GSA supports share-in-savings contracts

The General Services Administration is encouraging agencies to buy IT through share-in-savings contracts. GSA has set up a Web site and program office to provide advice and lessons learned to departments, said David Drabkin, GSA's associate administrator for acquisition policy.

With share-in-savings contracts, the vendor pays for developing an IT system and is compensated from the savings it generates for the agency. For example, a contractor building a tax collection system would get a portion of the revenue it creates.

GSA's efforts are a precursor to the draft guidance that will come out the middle of next year. The agency on Oct. 1 published an advance notice of rule-making to solicit industry and agency comments about what should be included in the guidance.

'Agencies don't have to wait for the guidance to use these types of contracts,' Drabkin said. 'The Web site and program office will help agencies do the work themselves.' He said a few agencies are working on share-in-savings contracts already.

'Share-in-savings can't be used for everything,' Drabkin said. 'It is an advanced form of incentive contracting.'

The Web site,, gives policy updates, case studies and other contractual information. The program office will conduct outreach programs to help agencies and industry identify suitable opportunities. It also will post new case studies and online tools on the site.

The E-Government Act of 2002 made it easier for agencies to use such contracts and keep the savings they generated. The act limited termination obligations to $5 million or 25 percent of the estimated cost of the contract, Drabkin said. Previously, under the Clinger-Cohen Act, agencies could not keep the savings, and the termination fee was unlimited.

'Share-in-savings gives agencies a tremendous opportunity to be innovative and hire vendors with innovative technologies,' Drabkin said. 'This is the type of contract that can be used when an agency is trying to recover funds or reduce costs by improving the way it does business.'

PostNewsweek Tech Media staff writer Gail Repsher Emery contributed to this article.

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