After $77m, GSA pulls the plug

Auditors say GSA Preferred had failed; legacy systems to be restored

After spending $77 million to modernize its tracking of agencies' procurement spending, the General Services Administration abandoned its GSA Preferred project earlier this month. Internal and external audits concluded that the program was broken and couldn't be fixed.

The news drew cheers from industry contractors who said the program was clunky and inefficient and did not suit anyone's needs.

'Preferred was filled with problems from the start and never lived up to its potential,' said Larry Allen, executive director of the Coalition for Government Procurement, a Washington industry association.

GSA took the action after KPMG LLP of New York performed an independent audit that essentially confirmed the agency's own internal analyses and found the program fraught with problems.

'Following internal reviews and an evaluation by an outside consultant, GSA is now electing to end GSA Preferred,' the agency said in a statement.

GSA launched Preferred in 2004 as a pilot in Region 3, which includes Delaware, Maryland, southern New Jersey, Pennsyl- vania, Virginia and West Virginia; and Region 8, which includes Colorado, Montana, North Dakota, South Dakota, Utah and Wyo- ming. The system was supposed to give agencies that use GSA's Federal Technology Service a better view of how they spend their money on IT products, as well as their project billing deadlines.

GSA in 2002 awarded Unisys Corp. a seven-year, $36 million contract to implement software from SAP America Inc. of Newton Square, Pa. The agency also spent about $41 million of its own money to implement the system, officials said.

The application was intended to replace FTS' IT Solution Show Web System and Integrated Task Order Management System used in GSA's regional offices, and the Task Order System and Online Management Information System used nationwide.

Failure to meet needs

GSA expects to migrate data already in GSA Preferred back to the legacy systems by the end of the year, agency officials said.

Critics said the product wasn't malleable enough to meet GSA's or its industry contractors' needs.

'Though an automated system, contractors had to overnight hard copies of invoices to the GSA finance center in Fort Worth [Texas] in order to get paid,' Allen said. 'Also, there were problems with the point-of-contact system, so companies sometimes did not get notice of bid requests.'

Although it performed its own analyses of the program, GSA in September 2005 tapped KPMG to do an independent review before taking any official action.

KPMG confirmed GSA Pre-ferred's shortcomings, concluding that the legacy systems did a better job managing IT projects.

'Overall, we found that GSA Preferred met fewer of GSA's business objectives and received a lower score than the legacy environment,' the report said.

A Unisys spokeswoman referred calls to GSA.

'GSA relied heavily on the system to effect organizational and process changes but did not invest sufficiently in managing the change,' KPMG said.

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