House committee grills GSA

The General Services Administration has encountered unexpected snags in its effort to realign its two primary divisions, but the agency is dealing with the issues, Administrator Stephen Perry told the House Government Reform Committee today.

Perry, along with the administrators of the Federal Supply Service and the Federal Technology Service, GSA's primary divisions, appeared before the committee as part of a hearing provocatively titled "Entrepreneurial Government Run Amok?" The hearing was intended to be a status check on GSA's effort to realign the responsibilities of FSS and FTS.

Committee chairman Tom Davis (R-Va.) focused his questions on GSA's recent revelations that FTS used more than $37 million from an information technology fund to construct and renovate buildings for clients. He and other committee members also asked the officials about the recent decision to consolidate and eliminate some governmentwide acquisition contracts.

Perry highlighted several moves the agency has made since undertaking the realignment. The supply service now develops and manages almost all IT contracts, while the technology service retains some single-agency contracts and network services contracts. FSS has primary responsibility for marketing services and has been successfully collaborating with FTS to coordinate marketing plans, Perry said. The contract consolidation is intended to reduce duplication and lower costs for both government and industry, he said.

Perry reminded the panel that GSA discovered the misspent funds, when a contracting officer brought the matter to the attention of the regional administrator over Region 10, which includes the Northwest and Alaska.

The agency has reassigned the employees in the Bremerton, Wash., office to an office in Auburn, Wash., where they will have closer supervision, Perry said. GSA has also implemented training courses.

On Sept. 23, FTS Commissioner Sandra Bates issued a memorandum to the agency's regional offices that reminded them of the regulations and policies they are to follow, Perry said. "This memorandum strongly admonishes all FTS activities to scrupulously adhere to the letter and spirit of all pertinent guidance," he said.

Bates plans to solicit an independent review of the agency's contract and management operations to ensure they are in compliance with law, regulations and GSA policies, Perry added.

William Woods, director of acquisition and sourcing management at the General Accounting Office, testified that GAO officials have reservations about FTS moving into areas that have no connection to technology. "The findings that the Inspector General revealed about the Bremerton office are quite disturbing," Woods said.

The technology service is offering its assisted procurement services to purchase professional services for clients, including some that are not technology-based. In Bremerton, FTS was procuring construction services for clients, Wood said.

Davis wondered if performance incentives that GSA offers to employees could give them a motive to bring in more business even if it meant misusing the funds.

Bates said that the incentives are based only in part on sales volume. "Another one of those aspects is compliance with procedures," she said. "While we are using the terms 'bonus' and 'incentive plan,' those are not the same things as when industry uses those terms."

GSA has to maintain a careful balance, Davis said. "We try to encourage our managers to be innovative," he said. "If they step out and get slapped down, it encourages others to stay inside the box."