Tailor contracts to take advantage of FSS deals

'Increasingly, the government is being forced to outsource more and more because of the human capital crisis,' said Dennis Fischer of Visa USA and a former FTS commissioner.

Two years ago, the General Services Administration started offering financial and business services on the Federal Supply Schedule, and observers expected the revenue eventually to surpass that of the IT schedule, which brought in $13.2 billion in fiscal 2002.

'People see tremendous potential in that arena,' said Larry Allen, executive vice president of the Coalition for Government Procurement, a Washington trade association that represents mostly schedule companies. 'It hasn't happened yet, but it will because it is a commercial function.'

Last April, GSA combined its financial and business services offerings on the FSS schedule into a new multiple-award contract with the hope of providing a semblance of one-stop shopping.

Under the new Federal and Business Solutions, or FABS, multiple-award contract, agencies spent about $230 million last year. The total is expected to rise this year as more agencies outsource financial services, Allen and other industry experts said.

Outsourcing debt collection

'Increasingly, the government is being forced to outsource more and more because of the human capital crisis,' said Dennis Fischer, vice president for government solutions for Visa USA in San Francisco and a former GSA Federal Technology Service commissioner. 'You will first see the smaller and more repetitive and labor-intensive type of work. And as people become more comfortable, more and more financial transactions will be outsourced.'

Fischer's predictions seem to be coming true. Agencies bought more than $53.1 million worth of debt collection services, more than $43.9 million of complementary financial-management services and more than $36.8 million worth of financial and performance auditing services from FSS in 2002, according to GSA.

Fischer said agencies outsourced the processing of credit card transactions long ago to the major banks, but other financial transactions are slowly coming around.

It's not as if the government has no experience in this area. The Agriculture, Justice, Housing and Urban Development and Veterans Affairs departments routinely outsource debt collection services, Fischer said. Agencies for many years have contracted out other services, such as payroll processing, travel and even grant payments.

The Education Department was among the first agencies to contract out its debt collection services in the mid-1980s.

'From outsourcing, we gain expertise and the ability to have continuous improvement and stay current with technology,' said Gary Hopkins, director of collections for Education's Federal Student Aid office. 'We can set the contract and the prices but don't have to take on the risk of hiring additional people.'

Hopkins said if Education didn't contract out the debt collection services, it would have to hire an additional 1,500 people to do the processing.

Education hired Raytheon Co. about seven years ago to make sure the debt collection systems run smoothly, said Brian Sullivan, system director for Education's collections office. He said agencies should pay attention to data ownership and database maintenance.

Ownership questions

'One of the things we stated very clearly in the contract is that we own all the data and software,' Sullivan said. 'You have to look at the contractor and all the subcontractors closely to make sure they have experience in this type of work.'

As for database maintenance, he said the vendor must have a plan to maintain a parallel file while work is being done on the original.

Education also emphasized meeting contract performance requirements by including disincentives in the contract, Sullivan said.

Hopkins added the contract also must be flexible, making it easy to modify the agency's system.

'We do a lot of task orders, but we would like the next contract to be able to adapt to our changing goals and needs more easily,' Hopkins said.

Sullivan added the next contract likely would include systems integration work so the debt collection system can exchange data with other systems inside the agency and within the government.

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