numerous federal laws and procurement regulations.

One industry source, who spoke on the condition of anonymity, said that unless GSA addresses the regional offices' accountability, then any merger of FTS and FSS will have limited impact on Perry's stated goal of improving the integrity of the procurement system.

The president's 2006 budget would also make changes to the funding mechanisms used by FSS and FTS, which have been the subject of considerable controversy. The budget calls for merging the Information Technology Fund with the General Supply Fund, to "improve accountability by bringing oversight of the [new] Fund under the agency's chief financial officer."

FTS employees used money from the IT Fund, which consists of other agency's appropriated budget dollars, to purchase goods and services that had no apparent connection to technology. The inspector general's audits and media reports discovered employees had used IT money and contracts to procure building services, marine equipment, and mental health and counseling for military service members. FTS regional offices have marketed the IT Fund as a way for agencies to "park" money that was appropriated for a specific fiscal year in order to use it in future years.

The president's budget noted that GSA will "develop an aggressive action plan" to reorganize the agency by July. Also, in January 2006, the agency will reduce the fee its customers pay when using governmentwide contracts to purchase commercial goods and services. FTS has come under fire in the past from industry critics and some lawmakers for charging what they called excessive fees for its procurement services. Unlike FSS, which charges a flat fee, FTS' brokerage charges depend on the services being performed. Agency officials have said those charges pay for FTS' "value added" service to its customers, which include helping them craft procurement strategies, award contracts and manage projects. It's not yet clear whether GSA would do away with those high-end services under the new structure.

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