By Steve Kelman

Blog archive

Another GSA monopoly issue?

I was at a briefing today at a Defense Department military installation, and one issue that came up in passing was delays in getting some on-base space leased out (which would help the government from a revenue perspective, since the properties are currently unoccupied and in need of renovation) due to the length of time it takes for the General Services Administration’s Public Building Service to complete space leasing transactions.

The briefer mentioned – again in passing, since this wasn’t the theme of the brief, which made mention of the issue actually more interesting – that originally GSA had delegated leasing authority to the Department of Veterans Affairs, that the base had been planning to use the VA to get the lease done, but that GSA had since withdrawn the VA’s delegated leasing authority because they had begun doing third-party transactions for other government agencies. GSA, the briefer complained, often takes two years to complete a lease.

This is not my area, and I don’t know much about this – although I checked my understanding of the facts with somebody in the group who had GSA experience. But the issue sounds a bit like the issuing wracking the procurement community in the context of non-GSA governmentwide acquisition contracts. GSA used to have a monopoly on many of these kinds of services, and this wasn’t a happy era. It sounds like they are trying to preserve a monopoly in the leased space area.

This example raises general issues of principle about many inside-government monopolies, including sometime ones inside an agency (e.g. if customers for procurement services were required to use agency contracting people and not allowed to go to GSA or a governmentwide acquisition contract). I am guessing that GSA would argue that their competitors can lease faster because they don’t follow whatever rules exist in this area – and I am guessing those rules are significant. That is the typical story (excuse?) of the government monopolist, but the problem is that once a monopoly is created, for whatever reason, it tends to produce lazy, non-customer oriented behavior.

It is interesting that, according to the person I spoke with after the brief, GSA delegated leasing authority originally because it couldn’t keep up with leasing demand, but took that authority back when the kinds of third-party entrepreneurial activities the VA undertook started eating too much into GSA’s revenue.
One possibility is that some or even many of the leasing rules are stupid and should be eliminated. If the rules are important, let auditors audit a sample of leasing transactions, by any agency, for compliance. But let’s not preserve a monopoly.

As I said, I hardly regard myself as an expert on leasing policy, but I do smell monopolies pretty well and am skeptical of them. And I write not as an anti-GSA person at all, but as one who believes that it is good for agencies, and good for GSA in the long run, when GSA needs to compete for business.

Any blog readers have any thoughts on this?

Posted on Aug 12, 2010 at 12:08 PM


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