GSA may lower some contract surcharges for agencies

The General Services Administration’s is considering reducing the surcharge it applies to some contract purchases, potentially providing a boost to the Barack Obama administration's push for strategic sourcing.

The fee is expressed as a percentage of the dollar value of orders placed. On Multiple Award Schedule contracts, the fee has been 0.75 percent since fiscal 2004. GSA can use the money to fund the Schedules program or another agency program.

“We think there’s already an opportunity for us to reduce fees,” Dan Tangherlini, acting GSA administrator, told Homeland Security and Governmental Reform Committee Chairman Sen. Joe Lieberman (I-Conn.) at a hearing held Sept. 12.

Furthermore, GSA has a surcharge on the strategic sourcing initiative contracts.

“In many ways, the [fee] discourages agencies from doing the right thing,” which is to use the strategic sourcing contracts, he said. Without an additional fee or even a decreased fee, agencies may be more inclined to choose the contracts as they try to save money. Some Obama administration officials have also been concerned about the relatively slow pace of agencies adopting strategic sourcing.

GSA’s fees have generated more money than officials need to run the MAS program. The fee brings in more than $250 million per year, Lieberman said. He pointed out too that, based on a GSA inspector general audit from fiscal 2012, GSA has reserves of more than $687 million, as of September 2009, in its revolving fund. GSA IG Brian Miller did not have a more current figure.

Lieberman doesn’t want to eliminate the reserve fund. However, “this is clearly a time in our federal government where every dollar counts, and you’ve got millions of dollars in excess in this reserve fund,” he said. He urged Tangherlini to reduce the fees.

"It’s worthy of a good deep dive and inspection,” Tangherlini said.

The Federal Acquisition Service, which oversees the Schedules program, should get a better understanding of the right amount to keep on reserve and develop a transparent process so agencies can see how GSA is spending the reserves, he added.

Overall, “we really want to kick off a broader discussion with our agency partners and say, what’s the right structure for these fees going forward,” he said.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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