GSA cuts back to break even

Amid downturn in FTS, agency gets approval for employee buyouts

In the [ITS] area our revenues are down and our costs are the same, so we need an aggressive response on our part.'

'GSA acting administrator David Bibb

Rick Steele

The General Services Administration is facing the same harsh realities the private sector does.

The agency projects that its national Information Technology Service revenues will drop to $1.4 billion in 2006 from $1.9 billion last year, and its losses will be $3 million'less than the $8 million lost last year, but still significant.

Regional ITS office revenues also are expected to drop to $2.8 billion this year from $3.6 billion. Losses, however, will increase to $48 million from $35 million, GSA chief financial officer Kathleen Turco said.

In response, GSA has cut discretionary spending, put in place a hiring freeze and will reduce personnel costs to meet its 2006 operating budget, according to acting administrator David Bibb.

'This has been a heck of a last six months,' Bibb said recently at the Interagency Resources Management Conference in Williamsburg, Va. 'We are dealing with substantive changes.'

Like a private-sector company faced with falling revenues, GSA is being forced to take drastic action to make sure it breaks even'as required by law.

GSA does not receive congressional appropriations for FTS or the Federal Supply Service, being merged into the Federal Acquisition Service, and must recover all costs through fees from agencies using their services.

'In the ITS area our revenues are down and our costs are the same, so we need an aggressive response on our part,' Bibb said.

The agency recently received approval from the Office of Management and Budget and Office of Personnel Management to offer buyouts or early retirements to 400 FTS and FSS employees.

Turco said the early outs may have come too late to benefit the agency this year but will make a big difference in 2007.

Over the past two years, agencies have moved away from GSA's services and caused a once flourishing agency to go into decline.

Using GSA services takes longer than it used to 'because of the Get It Right campaign and the fact that contracting practices needed to be put back in a business-like manner,' she said. 'Or our clients decided not to use GSA. We feel we are coming out of this downturn.'

In addition, Turco said agencies' use of the IT Fund is projected to bring in $5.4 billion instead of the expected $7.2 billion. That shortfall also will affect GSA's bottom line, because it receives a 2 percent to 4 percent fee from every agency purchase made through the fund, Turco said.

On a positive note, the FSS schedules are still popular with the agencies. Turco said schedule purchases through March 30 are up 5 percent over last year'$18 billion compared to $17.2 billion. The IT schedule, in particular, is growing, to $9.3 billion compared to $9.1 billion at this time last year, Turco said.

'We are doing an analysis to see why we are up, but this is good news, no matter,' she said.

Donna Bennett, former FSS commissioner, said schedules have always fluctuated, so GSA must find out whether this is structural or cyclical.

'Up is better than down, in any case,' said Bennett, who is the infrastructure research chairperson for the Logistics Management Institute Inc. of McLean, Va.
'They have to cut costs and look at the value proposition for their customers and make sure they are putting forth a solution their customers want to buy.'

More good news
Another piece of good news is the passage by the Senate Homeland Security and Governmental Affairs Committee of the legislation to merge the IT and the General Supply funds into OneFund and create the FAS.

'My hope is we can get it through the Senate very quickly,' said committee chairwoman Sen. Susan Collins (R-Maine) after the vote. 'It would bring more efficiencies to the system, and I think it makes a lot of sense.'

The House passed its version of the bill last year. Although GSA has already launched the FAS, it cannot combine the two funds without congressional approval.

GCN staff writer Rob Thormeyer contributed to this story.

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