POSSIBLE SAVINGS IN PROCUREMENT OF GOODS AND SERVICES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87-01146R000100030001-9
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 49
• Document Creation Date: December 14, 2016
• Document Release Date: March 13, 2003
• Sequence Number: 1
• Publication Date: March 24, 1975
• Content Type: MEMO

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COMPTROLLER GENERAL OF THE UNITED STATES
WASHINGTON. D.C. 2054E
March 24, 1975
DDJA25--/S/~~'
HEADS OF CIVIL DEPARTMENTS AND AGENCIES:
SUBJECT: Possible Savings in Procurement
of Goods and Services
The purpose of this letter is to bring to your attention our report
to the Congress dealing with the Federal Supply Service procurement pro-
grams. A copy of the report entitled "Management of the Federal Supply
Service Procurement Programs Can Be Improved" is enclosed.
Our nationwide statistical survey showed that in fiscal year 1973
civil agencies procured $4.5 billion worth of goods and services directly
from commercial sources. Of these purchases, $1.4 billion was for items
identical or similar to those which could have been purchased from (GSA)
General Services Administration's supply system at reduced cost to Govern-
ment agencies. We estimated that agencies could have saved $300 million
had they obtained these goods and services through GSA rather than from
commercial sources.
Because of volume buying, GSA's prices for goods and services are
of n sig i i aptly less than the=prices paid by agencies when they buy
directly from commercial sources. Our report shows that Government agen-
cies can conserve their limited funds by using GSA to A gi-P extent.
Increased cooperation between GSA and its agency customers should result
in significant savings in Government procurement.
The Federal Property Management Regulations require agencies to use
the Federal Supply Service as the source for many common-use supplies and
.services. If a particular product handled by GSA will not meet the require-
ments of an agency, a waiver should be obtained by the agency to procure
an alternate product directly from commercial sources.
We urge each _dep_artmeat and agency to review its present procurement
practices to insure that it is using the most economical ppurres o supply
--------
consistent with GSA's Federal Property-Management Regulations 44n
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Comptroller General
of the United States
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REPORT TO THE CONGRESS
Management Of Federal Supply
Service Procurement Programs
Can Be Improved
General Services Administration
BY THE COMPTROLLER GENERAL
OF THE UNITED STATES
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COMPTROLLER GENERAL OF THE UNITED STATES
WASHINGTON, D.C. 20548
To the President of the Senate and the
Speaker of the House of Representatives
This is our report on how management of Federal Supply
Service procurement programs can be improved by the General
Services Administration.
We made our review pursuant to the Suaget and Accounting
Act, 1921 (31 U.S.C. 53), and the Accounting and Auditing Act
of 1950 (31 H.S.C. 67).
itie are sending copies of this report to the Director,
Office of Management and Budget, and the Administrator,
General Services Administration.
r4'C'4 a. 4"~
Comptroller General
of the United States
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Page
DIGEST
CHAPTER
INTRODUCTION 1
Depot program 2
Federal Supply Schedule program 2
Special buying program 2
GSA sales 3
Why the review was made 3
Objectives 3
Scope of review 4
2 PROCUREMENT PRACTICES OF CIVIL EXECUTIVE
PURCHASING OFFICES
Similar goods and services available
from GSA
Reasons for commercial purchases
Factors influencing commercial procure-
ment
Goods and services not available from
GSA depots and schedules
3 GSA's MONITORING OF PROCUREMENT PRACTICES
OF PURCHASING OFFICES 12
Customer service program 12
Waiver system 13
4 COST EFFECTIVENESS OF GSA IN PROVIDING SUP-
PLY SUPPORT TO CIVIL EXECUTIVE AGENCIES 14
Industrial funding 16
5 CONCLUSIONS AND RECOMMENDATIONS 17
Conclusions 17
Recommendations 17
6 AGENCY ACTIONS 19
Automated Delivery Order System 19
Creation of marketing research and
marketing division 19
Consultant study 19
I Organization chart of General Services
Administration 21
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APPENDIX
Page
II
Organization chart of Federal Supply
Service
22
III
IV
GSA regions
Sampling errors for major procurement
estimates
24
V
Estimated civil agency procurement data
for fiscal years 1973 and 1972
25
VI
Estimated amount of commercial procurement
by commodity and service category
26
VII
Estimated amount of commercial procurement
by commodity category for goods and serv-
ices available in GSA's schedule and depot
programs
VIII
miajor geographical areas used to analyse
buying habits of purchasing offices
28
IX
Procurement data by geographical area
29
X
Location of GSA distribution facilities
30
XI
Percent of commercial procurement to total
procurement by size of purchasing office
31
XII
Type of commercial procurement by size of
purchasing office
32
XIII
Computation of potential savings available
agencies if GSA supply sources were used
to
to
procure the similar items available from
GSA
XIV Agency comments
XV Principal Officials of the General Services
Administration responsible for the adminis-
tration of activities discussed in this
report
ABBREVIATIONS
DOD Department of Defense
GAO General Accounting Office
GSA General Services Administration
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COMPTROLLER GENERAL' S
REPORT TO THE CONGRESS
MANAGEMENT Of
FEDERAL SUPPLY
SERVICE PROCUREMENT PROGRAMS
CAN BE IMPROVED
General Services Administration
D I G E S T
w'HY THE REVIEW WAS MADE
The General Services Adminis-
tration (GSA) is responsible
for procurement and supply of
goods and services to Federal
agencies. GAO made this review
because a surve_?_ showed that
Government agencies were pro-
curing directly from commercial
sources goods and services that
GSA could provide.
GSA sales to civil executive
agencies during fiscal year
1973 amounted to $1.7 billion,
or only about 27 percent of the
$6.2 billion they spent for
goods and services during the
year. The remaining $4.5_bil-
lion worth of goods and non-
p~r-sonal services were procured
directly from commercial supply
sources.
Because GSA's share of the Fed-
eral civil market was relatively
small, GAO examined:
--The extent that civil agencies
purchased goods and services
from commercial sources when
identical or similar items
were available from GSA.
--The reasons why GSA supply
sources were not used.
--The extent of commercial pur-
chases for goods and services
not available from GSA.
--The amount of savings which
might be realized if GSA sup-
ply sources were used.
--Ways for improving GSA's re-
sponsiveness to its customers.
FINDINGS AND CONCLUSIONS
Findings
The procurement estimates pre-
sented in this report are based
on a GAO statistical survey of
Government purchasing offices.
In fiscal year 1973, civil
agencies procured $4.5 billion
worth of goods and services
directly from commercial
sources.
--$1.4 billion was for identi-
cal or similar goods and
services available througn
GSA supply sources.
--The remaining $3.1 pillion
was spent for goods and serv-
ices not available through
GSA supply sources. However,
many of these goods and
services fall within the
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same general categories
managed by GSA. It is pos-
sible that GSA could have
supplied them at lower cost
had it known that agencies
needed and were ordering the
_,i t.S m s .
____ _j
Major reasons agencies offered
for not using GSA's procurement
programs to a greater extent
were: (1) untimely GSA de-
livery dates, (2) personal pre-
ferences, (3) insufficient item
descriptions in GSA catalogs,
and (4) inadequate research to
see whether GSA stocked the
same or comparable items.
