Clean up GSA service schedule procedures

I yield to nobody in my admiration for the changes in the General Services Administration's information technology contracting operations since 1993. The agency has transformed itself from dinosaur to space warrior.

Under the leadership of Roger Johnson and David Barram and in a world where defense of rice bowls is the rule rather than the exception, GSA accepted without objection the elimination of the agency's required-source status and Brooks Act authority.

Under Bob Woods, John Ortego and Dennis Fischer, the Federal Technology Service has negotiated great telecommunication deals and fielded (through contracts such as Seat Management, Virtual Data Center Services and Computing, and Communications Recovery Services) perhaps the best-run governmentwide contracts, and FTS has taken the lead in promoting share-in-savings contracting.

The Federal Supply Service, under Frank Pugliese and Bill Gormley, revolutionized federal contracting with the elimination of maximum order limitations on the GSA schedule and development of blanket purchase agreements. The hardware BPAs negotiated off the schedule have provided the government with a streamlined contracting process, great prices and responsive vendors.

So when I criticize GSA, I criticize as someone with enormous respect for the agency's stupendous accomplishments in re-inventing an old-line bureaucracy.

Let me express my criticism in the bluntest possible terms: There are serious problems with how the GSA service schedule is working. The problems, I fear, are not odd horror stories but come close to being standard practice. These problems threaten the ability of government to obtain best value when contracting for IT services. They threaten procurement reform. And they even threaten GSA.

Procurement reform intends to develop streamlined, commercial-style selection procedures to enable government to quickly choose a best-value solution in a competitive environment. Competition should never be seen as something imposed on IT or program managers. Instead, it is something that helps managers secure better vendors, meet agencies' missions and pay better prices.

Yet over the past two years, I have heard anecdotes from government and vendor sources about the award of orders under the services schedule that had no competition or even a statement of work. People who want to get on contract in 24 hours without worrying about such things, I kept hearing, flock to the schedule.

I've come across two bits of evidence recently that support these anecdotes. One comes from an FCW article that was not about procurement but about a new GSA schedule that includes a category for World Wide Web designers [FCW,

Aug. 2]. In the article about the success of this new schedule - which is, incidentally, a small-business set-aside - one vendor gushed over the fact that the schedule "means that our current government clients as well as new clients can purchase these services with us without wasting their time having to get three bids and making sure everything is competitive. They can make a purchase order for up to $1 million without asking any questions."

Yes, you read it right: "without asking any questions." Hardly a way to be a smart buyer.

Then, at a party I attended for a senior career official moving to another government job, the head of contracting at a somewhat Defense Department-

related organization introduced himself to me and began moaning about how the service schedule is working. "Here's the most common way people are buying," he said. "They get marketed by a contractor, and they decide they want them. They then look at the schedule to find two other contractors with higher hourly labor rates. They then put in the file that they have 'considered' two other contractors and rejected them because of higher rates, and they award the order."

He then added that a variation on this procedure involves contacting two other contractors and asking them to bid. The contractors indicate "no bid," and that information is put in the contract file.

The practices cited above violate even GSA's minimalist requirements for awarding orders. But GSA cannot simply continue to offer the defense that it is fully up to the agencies to assure that GSA procedures are being followed. Eventually Congress will say, and with reason, that if the service schedule has become a rogue zone for everyone who doesn't want to follow common-sense, taxpayer-friendly approaches, then the loophole needs to be closed. And then - service schedule, sayonara.

Such a result would be too bad. The schedule performs a valuable role, especially for small IT businesses. There are people out there using the schedule intelligently to conduct streamlined, vigorous competitive procurements. Greg Woods at the Education Department conducted a great procurement recently for a modernization partner that was quick and brutally competitive.

The time is here for bold action, with cooperation among GSA, the Office of Federal Procurement Policy, ordering agencies, Congress and vendors. Let's explore what we need to do to put some teeth in competition requirements. FSS is taking a good first step by bringing in an outside auditor to gather information about how widespread noncompetitive orders on the schedule are.

Here's one idea: Consider a requirement that three bids be received before an order can be awarded, rather than three sources merely "considered." Three bids is an easy-to-observe standard that serves as a good measure of the reality of competition without demanding lots of file reviews.

Alternatively, documentation requirements for the reasons for award could be beefed up, although we should be careful about becoming too onerous.

As a community, we have a problem on our hands, and we need urgently to initiate a dialogue about how to deal with it.

Kelman was the administrator of the Office of Federal Procurement Policy from 1993 to 1997. He is now Weatherhead Professor of Public Management at Harvard's Kennedy School of Government.