GSA official: Revolving funds merger will help offset losses

The General Services Administration anticipates that congressional permission to merge its two revolving funds will help ensure that financial shortfalls do not occur during the next fiscal year, a top agency official said Friday.

Congress is close to approving a bill (H.R.2066) that would combine the Federal Technology Service and Federal Supply Service revolving funds into a Federal Acquisition Service fund - a step in an ongoing agency reorganization. House members could approve a modified Senate version before the House's target adjournment day of Oct. 6, according to a House staff member.

With the two funds combined, the agency would be able to use FSS-generated surpluses to cover FTS losses, said Jim Williams, commissioner of FAS.

"We did need [the bill], because of downturns in the business volume in one particular area," Williams told reporters after an industry breakfast. "[With] one organization being in the red ink and one being in the black, bringing them together [would] balance them."

As of June 30, FTS reported a $104 million deficit for the fiscal year, while FSS carried a positive balance of $99.1 million. An agency third quarter prediction forecasted that FTS losses will add up to almost $110 million by the end of this fiscal year on Sept. 30 -- a number that some former GSA officials have called overoptimistic.

"That's not a loss that we see continuing," Williams said. Revenue is up from sources including information technology Schedule 70 and from agencies seeking to comply with the identification card mandate in Homeland Security Presidential Directive 12, he said. "Frankly, we don't have enough people to handle [HSPD 12 demands] today," he added.

While covering the shortfall likely will require tapping into agency reserve funds, none of the money set aside for the Networx transition will be used, Williams said. Networx, GSA's massive next generation telecommunications procurement, "is too important, it's too complex -- and we're not going to steal from that pot of money," Williams said.

Williams also told the industry audience that he has finalized his recommendations on the still incomplete FAS reorganization. GSA Administrator Lurita Doan will choose the organization's final shape later this month, he said.

GSA also wants to improve its relationship with the Defense Department, which Williams said provides more than half of FAS' annual revenue. The two organizations need each other, he said: "If we went away today, DoD would probably have a hard time making their mission. If DoD went away from us, frankly, GSA would be in serious trouble."

GSA is the subject of a recent draft Pentagon inspector general report that recommended against placing restrictions on the Pentagon's ability to contract with GSA's assisted services regional shops. The report included allegations about GSA contracting oversight, which Williams contested in a letter.

A mistaken perception has grown within the Defense Department that "the message is 'Don't use GSA,'" Williams said. "There is nothing in DoD that is discouraging anybody from using GSA."