GSA is a mandatory source for
most commonly bought commercial
goods and services. Yet, GSA
has not reviewed agencies'
procurements from commercial
sources to assess their cost
effectiveness and propriety.
GSA said it lacked sufficient
resources to monitor compliance
with its procurement directives.
The result is that GSA has
little visibility over who it
supplies, what its customers
need, and from whom its cus-
tomers are buying.
The result has been that agen-
cies have not made the most
effective use of their limited
procurement funds. For example,
-a recent GSA study shows that
agencies could have saved, on
-=-the average, 23 percent of the
c m nor i cP had they
bought comparable goods from
GSA GAO has tested GSA's
price comparison calculations
and believes their procedures
and methods are acceptable for
calculating potential savings
to agencies.
On the oasis of the $1.7 bil-
lion GSA sales in fiscal year
1973, civil agencies presumably
saved about $391 million. An
additional $300 million annual
saving could have been realized
had the civil agencies obtained
through GSA the $1.4 billion of
goods and services they pro-
cured directly from commercial
sources.
These procurements were for
identical or similar goods and
services available througn GSA
supply sources. Additional
savings could nave been real-
ized if agencies had been aole
to obtain some of the remaining
$3.1 billion of commercial
items througn GSA.
While it is clear that agencies
could nave realized significant
savings through greater use of
GSA as a procurement source,
overall savings to the Govern-
ment would nave been somewhat
less. In comparing prices and
t'estimating savings, GSA did not
i consider total economic costs
.,of doing business--such as ad-
ministrative cost, transporta-
'tion, warehousing, and other
associated costs.
All of these costs would have
to be considered if valid cost
comparisons were to be made
between GSA centralized pro-
curement and procurement by
agencies directly from commer-
cial distribution sources.
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No measure exists (either on an
item basis or in total) to
evaluate the overall cost ef-
fectiveness of GSA as a sup-
lier of goods and services.
Conclusions
GSA could do a better job of
fulfilling its procurement
leadership responsibilities if
--it obtained more detailed
knowledge about its customers,
their needs, and their buying
practices, and
--it monitored agency procure-
ment practices to insure com-
pliance with mandatory GSA
buying policies and regula-
tions.
The enabling legislation
clearly expresses the intent
that GSA perform a centralized
procurement function for execu-
tive agencies. GAO believes
the authority for GSA to moni-
tor agency procurement practices
flows from this legislation.
Overall savings available to
the Government through cen-
tralized procurement cannot be
assessed until GSA develops a
system which will permit eco-
nomic cost comparisons between
commercial and Government dis-
tribution systems. However,
until more definitive data is
available, Government agencies
can and should conserve their
appropriated funds by using
GSA to a greater extent.
RECOMMENDATIONS
GAO recommends that the Admini-
strator of General Services:
--Obtain more and better in-
formation on the needs and
problems of purchasing of-
fices. The information
should permit GSA to deter-
mine the types and amounts of
goods and services being
bought from both GSA and com-
mercial sources.
It also should pinpoint any
problems purchasing offices
are experiencing in making
greater use of GSA as a sup-
ply source--such as delivery
problems, pricing problems,
and lack of clarity in GSA
catalogs.
--Analyze the additional data
systematically to identify
underlying problems and
establish appropriate mea-
sures to cope with them.
--While gathering and analyzing
information, take interim
steps to increase GSA sales
to Federal agencies when it
is economical to do so.
Lacking economic cost data
permitting appropriate cost
comparisons of GSA versus
direct commercial purchases
by agencies, GSA will have to
adopt interim guidelines for
use in deciding whether to
stock and/or supply a broader-
range and depth of items.
For example, GSA might stock
items where the volume of
procurement and the price
differential from the Gov-
ernment's mass-purchasing
power offer large savings to
the Government when compared
to direct commercial procure-
ment by agencies.
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--Develop cost data or pricing
systems that will permit
evaluation of total economic
/ costs to the Government of
V supplying items through GSA
--channels for comparison with
direct commercial procure-
ment by agencies. This would
allow GSA to establish rea-
sonable standards to permit
agencies; to buy directly from
commercial sources if lower
total economic costs to the
Government can be achieved.
Such data is essential if in-
formed procurement decisions
are to be made. This recom-
mendation is in line with
conclusions of the Commission
on Government Procurement.
-AGENCY ACTIONS
--r
During
GAO's review GSA
ini-
tiated
positive actions
on
issues
in this report.
Major
actions
include:
--Implementation of an Auto-
mated Delivery Order system
which requires agencies to
submit their requirements
from schedule contractors to
GSA for processing. This
system will permit GSA to
identify customers of the
schedule program, as well as
the total demand for a given
item or class of items.
--Creation. of the Market Re-
search and Marketing Divi-
sion to plan, develop, and
conduct customer research and
to promote programs designed
to advance awareness of com-
modities and services avail-
able to agencies.
--Award of a contract to a con-
sulting firm to study and re-
port on the Federal Supply
Service organization and op-
erations. The study will in-
clude an examination of the
effectiveness of the supply
schedule, depot, and special
buying programs.
--Formulation of legislation
calling for development of
an industrial funding con-
cept for GSA procurement and
supply operations. This
would permit applying over-
head to the cost of items
being procured and would be
a great stride toward de-
veloping economic cost data.
MATTERS FOR CONSIDERATION
BY THE CONGRESS
The Congress may wish to
consider having the GSA
Administrator periodically
advise it on the progress
being made and on any major
obstacles encountered in
carrying out GSA's monitor-
ing and enforcement role.
GAO and the P ocure.ment__Com-
mission__favor
mittin9 GSAto, adopt the in-
dustrial funding concept.
Timely passage of this legisla-
tion will provide GSA with the
incentive to retain centralized
procurement of items that will
result in savings to the Gov-
ernment and eliminate cen-
tralized~roourement_ of, items
which agenciescanrocu.re
more economicallfromc9m-
mercial distribution systems.
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CHAPTER 1
INTRODUCTION
The Federal Property and Administrative Services Act of
1949 created the General Services Administration (GSA) to give
the Government an efficient and economical system for procur-
ing and supplying personal property and nonpersonal services. y,.
The intent of the act is to provide uniform policies and
methods of procurement and supply and to eliminate duplicate
procurement functions and competition among executive agen-
cies for like articles in the same market, lack of quality
purchases, and other inefficiencies.
The act authorizes the Administrator of General Services
to (1) prescribe policies, regulations, and methods for pro-
curing and supplying personal property and nonpersonal serv-
ices, (2) procure and supply personal property and nonper-
sonal services for executive agencies, and (3) survey and
obtain reports on agencies' procurement and property manage-
ment practices.
Exeecutive_ age noiQ_s are required to_ procure use, and
dispose f property in accordance with the act and appropri-
ate ree ulations, particularly as far as common-use.items
(]terns of standard commercial production) are concerned.
Although GSA has responsibility for supply ng many classes
of items to the Department of Defense (DOD), the act allows
the Secretary of Defense, unless the President shall other-
wise direct, to exclude DOD, from time to time, from using
GSA as a supply source whenever he determines such exclu-
sion to be in the best interest of national security.
The Federal Property Management Regulations issued by
GSA interpret the act, The regulations provide, with few
exceptions, that GSA shall supply common-use items to Fed-
eral executive agencies.
