GSA chief defends Federal Technology Service

The head of the General Services Administration said Tuesday that the agency's Federal Technology Service is a "success story" in the annals of entrepreneurial government, despite recent revelations of contracting abuse and mismanagement.

In an interview Tuesday with Government Executive, GSA administrator Stephen Perry lauded FTS for providing federal agencies with technology and telecommunications goods and services and saving taxpayer dollars in the process. He said FTS, which buys technology on behalf of other agencies in exchange for a fee, provides a "substantial" value to the government, which would incur greater costs if agencies ran procurements on their own.

Perry acknowledged that GSA inspector general's recent findings of abuse involving $40 million worth of contracts issued from FTS's Bremerton, Wash., office were "well-founded." He said all FTS employees have been reminded to adhere to proper contracting procedures, and that the agency has implemented a variety of internal controls to let managers more closely monitor the activities that occur in FTS' regional offices, where the improprieties are being uncovered.

But Perry emphasized that FTS was still fulfilling a vital service to government. In all the cases of abuse, FTS purchased goods or services that its agency customers "did need and want," Perry said. For example, the Bremerton employees purchased computers and software on behalf of the Washington State National Guard as part of its online education program, but also paid for the construction of buildings in which to hold classes.

Perry said that when GSA officials discovered the improper acts in Bremerton, they "reiterated" procurement policies to the employees and then moved them to another office where they could be more closely monitored.

The incident showed that there "must not have been adequate management oversight" of the local office, Perry said.

The GSA inspector general also has raised concerns about FTS' policy of rewarding top employees with bonuses. Some Bremerton workers, for instance, were compensated for finding new FTS customers. Perry said GSA would hire technology research and consulting firm Gartner Inc. to review the bonus policy, to determine if it helps "drive inappropriate behavior."

Perry said, though, that he didn't believe bonuses drove Bremerton employees to break the rules. Rather, the employees displayed "an enthusiastic effort to try to satisfy customers," Perry said. The inspector general has found that Bremerton's business increased almost tenfold over five years, peaking at more than half a billion dollars in sales to agencies in fiscal 2002.

FTS has 11 FTS regional offices across the country. Asked whether they were attempting to increase their revenues by pursuing customers in each other's regions, and whether this led to unhealthy competition, FTS commissioner Sandra Bates said that customers ultimately make the decision about which FTS office they want to do business with. She said that, generally, the customer is best served by an office within its geographic area, but that FTS didn't want to dictate to agencies exactly how they should buy.

Perry said he felt appropriate actions had already been taken to make FTS more effective. Many of FTS' functions, such as writing and managing contracts, have been transferred to a sister GSA agency, the Federal Supply Service. FTS has been left to focus on customer service and sales, which experts say are its two greatest strengths.

Perry said he was open to any suggestions on how to improve the agency, but that further reorganization wasn't necessary. Keeping FTS and the Federal Supply Service working cohesively is "my job," Perry said, adding that eventually GSA would have to consider whether having FTS only sell technology was in the best interests of its customers. As part of the reorganization, Perry noted, FTS is now allowed to sell certain kinds of professional services that are not related to technology.

Bates added that, in the coming year, she hopes FTS will be selling more of those services. The agency's contracting officers have the legal authority to procure anything, she noted, even though FTS' mission is focused on technology.

Perry said if GSA provided a broad range of services under one roof, it would make the agency run more like a business. Currently, technology, building services and leasing and other procurements are housed in separate organizations. Combining them under a single banner, and letting any GSA agency sell them, would be "very much like what a major multinational corporation would do," Perry said.

However, Perry avoided drawing a direct a line between how GSA and corporations operate. The government has no profit motive, he said, adding that FTS and GSA only want to cover the costs they incur providing procurement services.

Perry said he prefers not to use the word "businesslike" to describe the agencies. Instead, he favors the phrase "high-peformance organization," he said.