GSA Advantage!

Not very many people realize it, but the federal government was an e-tailing pioneer, opening its first Web shopping mall in 1995, the same year that Amazon.com started "Earth's Biggest Bookstore." Back when Web technology was in its infancy, the General Services Administration's Federal Supply Service opened the virtual doors to GSA Advantage!. Today, Advantage! handles more than 1,000 orders worth about $500,000 every day. The site, www.gsaadvantage.gov, is open 24-7 and receives more than a million hits each day-during the day, someone searches the site every second and at night a federal worker, usually in Europe, Asia or elsewhere, conducts a product search every minute. The site's virtual shelves hold a million products offered by 2,221 of the 7,875 vendors that hold contracts with GSA.

Using Advantage!, federal buyers with purchase cards or agency accounts can search for products and services over the Web instead of reviewing whatever paper catalogs happen to be in the office. They can order online instead of calling vendors, waiting for price quotations and then placing orders. Advantage! also eases procurement for employees and military service members stationed outside the United States. Time zone differences make it tough for these people to order products by phone from vendors and supply depots, but time zones don't apply on the Web. In four years, Advantage! has processed $200 million in sales. During an average shopping session on the site, a federal employee buys four items and spends between $450 and $500, says Ed O'Hare, FSS chief information officer. "Yesterday we had 600,000 purchases for $500,000."

The Advantage! story isn't an acquisition epic about hacking through procurement rules to find a golden business solution. Rather, it's a tale of serendipity and letting people take risks and innovate even when the big payoffs they produce aren't the ones you expected. Advantage! emerged from the convergence of several events in the mid-1990s. First, FSS had charged a couple of its young employees with spending six months surveying customers. Customers told the surveyors they liked FSS' many innovative ordering systems-touch-tone telephone, dial-in and telnet-but they didn't like the fact that they could only order certain items with certain systems. "You need a single simple ordering system," customers said.

At the same time, FSS was gearing up to become the supply distribution center for a new Clinton administration initiative to provide vaccines for children. O'Hare, who had been charged with developing a computer system to support the potentially huge vaccine program, was wallowing in an embarrassment of riches. He had been given all the resources he sought in order to guarantee the success of the high-risk, high-profile, time-bound effort. Most of his staffers were young and energetic-they had to be to work the 15- to 16-hour days required under the tight deadlines-and all his computer equipment was new. O'Hare's team got the system designed just in time to hear that the vaccine program, caught up in the national health care debacle, had been dropped.

"So I had a young group in technology with nothing to do and high-end, brand-new equipment from the vaccine program. We got together with the two who had done the customer survey and said, 'Let's develop a new technology' " to simplify orders for GSA schedule products, O'Hare says. "A year later we had GSA Advantage!. We took it to the FSS management council and they went nuts. They gave me six months to get it up." O'Hare met the challenge, in part due to another lucky break. FSS had recently picked up responsibility for information technology sales from another part of GSA, and the IT group had developed a telnet catalog search system that O'Hare's group used in developing Advantage!. They also made use of a homegrown enterprise resource program called FSS19, which had electronic data interfaces with all FSS vendors.

O'Hare credits FSS management with encouraging a spirit of innovation that helped propel Advantage! past some staffers' trepidations. "It wasn't all Kumbaya around the campfire; it was contentious," he recalls. But it probably was not as contentious as it might have been in another agency. In recent years, GSA has undergone a complete renovation and has redoubled its focus on streamlined service to customers. FSS receives no appropriated funds, relying instead on fees paid per order by vendors on the GSA schedules to cover its operating costs and pay more than 400 staffers. Thus the agency's funding depends on attracting agencies to use its contracts by negotiating great prices and service. Once a mandatory source of supply for the government, FSS lost its monopoly and adopted an practice of studying customers so closely that it could almost anticipate their needs. Industrial funding and obsession with customers produced a zeal for improvement throughout the agency. "Management is pushing the crap out of us to innovate," O'Hare says.

Today, Advantage! is on its third release and is still evolving. A customer team reviews every enhancement before it is developed and again before it goes online, O'Hare says. The latest version will allow FSS to set up stores for specific groups of users, an innovation born of GSA's decision to close its eight supply warehouses.

The decision spurred O'Hare to figure out how to serve former warehouse customers, who are primarily buyers seeking full service from GSA. "Self-service customers do [entire purchases] over Advantage! and then deal with vendors themselves," O'Hare says. "Full-service customers, who want us to do it all, were warehouse customers." Knowing those customers buy mostly from a group of about 5,000 items, FSS is negotiating blanket purchase agreements (BPAs) with the vendors of those items to get lower prices. Then it will set up a system under which agencies can call in their orders against the BPAs. Order takers will fill out computerized forms and send them to vendors. The vendors will ship directly to the customers and bill FSS, which will pay them and then bill the customers. FSS, not the vendors, will handle the buyers' problems.

O'Hare also envisions setting up online stores for agencies. For example, this year the Census Bureau has set up a number of BPAs for products it needs regularly and in large quantities to run temporary offices all over the country. For the next decennial count, O'Hare would like to set up a virtual store using Advantage! so that Census buyers could sign on and view only Census items at Census BPA prices. O'Hare plans to market this ability to customize virtual stores carrying all the items from all the vendors with which an agency has BPAs and display only the BPA prices. FSS also could enable virtual storeowners to accept telephone orders on special 800 numbers, as it is doing for former warehouse customers.

O'Hare hopes to one day make Advantage! the electronic face for everything FSS does. Already he has built an online vehicle store for GSA's Office of Vehicle Acquisition and Leasing Services, and he is constructing GSAauctions.gov, an online space for selling the more than $200 million in surplus goods GSA must auction to the public each year. This summer will see the debut of eBuy, an automated request for quote system, via Advantage!. O'Hare hopes eBuy will entice buyers to make larger purchases using Advantage!. "I'd rather broker $1 million sales, and eBuy will draw bigger sales," he says. Right now, Advantage! is synonymous with online shopping, says O'Hare, but his vision is that it will become a portal to all kinds of online markets: retail, auction, barter, etc. "We need to make all market models available on Advantage!," he says. And given the flood of dot.com firms into the federal procurement arena, O'Hare has his work cut out for him.

In its race against these new online marketers, Advantage! has the advantage of a government imprimatur. But its guaranteed adherence to the Federal Acquisition Regulation also prevents Advantage! from offering the ease of buying common in the commercial world. "On eBuy, say I take the position, as a user wanting to buy a server, that I know about several companies on the schedules and I want them to bid. We can't do that," O'Hare says. "We have to send the request for quote to every vendor offering servers on the system. I might get hundreds of bids, but we have to do it. "We want to be as user-friendly as the FAR allows," he says. "If all we did was commercial-style sales, we ought to get out of this business because our value is FAR compliance."