The regulations further provide that agencies obtain goods
and services from GSA, when available, rather than from
other sources, especially when the GSA item will serve the
desired functional end use. If agencies determine that GSA
items will not serve their functional end use, the regulations
require the agencies to request waivers from GSA to purchase
from non-Government sources. Personal preference and subjec-
tive evaluations are not acceptable as justification for a
waiver. The regulations also authorize e_ncies,__to_pu_rchase
direct from co mercial sources ( i in emergency situations,
(2--)--when the item is per isftable in nature, or (3) when GSA
determines that such procurement will produce the greatest
~_ . _ - -
econom o Government. __
1
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GSA has assigned the Federal Supply Service the mission
of making qualit common-use items available to Federal
agencies a e lowest overall cost to the Government. The
operations are carried out with the assistance of 10 regional
offices. (See apps. I, II, and III, for the organization of
GSA.) Each region, together with Federal Supply Service head-
quarters, administers a depot program, a schedule program,
and a. special buying program. These programs are described
below:
DEPOT PROGRAM
Under this program about 33,000 different common-use
items; are purchased and stocked in 23 regional depots. The
items are sold and shipped to Federal purchasing offices,
=cost reimbursable contractors, and other authorized user
activities.
In addition, GSA also operates 63 self-service stores
throughout the United States. Besides handling depot items,
the stores are focal points for customer orders for items
not available through the depot program. For such orders,
the stores enter into purchase agreements with local vendors
to obtain the desired items.
FEDERAL SUPPLY SCHEDULE PROGRAM
Federal Supply Schedules are lists of contracts for over
6 million types of goods and services. Purchasing offices
use the schedules for ordering goods and services directly
from contractors and pay the contractors' established prices
in accordance with terms. of the contract. Federal Supply
Service headquarters and regional offices are assigned sched-
ules and contracting responsibilities for various commodities
and services.
Some schedules include the same items in varying degrees
of quality and price from different manufacturers. For
example, typewriters and copy machines are available from a
number of manufacturers. An agency would have its choice
among the least costly machines which meet its needs.
SPECIAL BUYING PROGRAM
Under this program GSA enters into definite- and
indefinite-quantity term contracts for commodities or serv-
ices to be furnished directly by vendors for any agency
without adequate "in-house" procurement activities and for
certain items not normally available from the stores or
schedule programs.
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In fiscal year 1973, GSA reported sales to civil agen-
cies of about $1 billion.
Sales to
civil executive
Depot
$ 157,000,000
Schedule
705,000,000
Special
buying
f163,000,000 `
10L.al $1,025,000,000
Although GSA-reported sales to civil agencies amounted
to $1 billion, GAO estimated their sales to be $1.7 billion.
The difference is attributed to incomplete reports received
from schedule contractors on Government sales.
4HY THE REVIEW WAS MADE
GAO made this review because a survey showed that civil
agencies were not using GSA supply sources and were procur-
ing large amounts of goods ana services from commercial
sources. GAO estimated GSA's sales to civil agencies in fis-
cal year 1973 were $1.7 billion, or only 27 percent of the
$6.2 billion spent by these. agencies for goods and services.
The remaining $4.5 billion worth of goods and nonpersonal
services were procured directly from commercial supply
sources.
Since the regulations require GSA to be the principal
supplier of goods and services to civil agencies, GAO wanted
to determine why GSA had only 27 percent--a relatively small
share of the Federal civil market.
OBJECTIVES
The objectives of our review were to examine into:
--The extent civil agencies purchased goods and serv-
ices in the open market when identical or similar
items were available from GSA.
--The reasons why GSA supply sources were not used.
--The extent of open market purchases of goods and
services not available from GSA.
--The amount of savings which might be realized if
GSA supply sources were used.
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--Ways for improving GSA's supply responsiveness.
SCOPE OF REVIEW
The procurement data presented in this report was ue-
veloped from a two-phase sample. The first phase consisted
of mailing questionnaires to 500 purchasing offices randomly
selected from the approximately 10,000 civil purchasing of-
fi es in the continental United States. DOD activities e
cluded because GSA is a mandatory source of supply on only
certain classes of items. The questionnaire requested infor-
mation on the source and amount of procurements and opinions
on these offices' experiences with GSA. Answers to the
opinion-type questions provide the subjective information in
this report.
i
The sample of purchasing offices was stratified on the
basis of the dollar volume of commercial procurement reported.
The few offices (less than 5 percent) that tailed to return
questionnaires were put in a separate category.
For the second phase, a sample of purchasing offices
was randomly selected from each of the categories for field
visits. Also, one-half of the nonresponding purchasing of-
fices were included in the second-phase sample. Field visits
were made to 133 purchasing offices.
The field visits were made to
1. verify the accuracy of procurement data reported on
the questionnaires or to obtain data in the case
of nonrespondents,
2, obtain procurement data for fiscal year 1973,
3. review a randomly selected sample of open market
procurement and determine the types of commodities
and services procured commercially and the reasons
they were obtained in the open market, and
4. interview officials about offices' procurement
practices and experiences with GSA.
About 20,000 commercial procurements were analyzed to
identify the types of goods and services involved and to de-
termine.whether identical or similar goods and services were
available from GSA.
The estimates in the report were developed from the
commercial procurements analyzed and the questionnaire data,
using ratio estimation techniques. The sampling error for
the estimates is shown in appendix IV.
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In addition to the authorizing legislation and GSA
policies and procedures, we reviewed the report on the Com-
mission on Government Procurement dated December 1972. In
reports 1/ dated June 19, 1973, September 19, 1973, and
January 31, 1974 (B-160725), GAO reported on the executive
agencies' progress in implementing the Commission's recom-
mendations. itie have included comments on the Commission's
findings and conclusions that relate to our review.
1/
Executive Branch response to recommendations of the Com-
mission on Government Procurement, June 19, 1973, Progress
of Executive Branch Action on Recommendations of the Com-
mission on Government Procurement, September 1973, and
Recommendations of the Commission on Government Procure-
ment: Executive Branch Progress and Status, January 31,
1974.
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CHAPTER 2
PROCUREMENT PRACTICES OF CIVIL EXECUTIVE
PURCHASING OFFICES
The procurement estimates presented in this report are
based on a GAO statistical survey of Government purchasing
offices. Our survey revealed that civil executive purchasing
otfice-s procured $6.2 bill-ion of goods and services in fiscal
year 1973. Of this amount, GSA could potentially supply
$4.5 billion of these goods and nonpersonal services over and
above its current sales of $1.7 billion. Further details on
agency procurement by source is shown in appendix V.
SIMILAR GOODS AND SERVICES
TWULABLE FROM GSA
We estimate that, of the $4.5 billion commercial procure-
ment, $1.4 billion was for goods and nonpersonal services for
which an identical or similar item was available from GSA's
supply system--$l billion from the schedule program and about
$400 million from the depot program. (See apps. VI and VII.)
With the assistance of GSA procurement specialists, we
compared the purchase order descriptions for goods and serv-
ices procured commercially to goods and services available
through GSA's supply system. 'N e found that, in many instances,
identical or similar items were available from GSA which would
nave served the required functional end use of the purchasing
office. Due to numerous brands of competitive commercial
products, it was necessary to use functional end use as a
criterion because goods purchased commercially and GSA goods
and services generally are not identical. For example, it the
purchasing office bought general-purpose pens and wasteoaskets
from commercial sources we considered that the pens and waste-
baskets available from GSA sources could have adequately met
the needs of the purchasing office. If GSA items varied in
quality, we tried to match the quality of the item procured
from commercial sources.
