GSA: Buy for office on Net

The General Services Administration's Federal Supply Service last week announced that it is closing down its last eight office supply and distribution centers and will transition all that business to the Internet.

The stock program offers a range of commonly ordered office supplies, paper products and packaging materials. GSA buys the products in bulk and then ships them to federal customers from warehouses and customer supply centers located across the country.

But sales have been declining steadily over the last 14 years, with sales last year down to $772 million compared with $908 million in 1988. Recently the drop has been more noticeable as the commercial market has changed. Federal customers now can buy the same products in bulk from office supply stores on the World Wide Web—often at lower prices than the products from the FSS stock program.

Many vendors in the program already use GSA's online store, GSA Advantage, and others also have their own electronic commerce sites. So, following the recommendations of the Stock Program Steering Group, formed earlier this year, FSS commissioner Frank Pugliese and GSA Administrator David Barram decided to move the business line entirely to a "virtual platform."

"What we are doing is making the next logical step and further utilizing what we have already put in place in terms of our electronic mall, GSA Advantage and further enabling our business partners' electronic ordering," Pugliese said.

Federal customers have ordered products through the stock program over the Internet for years using the proprietary federal/military standard requisition and issue procedure electronic data interchange system. They also could place phone and mail orders and go directly into the service center "stores."

But for every transaction, GSA stood between the customer and the vendor. Unlike the FSS information technology schedule, there was no direct contact between the customer and the vendor. The move to the "virtual platform" will cut out GSA as the middleman so that the stock program will work more like the GSA schedule, Pugliese said.

"We're not in the middle of it, playing policeman or anything else," he said. Instead, FSS will serve more as a broker, he said, "and we're much better-suited to being a broker."

There are vendors that have counted on the stock program as a steady revenue stream, so they will have to change their business practices, but GSA's move is not much of a surprise, said Larry Allen, executive director of the Coalition for Government Procurement.

"The handwriting's been on the wall, and it's been inevitable that this was going to happen," he said. "The government is buying differently.... This was driven not because GSA wanted to get out of the business but because the customers decided to change the way they bought things."

The change will help industry and federal customers as the stock program finally moves to the more commercial practices that already have been embraced by the schedule program, Allen said. At GSA, as many as 1,400 employees will be displaced. Gail Lovelace, the agency's chief people officer, is working with the Office of Personnel Management to determine a way to move as many employees as possible to other positions to avoid reductions in force.

"While we will have RIFs, we will provide counseling, outplacement and retaining assistance to all affected employees," she told agency employees last week.

"We intend to give you every opportunity to find a 21st century role and fill it, whether that is through help finding another job, through placement in another job here or retraining," Barram said at the announcement last week. "While closing an operation is always painful, I am convinced that this is the best thing to do for the future of the agency."