GAO to consider FSS, FTS privatization

Rep. Tom Davis (R-Va.) plans to ask the General Accounting Office to report on the pros and cons of merging the General Services Administration's Federal Supply Service and Federal Technology Service into a quasi-governmental organ-ization operating along the lines of the U.S. Postal Service.

Davis has prepared a draft letter to GAO requesting the study and was expected to send a final version last week.

A staff member on the House Government Reform and Oversight Committee's Subcommittee on Government Management, Information and Technology said that subcommittee chairman Rep. Steve Horn (R-Calif.) also plans to sign the letter.

FSS runs the multiple-award schedule program, through which agencies order products ranging from computers and office supplies to automobiles. FTS provides agencies with telecommunications, acquisition and other information technology-related services.

The draft letter asked GAO to consider whether such an action could reduce the costs of operating the two agencies; improve federal acquisition programs; give the agencies more flexibility in managing, hiring and paying employees; and reduce duplicative procurement functions.

A spokesman for Davis said the congressman believes that revamping FSS and FTS into a quasi-governmental entity will allow the organizations to act more like a business. "Rep. Davis is intrigued by this idea," the spokesman said. "Theoretically, it makes a lot of sense to him."

Davis last year expressed interest in privatizing FSS, but he seems to be pursuing the idea with renewed vigor within the past month. His spokesman said Davis plans to hold hearings on the issue next year.

The spokesman said part of GAO's work will focus on state and foreign governments that have already privatized their acquisition agencies and may serve as models for a federal program.

A spokesman for Horn said he is concerned about the efficiency of GSA's work force because many top-performing people have left on buyout programs, and the average age of remaining employees is over 50 years old. According to his spokesman, Horn expects many GSA employees to retire in 10 years and is concerned about the effect that will have on the agency's ability to conduct its mission. He said Horn wants to determine whether privatizing FSS and FTS will ensure that GSA has the manpower to keep up with its increasing workload.

FSS Commissioner Frank Pugliese said he has long supported the idea of turning his office into a quasi-governmental organization, but he added that GSA Administrator David Barram opposes such a move. Barram has said he believes FSS and FTS have been operating successfully within GSA, and he saw no reason to spin them out of the agency.

Pugliese said that transforming FSS into a quasi-governmental organization would give him an opportunity to run the agency more like a business. "It would set up an ability for us to react quickly to a peak situation," such as increasing staff to manage a high volume of business, he said. "You can reward those people who perform more effectively. You get the ability to get out of a business line if it doesn't work out. You get the ability to attract different kinds of people."

But FTS Commissioner Dennis Fischer said he does not believe that splitting up GSA in any fashion would benefit the government. He said such an action would harm the cooperative relationship that exists among FTS, FSS and other GSA components such as the Office of Government-wide Policy.

"I don't see any substantial barriers we can't overcome by working within the existing GSA," Fischer said.

Larry Allen, executive director of the Coalition for Government Procurement, said he believes industry will support the idea because it would allow the government to purchase products more like commercial buyers, as the new organization probably would not be subject to Federal Acquisition Regulation.