In many instances, we found identical items. These
items were purchased commercially and had the same Federal
stock number as those managed by GSA. We matched these items
with identical ones in GSA's supply system. Examples follow:
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Federal stock
number
Description
of item
Commercial
price
GSA
price
7530-170-8208
Tracing paper
$10.10
$1.95
7520-232-6817
Letter trays
3.95
1.05
F:
7530-959-4562
Legal pads
.59
.40
7530-238-8352
Adding machine tape
.32
.13
7510-162-5655
Typewriter ribbons
1.25
.31
4210-775-0127
Fire extinguishers
10.75
9.50
7240-222-3088
Gas cans
4.55
3.65
Schedule program
We estimate that $1 billion of commercial procurement
was for goods and services for which a similar item was avail-
able in the GSA. schedule contract program. A major portion.
of the procurement was in the following commodity categories:
Estimated
value of
commercial
Commodity category procurement
(000 omitted)
Electrical components $226,000
Laboratory equipment, chemicals, drugs 195,000
Heavy equipment and parts 183,000
Motor vehicle parts 70,000
(See app. VII for further details.)
Some specific examples characterizing the type of
similar goods procured in the above commodity categories are:
Electrical
components
Motor vehicle
supplies
Fuses
Circuit breaker
Battery
Intercom
Light bulbs
Depot program
Tires
Oil
Airfilter
Bearings
Bumper
Gaskets
Gas caps
We estimate that $400 million of commercially procured
goods were similar to items available in the GSA depot. The
major portion of the commercial procurement was in the fol-
lowing commodity categories:
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(000 ommited)
Office supplies and paper products
$78,000
Safety equipment and textiles
60,000
Furniture and appliances
42,000
Laboratory equipment, chemicals, and drugs
25,000
Cleaning supplies and equipment
22,000
Motor vehicle parts
11 , 000
Some specific examples of goods in the above commodity
categories are:
Office supplies
Walnut desk set
Rubber stamps
Typing paper
Typewriter ribbons
Drawing board
Pencils
Estimated
value of
commercial
Commodity category procurement
Safety equipment and textiles
Refill for fire extinguishers
Safety glasses
Fire extinguishers
Gloves
Construction helmet
Furniture and
appliances
Utility cabinet
Brass lamps
Toasters
Office chairs
File cabinets
Cleaning supplies
Laboratory
equipment
Wind meters
Portable scales
Graduated cylinders
First aid kit
Motor vehicle parts
Detergents Oil filters
Buckets Car jacks
Cleaning fluids Tires
Miscellaneous janitoral supplies
REASONS FOR COMMERCIAL PURCHASES
All purchasing offices which responded to our question-
naire cited either quality and/or delivery timeliness as
major factors in the decision to purchase from commercial
sources. Field visits confirmed that delivery timeliness
was a problem, especially for the smaller purchasing offices;
but quality problems, although numerous, appeared to be iso-
lated among a few types of goods and services, such as paint,
typewriter ribbons, and office equipment repair.
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Although purchasing officials frequently justified
commercial purchases on the basis that similar goods and
services were not available in GSA's supply system, this was
not always the case.
At a selected number of locations, we made further in-
quiry into the validity of these justifications. We found
that decisions to procure commercially were based on little
or no research of item availability in GSA's supply system
but on personal preferences.
At one location, officials commercially procured goods
and services considered unique to their mission on the as-
sumption that such items were not available from GSA supply
sources. They conceded, however, that they could not be
certain the items were not available from GSA because of a
limited search of GSA supply sources.
In another instance, coat racks were procured commer-
cially to match existing office furniture. Procurement per-
sonnel stated that purchasing officials were not satisified
with "similar--but not identical" coat racks available
through GSA.
Lack of adequate catalog-descriptions
Several respondents to our questionnaire indicated that
descriptions of GSA catalog items could oe improved. Many
items listed in the GSA stock catalog are shown only by Fed-
eral stock number and one- or two-word nomenclature. Accord-
ing to GSA officials, these items are primarily for the
Department of Defense and complete descriptions are contained
in military publications. however, GSA does not know the ex-
tent that these and other items are required or used oy civil
agencies. For example, if a civil purchasing office needs
office supplies not shown in the descriptive portion of the
catalog, the customer would not know if any of the following
items could meet its needs.
Federal
stock number
Description
Cost
7520-116-1471
Basket,
wastepaper
$15.00
7520-733-5457
Basket,.
wastepaper
2.10
7520-753-4544
Basket,
wastepaper
5.50
The lack of descriptive data appears to be a factor
related to the officials' opinions on item availability from
GSA's supply system and may preclude the purchasing offices
from ordering what they need from GSA.
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minimum order limitations
Most schedule contracts contain minimum order
limitations that allow the contractor to reject orders for
less than the stated minimum. Several questionnaire respond-
ents indicated that the minimum order provisions were too
high and prevented them from using the schedules. Although
we do not know the magnitude of this problem, we believe it
could be a factor which encourages commercial procurement--
spe-cially for offices with sma11 requirements.
GSA efforts to extend the Automated Delivery Order
system to competitively awarded schedules should correct
this problem because GSA under the new procedures will place
orders directly with commercial contractors regardless of
the size of an agency's order. For further description of
Automated Delivery Order system see page 19.
FACTORS INFLUENCING COMMERCIAL PROCUREMENT
As part of our review, we examined the buying character-
istics of the purchasing offices to determine the extent
decisions to purchase from commercial sources were influenced
by geographical location of the purchasing office and its
size as evidenced by total procurement volume.
Geographical locations
To determine what relationships
exist
between commercial
procurement of purchasing offices and
their
geographical lo-
cation, the United States was divided
into
three geographical
areas--western, middle, and eastern.
(See
app. VIII.) Pro-
curement data and availability of GSA distribution facilities
by geographical area is shown in the following table.
Geograph-
Total
procure-
Commercial
procurement
of goods and
Number of
GSA dis-
tribution
Percent of
commercial
ical area
ment
services
facilities
procurement
(000 omitted)
Western
$1,732,093
$ 743,007
8
40
Middle
2,798,261
1,886,023
5
70
Eastern
5,177,367
1,812,134
10
34
Total
$9,707,721
$4,441,164
23
45
(See apps. IX and X for further details.)
As the foregoing table shows, purchasing offices in the
middle of the United States have the greatest percentage of
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co-mr.,ercial procurement of -3o-ods and services and the least
number of GSA distribution facilities. Accordingly, we be-
lieve there may be a relationship between agency procurement
practices and the proximity of GSA distribution facilities.
Size ofpurchasingoffice
There appears to be no particular relationship between the
size of the purchasing office and the proportion of goods and
nonpersonal services procured from commercial sources. This is
illustratea in appendixes XI and XII.
