FedSources: GSA dealing with its problems

The General Services Administration still faces significant problems, but the agency's new leadership is focusing on those issues, a Federal Sources Inc. analyst told an industry group today.

One step in fixing GSA is reorganizing the agency. GSA Federal Acquisition Service Commissioner Jim Williams said he was presenting GSA Administrator Lurita Doan with recommendations for structuring FAS. Speaking at a industry breakfast sponsored by FSI, a market research firm, Williams said he is looking to stabilize the organization by filling in the acting positions with permanent people.

GSA has been struggling because of financial pressures and a number of agencies that are shopping around for procurement services.

Williams said it is in the best interest of agencies and taxpayers for GSA to be the government’s procurement organization.

Ray Bjorklund, FSI's’ senior vice president and chief knowledge officer, said GSA has made progress with its largest customer, the Defense Department.

DOD is increasing its use of GSA contracts, but Bjorklund added that civilian agencies are taking their business elsewhere, according to a presentation today.

Market share from DOD sales rose to an estimated 8.9 percent based on available data through three quarters of fiscal 2006, after a fall from 8.5 percent in fiscal 2004 to 8 percent in 2005.

DOD boosted its use of GSA¹s governmentwide acquisition contracts and multiagency contracts (MACs) from fiscal 2004 to 2005.

In 2005, DOD spent $522 million through GSA contracts, which represents 6.4 percent of its overall spending on GWACs and MACs, compared with $250 million in 2004, or 3.8 percent of its business. However, a large portion of the increase came from telecommunications sales, according to FSI.

Bjorklund said it was a positive sign, showing that the new policies are smoothing the relationship between DOD and GSA. But he added that DOD had turned inward for indefinite-delivery, indefinite-quantity contracts. Sales climbed to $7.42 billion in 2005, an increase of $1.36 billion from the previous fiscal year.

However, the use of GSA schedules has declined slightly among civilian agencies through the third quarter of fiscal 2006, according to figures.

Agencies’ use of GSA¹s GWACs and MACs also decreased. Sales slid by 6.5 percent from fiscal 2004 to 2005, pulling down GSA¹s share of their business from 56.5 percent to 54 percent.

Bjorklund said fiscal 2006 numbers from the Federal Procurement Data System suggest further declines that may push GSA¹s share below 40 percent.

The year-over-year growth rate in Schedule 70 sales decreased by 0.2 percent between fiscal 2004 and the third quarter of fiscal 2006, Bjorklund said.

A confused market may be the root of the problem, he said. Extensive diversity of procurement vehicles can confuse a crowded, shrinking market.

New programs and acquisition management shortfalls, coupled with policy changes, leave customer agencies perplexed.

Confusion gives customers a license to hunt, he said.

Bjorklund said FAS has to overcome its lack of qualified acquisition staff and market share, but new leaders at GSA can reverse the trend with the FAS reorganization and the creation of the Acquisition Services Fund.