Rep. Davis floats FSS privatization scenario

Rep. Tom Davis (D-Va.) proposed last week turning the Federal Supply Service into a quasi-governmental corporation that would run the multiple-award schedule program more like a commercial business.

In a speech May 22 Davis said he is "considering" a plan to move FSS out of the General Services Administration and re-create it as an entity like the U.S. Postal Service subject to congressional oversight but free of most federal procurement and personnel rules. He said later that he wants to hold hearings about the idea and has not yet formulated specific legislation.

Various proposals to separate the schedule program from GSA have been floated in the past few years but none have generated much interest within the Clinton administration or on Capitol Hill. Davis' announcement caught many vendors and GSA officials by surprise and it left some questioning why there is any need to change a program that most agree is operating well.

This latest effort is being pushed mainly by the Coalition for Government Procurement a trade group whose members are schedule vendors. "It will give the Federal Supply Service the flexibility to operate as a streamlined business operation without some of the encumbrances normally attendant to federal agencies " said Larry Allen executive director of the group. "You'd be doing away with the bureaucratic mind-set and the organization would survive on its own capabilities."

But Ida Ustad GSA's deputy associate administrator for acquisition policy pointed out that FSS does not operate through appropriated funds. "They are industrially funded so they have a lot of flexibility to operate like a business already " Ustad said although she added that FSS could benefit from being released from federal acquisition and civil service rules.

Acting GSA administrator David Barram said recently that he knew of no "sound business case" to justify spinning off FSS.

FSS supports itself through the service fees it charges agencies that buy from the GSA schedules. Fewer regulations new schedule offerings and other recent changes FSS has made to the program have led to an increase in sales of information technology products and services.

Davis said privatizing FSS would give program managers more flexibility to improve their services.

Ken Salaets director of government relations with the Information Technology Industries Council said the IT industry would probably have "mixed views" about it.

"I'm not aware of any of my [members] lamenting that GSA is a millstone around the neck of FSS " he said. "We have to talk to Davis and find out what he believes would be gained by this."

Meanwhile some vendors think Congress could go further than what Davis is suggesting and let the private sector compete for the right to manage the schedules.

Rep. Steve Horn (R-Calif.) chairman of the subcommittee that would have to act on any proposal to privatize FSS has said in the past that he is interested in the idea. Mark Brasher an aide to Horn on the Government Management Information and Technology Subcommittee said Horn would review the issue.

- Brad Bass contributed to this report.

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