GOODS AND SERVICES NOT AVAILABLE
FROM GSA DEPOTS AND SCHEDULES
We estimate that civil executive agencies procured from
commercial sources $3.1 billion worth of goods and services
not available from GSA. These procurements represent poten-
tial sales for GSA. Many of these goods and services pur-
chased commercially by agencies are within the same basic
commodity classifications managed by GSA. For example, GSA
handles 26,000 items in its furniture classification yet
agencies spent an estimated $76 million in the commercial
market for various types of furniture and related items not
available through GSA. If GSA had more information on these
procurements, it might be in a better position to supply
many of these items at a lower overall cost to the Government.
Additional examples of commodity categories purchased
commercially for which GSA might have the potential to provide
follow:
Estimated
dollar value
Category
of commercial
procurement
(000 omitted)
Commodities:
Laboratory equipment, chemicals, drugs
$816,000
Plumbing tools
155,000
Books and magazines
78,000
Motor vehicle parts
71,000
Office machine and photographic equipment
45,000
Miscellaneous hardware
34,000
Office
supplies and equipment
20,000
Services:
Motor
vehicle repair
114,426
Office
equipment repair
60,000
(See app. VI for further details.
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CHAPTER 3
GSA' S MONITORING OF PROCUREMENT PRACTICES
OF" PURCHASING OFFICES
The 1949 act made the GSA Administrator responsible for
issuing Federal Procurement Regulations and tor making surveys
of, and obtaining reports on, agencies' procurement practices.
Although GSA has issued procurement regulations, it goes not
have an adequate review mechanism to determine whether execu-
tive departments and agencies have complied with the policies
of the act and the regulations.
Further, GSA does not have an effective information sys-
tem. for determining the needs of purchasing offices. For
example, GSA's information system does not identify purchas-
ing offices which procure from contractors under the sched-
ule program. This program is GSA's largest; yet GSA has
little visibility of its customers, their needs, and buying
practices.
In monitoring the procurement practices of agencies,
GSA's customer service program and waiver system provide
feedback on customers' needs and procurement practices.
In our opinion, however, both programs could be more effec-
tive in accomplishing the objectives for which they were
established.
GU STOMERSERVICE PROGRAM
The customer service program is intended to provide an
interchange of information between the Federal Supply Service,
GSA, and the agencies. For many field purchasing offices,
this program provides the only personal contact with GSA.
The objectives of this program are to;
---identify requirements of purchasing offices,
---evaluate effectiveness of supply procedures,
---coordinate significant supply support actions, and
---provide for interchange of information on customer
programs, projects, requirements, and major develop-
ments.
Our review showed that, of the 476 purchasing offices
which responded to our questionnaire, 374 offices had not
been visited by GSA representatives during the past 2 years.
Eighty-seven offices received visits but only for specific
reasons, such as problem solving or to receive instructions
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on the use of GSA's procurement programs. Fifteen offices
did not respond to the specific question. We believe that
the absence of visits to many offices and the nature of the
visits made to others indicates the need for a more aggres-
sive program to identify customer requirements and problems.
GSA regulations require agencies to request waivers to
procure goods and services from commercial sources when
similar ones are available from GSA. The waiver system was
designed to discourage such procurement and to provide GSA
with a means of monitoring procurement practices of the pur-
chasing offices. In fiscal year 1973, purchasing offices
submitted 1,667 requests for waivers to GSA. During this
same period, purchasing offices processed about 11 million
purchase orders for commercially procured goods and services.
Most agencies that responded to our questionnaire indicated
that requests for waivers are not submitted prior to pro-
curement of goods and services from these sources. Some
purchasing offices were not even aware of the waiver system.
Thus, the waiver system does not appear to be as effective
as it could be in monitoring the procurement practices and
identifying needs of purchasing offices.
We believe GSA needs to develop an effective informa-
tion system to identify and monitor customer needs and buying
characteristics to insure that agencies comply with the poli-
cies of the act and the regulations.
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CHAPTER 4
COST EFFECTIVENESS OF GSA IN
PROVIDING SUPPLY SUPPORT TO
CIVIL EXECUTIVE AGENCIES
GSA's price economy studies show that its procurement
a-c-t vities -in- f-iscal ye-ar- 1973 resulted in an overall average
saving of 23 percent below the commercial price for compar-
able goods and services. The average saving for the depot
program was 39 percent and for the schedule program 16 per-
cent.
housing, management, and obsolescence. Because these costs
GSA's reported savings are based on prices obtainable
hrough volume procurement versus commercial prices. How-
ver, these savings do not recognize and consider the costs
f doing business (economic costs), such as purchasing, ware-
On the basis of these percentages civil agencies saved
about $391 million in fiscal year 1973 by purchasing $1.7 bil-
lion ot goods and services through GSA. We estimate that an
additional $300 million annual saving could have been realized
by civil agencies had they obtained through GSA the $1.4 oil-
lion of goods and services they procured directly from com-
mercial sources. These procurements were for identical or
similar goods and services available through GSA supply
sources. We believe additional savings could have been re-
alized if agencies had been able to obtain some of the remain-
ing $3.1 billion of commercial items through GSA.
are funded through direct appropriations, they are not in-
cluded in GSA prices; consequently, the cost of GSA goods
and services is not known.
ECONOMIC COSTS
The concept of total economic cost considers the ac-
quisition cost of the product or service, support cost of
providing the item, and costs relating to using the product.
Ideally, all costs incurred by the Government--for both
supplier and user--should be considered before making a pro-
curement decision.
Historically, the Government has focused on the price
paid to suppliers rather than on the total costs of satisfy-
ing requirements. As a result, the data and techniques
needed to measure the total costs of fulfilling a Government
need have not been fully considered and developed. This has
precluded adequate consideration of the cost of alternative
procurement and distribution systems.
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The Commission on Government Procurement nas identified
three types of costs related to the acquisition and use of
commercial products.
Support-costs
Landed costs
Total economic cost
--the cost of the support systems the
Government uses to acquire anti pro-
vide commercial products to the
ultimate user, such as delivery,
inventory management, and installa-
tion.
--the total cost to provide an item to
its user, including the price paid
for the item and its allocated
share of the cost of the support
system, or systems, used to acquire
and deliver it. _
--the landed cost of an item, plus
costs incident to its use, and
disposal on consumption, including
testing, training, operating labor,
operating materials, preventive
maintenance, corrective maintenance,
dismantling, residual value, and
depreciation.
The Commission noted that, to compare prices between the
use of commercial and Government sources, the landed cost of
the two alternatives must be considered. The Commission
further found that prices to the Government vary above and
below those available to commercial users. Generally, when
products are procured for stock in large volume, the Govern-
ment is able to buy at a lower price. In addition, landed
costs using commercial channels of distribution appear com-
petitive to using Government sources and, in many cases,
offer other advantages to user activities. The Commission
concluded that:
--Although price savings accrue from large volume pur-
chases, this should not be the sole consideration for
using interagency support systems.
--The costs of the acquisition process are often well
over 50 percent of the purchase price of the product
procured.
--Landed cost characteristics vary widely; valid deci-
sions require tailoring to specific user needs.
--The landed cost characteristics of commercial channels
of distribution appear to be a-viable alternative that
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should receive consideration if support decisions
are to be cost effective.
