We trust that our cooperation with you and your staff will enable your inquiry to proceed expeditiously. Please contact the undersigned to establish a mutually convenient time for the meeting. Sincerely, г. Елес всъденит N. Eric Jorgensen NEJ:mb CC: Earl Wantland Tektronix, Inc, P. O Box 500, Beaverton, Oregon 97077 Subject: Effectiveness of GSA's Actions to Improve the Pursuant to your interest in the General Services Administration's (GSA's) management of the multiple award schedule program, we reviewed the actions GSA has taken to improve the program. In February 1979 and May 1980 you held hearings on this subject and encouraged GSA to introduce the necessary efficiencies and competition into the system needed to substantially reduce the cost of items procured by the Federal Government. Only until recently has GJA Begun to address the issues of improving the schedule progrum and reducing the number of schedules. However, the schedules concine in force and still constitute the major source of supply for Federal agencies. While GSA's plans appear responsive to our recommendations, few procedures plementing these plans have been developed. From our review of the procedures that were developed, we found that CSA has not yet solved the program's basic deficiencies. GSA must reexamine these procedures and intensify its efforts toward improving the program. Our objective was to determine if GSA's efforts to correct the deficiencies noted in our prior reports have produced effective results. The review was conducted from February 1980 to June 1980 and was performed at GJA's Federal Supply Service (FSS) headquarters, Arlington, Virginia. Car review included discussions with officials and examinations of procurement files, management policies and procedures, and GSA internal audit reports. (950591) Our examination consisted of revicwing actions taken by GSA on the recommendations contained in our prior reports on the multiple award schedule program. Accordingly, our review consisted of examining the effectiveness or procedures developed by FES to implement internal GSA policies for program improvement. Also, for those CSA policy areas in which FSS procedures ware not completely developed, we assessed the degree of progress made by FUS toward compliance with such policy. A summary of our efforts follows. included in enclosure I. BACKGROUND Additional details are Under the schedule program, GSA, through its FSS, awards contracts to multiple suppliers of similar items. The users order directly from the suppliers at prices that are supposed to be favorable to the Government. In fiscal year 1979 about 4 million items were listed, and total purchases were about $1.8 billion. GSA estimates fiscal year 1930 sales will approach $2.2 billion. On May 2, 1979, we issued a comprehensive report to the Congress entitled "Ineffective Management or ESA'g Hultinle Award Schedule Program--a Contly, berious, abu Lobostanding Problem" (PSAD-79-71). We reported that, because or GSA's incrfective management of the program, the Covernment was buying commercial products of higher quality than needed, price competition was absent, the lowest possible prices were not obtained, and most of the 4 million schedule items did not belong in the program. He made eight major recommendations to GSA for improving the program. In summary, we stated that (1) GSA should develop criteria for determining which items should be procured competitively and which should be purchased through multiple awards and (2) for those relatively few items which should remain on multiple award schedules, GSA should improve the contracting process. GSA agreed with all eight recommen dations. GSA ACTIONS TO IMPROVE THE MULTIPLE AWARD SCHEDULE PROGRAM Although congressional hearings and our May 1979 report prompted GSA to give considerable attention to the schedule program, this attention was short lived. Even though the GSA Office of Acquisition Policy issued an excellent policy statement in April 1979 to improve the multiple award program, few of the operating procedures required by this statement have been developed by FSS. This statement also requires that the procedures be developed within stipulated time frames and that FSS report its progress on a quarterly basis. Until we began our followup review in February 1980, GSA had not made any improvements that would solve the program's fundamental deficiencies. In view of the poor progress to correct these deficiencics, ISS, in March 1980, launched an intensive effort to asin attack the problem. A task force was created and charged with reviewing all multiple award schedules to determine is schedule items could be procured competitively, thus reducing the program's size. Also, FSS recently developed some procedures in an attempt to improve the contracting for and usage of items which should remain in the program. ilowever, these procedures have not solved the fundamental deficiencies of multiple award contracting. For example, our review of changes affecting late offer acceptance, maximum order limitations, and net price and benchmark discounts found that FSS --coes not maintain adequate documentation to prevent --does not follow procurement regulations for establishing maximum order limitations, and --may not obtain prices any more favorable than in the while progress has been evident in internal audit and training, it has been slow in market research, deletion or restriction of schedules, commercial item description development, and management information systems development. CONCLUSIONS GSA only recently addressed the crucial issues of reducing the number of schedules and improving the multiple award contracting process. The schedules continue in force and still represent a major source of supply for Federal agencies. CSA's plans, as evidenced by the GSA Office of Acquisition Policy planning statement and the recent initiatives of FSS, appear responsive to many of the recommendations 75-533 0-81--11 contained in our May 1979 report. However, few procedures implementing these plans have been developed by FSS. Our review of those procedures that were developed has shown: that GSA has not yet solved the schedule program's basic deficiencies identified in cur prior reports. Consequently, GSA must reassess these procedures and also intensify its efforts to improve the program. Wa will continue to monitor GSA's progress. Congressional oversight continues to be necessary to ensure that GSA complctes needed program reforms in a timely manner. A clear expression of congressional intent to correct the problems is desirable. RECOMMENDATIONS We recommend that the chairman, Senate Subcommittee on Treasury, Postal Service, General Government, Committee on Appropriations, --place GSA under a mandatory schedule to comply with the time frames stipulated in the GSA Office of Acquisition Policy statement for improving the multiple award schedule program and --require GSA to report the status of its improvement actions by submitting copies of its quarterly progress reports made to CON's 04fice of Acquisition Policy. We also recommend that the Administrator of GSA --intensify efforts to complete action on the recommendations contained in our May 1979 report, --strengthen procedures to assure compliance with the policy statement establishing firm cutoff dates for receipt of offers, --eliminate vendor marketing categories as a basis of bid evaluation and consider price together with discount when evaluating offers, and --establish procedures to assure that methods used GSA believes strongly that its efforts and achievements to date have not been recognized or accurately presented and urges that we revise our recommendations. (See enc. II.) |