GSA unveils revolutionary acquisition concept

The General Services Administration's Federal Technology Service yesterday introduced plans to develop contracts through a new method to fund information technology procurement in which vendors' payment is based on their performance.

The presenters at the FTS conference on share in savings—state officials, Rep. Tom Davis (R-Va.) and former and current Office of Management and Budget officials—explained the concept and reassured agencies and vendors that share-in-savings is a legal funding option. More than 200 agency and industry representatives attended the conference.

Through share-in-savings, which is already successfully used in state and local governments and in a limited form in two federal agencies, agencies can create contracts for IT systems that require little or no up front payment from the agency. Under one option, a vendor installs an IT system at no cost in return for receiving a portion of the money an agency saves or receives in increased revenue because of the system. GSA plans to develop by spring one or more pilot contracts to serve as examples and vehicles for the rest of the government.

Some agencies, including the Federal Aviation Administration, said share-in-savings would backfire, adding that it would create problems with OMB for obligating funds. Several also expressed concern that after saving money they would not receive the appropriations needed to pay the vendor the next year.

Allan Brown, associate administrator of procurement innovation at OMB's Office of Federal Procurement Policy, said that to avoid those problems, agencies should discuss each planned share-in-savings contract with OMB and Congress. OFPP is helping GSA form its share-in-savings policy, and the organization is ready to stand as a liaison for any other agencies in the future, he said.

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