INDUSTRIAL FUNDING
Currently, GSA has proposed legislation to convert to
industrial funding. Under industrial funding, the prices at
which GSA furnishes goods and services would reflect all
costs, both direct and indirect, of operating the supply sys-
tem. These costs would include the direct and indirect costs
of procurement, standardization, cataloging, quality control,
receipt, storage, care and handling, transportation, repair,
rehabilitation, conversion, issue, sales, lease, rent, and
other necessary related and supportive functions.
Industrial funding would require GSA to recover all
costs and would allow GSA to identify items or classes of
items which can be economically provided through a central
purchasing and distribution system. It would also permit
'GSA to establish reasonable standards to determine when GSA
should be the mandatory supply source and when lower economic
costs can be achieved by enabling purchasing offices to buy
directly from the open market. vie have,-_peen informed by GSA
'officials that th__are developing economic guidelines to_:ae_
su' e-d71n di gwhen agency, use of GSA or commercial sources
c result in the lowest expense to the Government, all.
costs c sidered.
We believe that industrial funding would be an important
step toward permitting GSA to obtain the information necessary
to make cost effective decisions on the methods of supply and
distribution. In addition, we believe that the success of the
industrial funding effort depends upon the cooperation and
compliance of purchasing offices.
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CHAPTER 5
CONCLUSIONS AND RECOMMENDATIONS
CONCLUSIONS
GSA is responsible for providing procurement leadership
to Federal executive agencies. In fulfilling its leadership
responsibilities, GSA could be more effective in providing
the management necessary to carry out its responsibility for
operating an effective and economical supply system. To
accomplish this, GSA must increase its ability to. (1) iden-
tify its customers, (2) determine their needs and require-
ments, as well as problems, and (3) monitor the buying
habits of its customers.
In our opinion, the act, and implementing regulations
issued thereunder, clearly manifest an ' ntt t.h:t -C'~A ner ~
fotr_a centr_ized procurement function. -for, the. ex_ys;_utiv_e_~
agenc-e--s~-1n addition the President, in commenting on the
E ram nsfer of certain procurement and contracting functions
from the Office of Management and Budget to GSA pursuant to
Executive Order 11717, dated May 9, 1973, stated that "GSA
now has overall leadership responsibility for developing
Government-wide policy in these areas and for seeing that
such policy is carried out within the department and agencies."
GSA's position is that it lacked resources to monitor the
purchasing activities of agencies. We believe there is basis
and need for GSA to monitor agency procurement practices to
determine whether executive agencies are complying with the
policies of the act and the regulations.
Further, unless GSA monitors the procurement practices
of agencies, it cannot be viewed as a central agency charged
with the overall leadership responsibility for developing and
implementing Government-wide policy in the procurement area.
The overall savings which- may be available to the Gov-
ernment throng ce r"aT=procurement cannot be assessed until
develops a system which will permit economic cost com-
parisons with commercial distribution systems. However,
until more definitive data are available, Government agen-
cies can and should conserve their appropriated funds oy
using GSA to a greater extent.
GAO recommends that the Administrator of General Services:
--Obtain more and better information on the needs and
problems of purchasing offices. The information should
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permit GSA to determine the types and -amounts- of
goods and services being bought from both GSA and
commercial sources. It also should pinpoint any
problems purchasing offices are experiencing in
making greater use of GSA as a supply source--such
as delivery problems, pricing problems, and lack of
clarity in GSA catalogs.
---Analyze the additional data systematically to identify
under-ly-ing -problems and e-s-tablish- appropriate measures
to cope with them.
---While gathering and analyzing information, take interim
steps to increase GSA sales to Federal agencies. Lack-
ing economic cost data which would permit appropriate
cost comparisons of GSA versus direct commercial pur-
chases by agencies, GSA will have to adopt guidelines
for use in deciding whether to stock and/or supply a
broader range and depth of items.
For example, GSA might stock items where the volume of
proc-urement and the price differential from the Govern-
ment's mass-purchasing power offer large savings to the
Government.
---Develop cost data or pricing systems that will permit
evaluation of total economic costs to the Government
of supplying items through GSA channels for comparison
with direct commercial procurement by agencies. Such
data is essential if informed procurement decisions are
to be made. This recommendation is in consonance with
the findings and conclusions expressed by the Procure-
ment Commission.
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CHAPTER 6
AGENCY ACTIONS
GSA has initiated positive action to address the issues
raised in this report. The major steps taken by GSA are
discussed below.
AUTOMATED DELIVERY ORDER SYSTEM
Under this system, agencies will submit their require-
ments from schedule contractors to GSA. The primary ad-
vantages of such a system are simplified agency requisition-
ing, economy of automatic purchase order preparation, and
automatic compilation of procurement data for each agency.
This system should permit GSA to identify what agencies are
purchasing from schedule contractors and the quantities
purchased. Hence, GSA will acquire visibility over its
schedule customers as well as the volume of procurement for
items or class of items.
CREATION OF MARKETING RESEARCH AND MARKETING DIVISION.
This division was created in January 1974. Swne of the
major missions of the division are to:
--Plan, develop, and conduct customer market research.
--Analyze procurement data on a line-item basis to
determine source of supply and reasons for use of open
market sources. and to identify items which should be
considered for Government-wide support.
--Plan,. develop, and promote programs to advance aware-
ness of GSA commodities and services available to
agencies.
--Identify items warranting special marketing considera-
tion, such as new or excess items.
--Recommend courses and presentations for the purpose
of educating and training Federal procurement per-
sonnel.
CONSULTANT STUDY
A contract has been awarded to a consulting firm to re-
view the organization and operation of the Federal Supply
Service, including:
--Organizational. arrangements and functions at both
the national and regional level and an examination
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into the need to consolidate various procurement
functions.
---An examination and redefinition of the total concept
of "'National Supply System."
--The effectiveness and economy of the current supply
depot system from the standpoint of locations, ship-
ping patterns, inventory investment, and ordering
processing and controls.
-?-The current use of alternative methods of supply to
determine the effectiveness of the Federal supply
schedule, stores, and special buying programs.
-?-Alternate methods of financing activities engaged in
interagency support.
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GENERAL SERVICES ADMINISTRATION
BOARD OF
CONTRACT
APPEALS
OFFICE OF
CIVIL RIGHTS
BUSINESS SERVICE
CENTERS STAFF
OFFICE OF
GENERAL COUNSEL
SOCIO-ECONOMIC POLICY STAFF
OFFICES OF:
THE EXECUTIVE DIRECTOR
NATIONAL SUPPLY POLICIES AND
PROGRAMS
PERSONAL PROPERTY DISPOSAL
PROCUREMENT
PROPERTY MANAGEMENT
STANDARDS AND QUALITY CONTROL
SUPPLY CONTROL
SUPPLY DISTRIBUTION
TRANSPORTATION AND PUBLIC UTILITIES
OFFICE OF
PREPAREDNESS
OFFICE OF
PUBLIC AFFAIRS
OFFICE OF THE
ASSISTANT ADMINISTRATOR
OFFICE OF
CONGRESSIONAL
AFFAIRS
OFFICE OF
ADMINISTRATION
NATIONAL ARCHIVES
AND RECORDS SERVICE
NATIONAL HISTORICAL
PUBLICATIONS COMMISSION
OFFICES OF:
THE EXECUTIVE DIRECTOR
EDUCATIONAL PROGRAMS
FEDERAL RECORDS CENTERS
THE FEDERAL REGISTER
THE NATIONAL ARCHIVES
PRESIDENTIAL LIBRARIES
RECORDS MANAGEMENT
PROJECT MANAGEMENT OFFICE
OFFICES OF:
THE EXECUTIVE DIRECTOR
BUILDINGS MANAGEMENT
CONSTRUCTION MANAGEMENT
FEDERAL PROTECTIVE SERVICE
MANAGEMENT
OPERATING PROGRAMS
REAL PROPERTY
SPACE MANAGEMENT
`I I I
REGIONAL OFFICES
1
BOSTON
2
NEW YORK
3
WASHINGTON
D
C
4
ATLANTA
5
CHICAGO
6
KANSAS CIT
7
FT. WORTH
8V 9 10
DENER SAN
.
