GSA supply distribution goes virtual

GSA supply distribution goes virtual

The agency will close its office supply centers, eliminate up to 2,000 jobs

By Christopher J. Dorobek

GCN Staff

The virtual world bled into the real world earlier this month as the General Services Administration decided it would close its last eight office supply and distribution centers.

'Change means embracing new technologies to help us accomplish our mission, and it means eliminating traditional methods when they no longer make good business sense,' GSA Administrator David J. Barram said.

Moving that business online will result in the loss of as many as 2,000 jobs, GSA officials said.

GSA's Federal Supply Service will move its supply and procurement program, which sells everything from office and paper supplies to furniture, to the Web. Agencies will be able to buy supplies directly from vendors using GSA Advantage, FSS's online shopping mall, or through other online sources.

The shift is the most recent effort to streamline GSA, moving it from a mandatory provider into the competitive marketplace where agencies have a range of choices for buying products and services.

'It is important to understand that the decision to move our distribution program toward a virtual platform is a significant part of the changes we are making throughout GSA,' Barram said. The agency must serve government buyers in the most efficient and effective ways possible, he said.

The landscape has changed dramatically since the supply distribution system was created 50 years ago, and although the program has evolved, it simply cannot keep up, FSS commissioner Frank P. Pugliese said.

The decision to close the eight centers was very difficult but followed a long downward spiral in sales, he said.

'Because the current stock program involves high fixed costs, we have found ourselves in a catch-22 position of constantly having to raise our prices to break even. This is unacceptable,' Pugliese said.

All centers will
close by 2001
By mid-October:

  • Burlington, N.J.
  • Franconia, Va.
  • Auburn, Wash.
  • Chicago
  • Denver

Within 18 months:

  • Stockton, Calif.
  • Palmetto, Ga.
  • Fort Worth, Texas

The warehouses were responsible for $772 million in sales so far this year, down from $988 million in 1988. The decrease over the 10-year period came as GSA schedule contract sales were on the rise. Sales for this year have reached $7.7 billion.

Buying power

The warehouses have been able to compete until recently, Pugliese said. But today, agencies have a wide array of buying options available, including simply using a credit card at stores such as Staples and Office Max.''

Agencies have ordered from the warehouses electronically for years using proprietary federal and military requisition procedures for electronic data interchange. Agencies also were able to place phone and mail orders or go to the service centers in person, officials said.

The plan is to cut GSA out as a middleman and follow the model of the schedule contracts that let agencies buy directly from the vendors, officials said.

The result of this change is a reduction in force of 1,400 to 2,000 people. GSA has instituted a hiring freeze and has requested early-out and buyout authority from the Office of Management and Budget, the Office of Personnel Management and Congress. The final job tally will depend on how many people take those options, GSA officials said.


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