GSA hikes FAST fees to stem financial loss

Most General Services Administration regional offices that operate a multibillion-dollar governmentwide information technology procurement program for 8(a) companies are plagued by financial losses and excessive competition between regional GSA offices nationwide according to sources at the agency.

As a result leaders of GSA's Federal Acquisition Services for Technology (FAST) program have doubled to 2 percent the average fee it charges agencies to process transactions worth less than $1 million.

Claude Garmon director of the national FAST program at GSA's Federal Telecommunications Service said most surcharges would fall between 1 and 4 percent depending on the complexity of the transaction.

Garmon said FAST program personnel could continue to negotiate with agencies on the amount of surcharges for transactions worth more than $1 million. "We agreed we would not put a hard and strong clamp on the charges " he said. "There is still enough flexibility for everyone to adjust and stay profitable."

He added that most of the FAST program's orders are worth less than $1 million so the new surcharges would apply to the vast majority of the program's business.

A GSA source said the FAST program which acts as a broker for agencies seeking IT products and services has been losing money in every region of the country except at GSA's Kansas City Mo. region and in the Washington D.C. region.

Garmon acknowledged that resources have been extremely tight within the program and many regions are now relying on outside contractors to handle the workload associated with the program.

Under the FAST program vendors offer the same services through FAST as they do through GSA schedule contracts but agencies often will opt to use the FAST contracts instead of the schedule to obtain credit for supporting small disadvantaged and minority-owned businesses. Unlike the schedules FAST contracts are 8(a) set-aside vehicles authorized by the Small Business Administration.

The FAST program began in the Kansas City region two years ago and GSA last year expanded it to a nationwide scope. Since then regions have awarded well over 100 FAST contracts to small and disadvantaged businesses. The FAST program also uses GSA schedule contracts and other governmentwide vehicles to deliver IT to agencies.

Francis Jones deputy director of the national FAST program said the new rate structure was worked out last month at a meeting of regional FAST program directors in San Francisco. He said the decision was made to prevent FAST program managers in different regions from undercutting each other's proposed rates by offering a decreased surcharge. He said attendees at the meeting agreed to "a tiered structure" that would assign a different standard surcharge for various types of task orders received from agencies.

"We didn't want our people competing with each other " Jones said. "We decided that if we kept the surcharge the same [in all regions] it would stop them from doing that."

Garmon agreed that internal competition was seriously hurting the program. "We found that our clients had us bidding against each other " he said. "The worst thing in the world is to have an organization where that takes place. So we got into this agreement because we wanted everybody on the same song sheet."

Wayne Carter president and chief executive officer of DC Information Systems Inc. Silver Spring Md. said his company holds a FAST contract with GSA's Kansas City region and he is working to obtain one from the National Capital Region. Carter said he was not concerned about the increased surcharge. "I think customers will pay that " he said.

Carter said he was more worried about GSA's plans to prohibit FAST regional offices from marketing their contracts outside of their territory. He said such an approach would adversely affect business in regions without a high concentration of federal employees.

"That is definitely a problem " Carter said. "I think it would have a major effect on companies with relationships with those regions."