.
FRANCISCO AUBURN
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FEDERAL INFORMATION
CENTERS STAFF
OFFICE OF FEDERAL
MANAGEMENT POLICY
AUTOMATED DATA AND
TELECOMMUNICATIONS SERVICE
OFFICES OF:
THE EXECUTIVE DIRECTOR
AGENCY ASSISTANCE, PLANNING,
AND POLICY
AUTOMATED DATA MANAGEMENT
SERVICES
TELECOMMUNICATIONS
CONSUMER PRODUCT
INFORMATION
COORDINATING CENTER
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ORGANIZATION - FEDERAL SUPPLY SERVICE
SOCIO-ECONOMIC
POLICY STAFF
OFFICE OF THE
EXECUTIVE DIFECTOR
OFFICE OF
SUPPLY DISTRIBUTION
OFFICE OF TRANSI ORTATION
AND PUBLIC U ILITIES
COMMISSIONER
DEPUTY COMMISSIONER
OFFICE OF
INTERAGENCY SUPPORT
:1
MANAGEMENT PLANNING AND
SPECIAL PROJECTS STAFF
VALUE ANALYSIS STAFF
OFFICE OF PERSONAL
PROPERTY DISPOSAL
OFFICE OF
PROPERTY MANAGEMENT
OFFICE OF STANDARDS
AND QUALITY CONTROL
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GSA REGIONS
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SAMPLING ERRORS FOR MAJOR
PROCUREMENT ESTIMATES
1973 1972
Sampling Sampling
error error
Amount (note a) Amount (note a)
(000 omitted)
Government:
GSA
$1,709,102 $123,724
$1,757,189
$105,083
Defense Supply Agency
97,687 24,841
103,322
24,371
012
Other Government
1,174,904
177,121
1,129,973
274,
Total
$2,981,693
172,936
$2,990,484
232,441
Non-Government
(Commercial):
Equipment and
supplies
$3,563,980
138,886
$2,745,873
92,909
Services:
Nonpersonal
877,184
215,582
b/3,339,111
b/177,620
Professional
2,284,864
126,853
Total
$6,726,028
172,936
$6,084,984
232,441
a/ Sampling errors are stated at the 95-percent confidence level. Thus
there is only 1 chance in 20 that the estimates derived from the
sample would differ from the results of an audit of all purchasing
offices by more than the amounts shown.
b/ Not broken out between nonpersonal and professional services.
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ESTIMATED CIVIL AGENCY PROCUREMENT
DATA FOR FISCAL YEARS 1973 and 1972
1973
Source Amount
Percent
(billions)
Government:
GSA a/$1.7
17
Defense Supply
Agency b/.1
1
Other Government 1.2
13
Total 3.0
31
Non-Government
(Commercial):
Equipment and Supplies 3.6
37
Services:
Nonpersonal .9
9
Professional 2.2
23
Total 6.7
69
Total $9.7
100
1972
Amount Percent
(billions)
$1.8 20
.1 1
1.1 12
3.0 33
c/3.3 37
6.0 67
$9.0 100
a/ GSA reported sales of $1 billion to civil agencies. The
difference is attributed to incomplete reports received
from schedule contractors on Government sales.
b/ This amount includes procurement from Federal Prison
Industries, Blind-made Products, Postal Service,
Interagency training programs, etc.
c/ No breakout made between nonpersonal and professional
services.
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APPENDIX VI
Commercial value of
goods and services
Not
Categories
In GSA
available
Total
Commodities:
Motor vehicle parts
$ 80,126
$ 71,285
$ 151,411
Office supplies and paper products
106,000
19,881
125,881
Books and magazines
29,148
77,684
106,832
Office machines and photographic equip-
ment
61,650
44,571
106,221
Laboratory equipment, chemicals, and drugs
214,018
816,111
1,030,129
Petroleum products
10,722
87,441
98,163
1
E:Lect oni_cs components 231,001
281,410
1
512,4
Miscellaneous hardware (screws, bolts,
hinges, hasps) 13,949
33,905
47,854
Construction supplies (wood) 14,988
25,252
40,240
Construction supplies (nonwood) 10,668
70,353
81,021
Safety equipment and textiles 70,279
79,489
149,768
Furniture (all types) and appliances 60,553
75,692
136,245
Hand tools (power and nonpower) 32,563
29,335
61,898
Plumbing tools (pipes, valves, sanitary
equipment, etc.) 5,836
154,626
160,462
Subsistence items (food) 4,436
115,922
120,358
Agricultural supplies and garden equipment 14,709
16,547
31,256
Heavy equipment parts 185,734
191,358
377,092
Other commodities 26,456
155,060
181,516
Paint and paint supplies 13,849
3,797
17,646
Cleaning equipment and supplies 23,662
3,914
27,576
Tota
l 1,210,347
2,353,633
3,563,980
Services:
Professional
Nonpersonal
services
services:
Motor vehicle and heavy equipment
repair
24,610
114,426
139,036
Office equipment repair
3,800
60,359
64,159
Custodial services
2,342
7,631
9,973
Other services
114,604
521,333
635,937
Utilities
42
28,037
28,079
145,398
3,016,650
3,162,048
$1,355,745
$5,370,283
$6,726,028
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APPENDIX VII
ESTIMATED AMOUNT OF COMMERCIAL PROCUREMENT
BY COMMODITY CATEGORY FOR GOODS AND SERVICES
AVAILABLE IN GSA's SCHEDULE AND DEPOT PROGRAMS
Commercial value of goods and
services by GSA buying program
Commodity classification
Schedule Stores Total
Commodities:
Motor vehicle
parts
69,600
$ 10,526
$ 80,126
Office suppl
ies and paper products
28,253
77,747
106,000
Books and mag
azines
27,777
1,371
29,148
Office machi
ment
nes and photographic equip-
36,172
25,478
61,650
Laboratory e
quipment, chemicals, and drugs
195,358
18,660
214,018
Petroleum pr
oducts
5,044
5,678
10,722
Electronics
components
226,359
4,642
231,001
Miscellaneou
hinges, ha
s hardware (screws, bolts
sps)
2,329
11,620
13,949
Construction
supplies (wood)
563
14,425
14,988
Construction
supplies (nonwood)
4,586
6,082
10,668
Safety equip
ment and textiles
10,645
59,634
70,279
Furniture (a
ll types) and appliances
18,847
41,706
60,553
Hand tools (
power and nonpower)
17,310
15,253
32,563
Plumbing too
equipment,
ls (pipes, valves, sanitary
etc.)
2,617
3,219
5,836
Subsistence
items (food)
4,130
306
4,436
Agricultural
ment
supplies and garden equip-
4,714
9,995
14,709
Heavy equipm
ent parts
182,985
2,749
185,734
Other commod
ities
17,931
8,525
26,456
Paint and pa
int supplies
2,430
11,419
13,849
Cleaning equ
ipment and supplies
2,102
21,560
23,662
859,752
350,595
1,210,347
Services:
Professional
Nonpersonal
services
services:
Motor vehicle and heavy equipment
repair
24,610
-
24,610
Office equipment repair
3,800
-
3,800
Custodial
2,342
-
2,342
Other
114,604
-
114,604
Utilities
145,398
-
145,398
$1,005,150
$350,595
$1,355,745
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MAJOR GEOGRAPHICAL AREAS USED
TO ANALYZE BUYING HABITS OF
PURCHASING OFFICES
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APPENDIX IX
Geographical
Total
Commercial procurement
area of
procure-
_
NonpersonalProtessionaI-
United States
ment
Total
Goods services a services
western
$1,732,093
$1,033,774
$ 540,282 $202,726 $ 290,766
Middle
2,798,262
1,895,489
1,727,228 158,795 9,466
Eastern
5,177,367
3,796,765
1,296,471 515,663 1,984,631
Total
$9,707,722
$6,726,028
$3,563,961 $877,184 a/$2,284,863
a/ Commercial procurement for professional services increased as the pur-
chasing office's total procurement increased. Most of the professional
service expenditures were made by purchasing offices located in the
Washington, D.C., area. Forty-one percent of the commercial expenditures
by the large purchasing offices with over $10 million in annual expendi-
tures was for professional services.
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LOCATION OF GSA DISTRIBUTION FACILITICS
LEGEND
* GSA REGIONAL OFFICE
? GSA SUPPLY DISTRIBUTION
FACILITIES AT LOCATIONS
OTHER THAN REGIONAL OFFICES
VT.
Y. ll_ ~ ASB.
BOSTON
YOR.k ~, :
?'u BAYONNE
?~-BELLE MEAD
RARI TAN
_M~
MIDDLE RIVER
- * WASHIN
GTON
v
i`RFOLK
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APPENDIX XI
Size of procurement
Commer-
Estimated cial as
total Commercial percent
procurement procurement of total
(000 omitted)
Less than
$ 1,000
$ 862 $ 537 62%
1,000
to
9,999
13,917 7,971 57
10,000
to
99,999
384,928 136,685 36
100,000
to
999,999
1,179,949 727,658 62
1,000,000
to
9,999,999
2,837,506 1,666,232 59
$10,000,000
to
or more
5,290,560 4,186,945 79
$9,707,722 $6,726,028 69
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APPENDIX XII
Size of procurement
Goods
Non-
professional
services
Professional-
type services
Total
Less than
$ 1,000
$ 375
$ 160
$ 2
$ 537
1,000
to
9,999
2,785
4,826
360
7,971
10,000
to
99,999
86,493
45,207
4,985
136,685
100,000
to
999,999
344,904
361,894
20,860
727,658
1,000,000
to
9,999,999
1,269,891
286,041
110,300
1,666,232
$10,000,000
to
or more
1,859,532
179,056
2,148,357
4,186,945
$3,563,980
$877,184
$2,284,864
$6,726,028
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APPENDIX XIII
COMPUTATION OF POTENTIAL SAVINGS AVAILABLE
TO AGENCIES HAD GSA SUPPLY SOURCES BEEN USED
GSA supply
program from
which similar
item was
available
GSA
savings
percentage
F.Y. 1973
Commercial
value of
similar
items
Total
computed
potential
savings
(000 omitted)
Stores (depot)
38.7
$ 350,000
$136,000
Schedule
15.7
1,000,000
157,000
$1,350,000
$293,000
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APPENDIX XIV
UNITED STATES OF AMERICA
GENERAL SERVICES ADMINISTRATION
WASHINGTON, D.C. 20405
Honorable Elmer B. Staats
Comptroller General of the United States
General Accounting Office
Washington, DC 20548
Thank you for the opportunity to comment on your draft
report entitled "Opportunities to Improve Management of
Federal Supply Service Procurement Programs" which was
forwarded by letter of August 20, 1974, from Mr. R. W.
Gutmann, Director, Procurement and Systems Acquisition
Division.
Recently GAO representatives met with the Commissioner,
Federal Supply Service, and members of his staff to discuss
the issues and overall implications concerning this study
on civilian agency procurement practices.
We have now completed our review of this report which
concluded that civilian executive agencies are procuring
significant volumes of supplies and services from open
market sources. Of the $6.7 billion procured in this
manner during FY 1973, about $4.5 billion was considered
to be common use, commercially available in nature and thus
appropriate for GSA support as mandated in the Federal
Property and Administrative Services Act of 1949.
The thrust of the report recommendations in which we concur
is that GSA pursue and expand on current initiatives for
assuming this support potential thereby achieving the
inherent. economies and related advantages ascribed to our
centralized supply system.
We have two additional observations on the study which we
feel would be of benefit in finalizing this excellent acid
timely study. One comment deals with the industrial funding
item for consideration by Congress as set out in the report.
Keep Freedom in Your Future With U.S. Savings Bonds
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APPENDIX XV
PRINCIPAL OFFICIALS OF THE
GENERAL SERVICES ADMINISTRATION
RESPONSIBLE FOR THE ADMINISTRATION
OF ACTIVITIES DISCUSSED IN THIS REPORT
Tenure of office
From To
ADMINISTRATOR, GENERAL SERVICES
ADMINISTRATION:
Arthur F. Sampson
June 1972
Present
Robert L. Kunzig
March 1969
June 1972
COMMISSIONER
FEDERAL SUPPLY
,
SERVICE:
Michael J. Timbers
June
1973
Present
Milton S. Meeker
Jan.
1972
June 1972
Lewis E. Spangler (acting)
May
1971
Jan. 1972
H. A. Abersfeller
March
1970
May 1971
ASSISTANT COMMISSIONER FOR
PROCUREMENT:
Frederick B. Bunke
June
1973
Present
Michael J. Timbers
Feb.
1973
June
1973
William W. Thybony
May
1971
Feb.
1973
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APPENDIX XIV
We recommend that this statement be expanded to indicate
that GSA is developing economic source guidelines to be
used in reaching decisions on whether agency use of GSA
or commercial sources will result in the lowest expense
to the Government, all costs considered.
The other matter pertains to statements on page 3 of
the report digest as well as on page 26 of the detailed
findings which indicate that GSA's position is that it lacks
sufficient stature and authority to enforce agency compliance
with its procurement directives. It is true that GSA has
not undertaken an extensive number of actions. in this area
but this has been due to limited resources, not an agency
position that statutory authority is lacking to ensure
agencies utilize GSA as a supply source. Accordingly, we
recommend that the referenced statements be revised to
substitute the word "resources" for "stature and authority."
We appreciate the opportunity to review the draft report as
well as the assistance furnished by your staff throughout
the study effort. We look forward to continuing participation
with your representatives in analyzing details of the study.
The results of this joint effort will form the basis for
actions on our part to enhance capability for providing the
most economical and effective level of supply support.
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