Doan's Statement Before the House Appropriations Financial Services and General Government Subcommittee
As prepared for delivery.
Statement of Lurita Doan
U.S. General Services Administration
House Appropriations Financial Services
and General Government Subcommittee
U.S. House of Representatives
April 18, 2007
Chairman Serrano, Ranking Member Regula, and Distinguished Members of the Subcommittee I am Lurita Doan: Administrator of General Services (GSA), and am pleased to have this opportunity to appear before you today to discuss GSA’s fiscal year (FY) 2008 budget request.
Great things are happening at GSA. GSA employees are committed to delivering products and services in an effective and efficient manner while ensuring accountability to the American taxpayers through superior performance and prudent financial and budget management. GSA was recently selected as one of the top ten Federal agencies to work for, as determined by our employees. And GSA is everywhere—around the world: In Washington, DC; at 11 regional offices nationwide; and at other satellite locations around the country and abroad. GSA is working internally to integrate project management and externally to simplify how we interact with customers. Our Federal customers no longer have to contact numerous GSA offices and programs if they have multiple workplace needs that both our Public Buildings Service (PBS) and Federal Acquisition Service (FAS) can provide. Now, our customers can work with just one person who will coordinate internally with all the various offices needed to complete the project. Our customers will now hear just one voice at GSA. We are striving for “One GSA-One Voice”, which will mean less customer time spent on the phone or the computer and more time for that customer to devote to his or her agency’s own mission.
The reorganization of the Federal Acquisition Service (FAS) is successfully underway. GSA has dramatically improved its relationship with the Judiciary and the Department of Defense, our two largest customers. Moreover, important improvements are underway to help us meet the needs of all our clients and provide savings to taxpayers. President Bush has challenged all Federal agencies to find new and smarter ways to do business and move toward a citizen-centered and results-oriented government, and we are rising up to meet the challenge.
GSA has made some difficult, sometimes unpopular, but necessary choices that have strengthened fiscal discipline and internal controls – all in the name of improving service to our customers and providing a better return on taxpayer dollars. As one example, we revised our FY 2007 agency financial plan and placed targeted limitations on spending across GSA. We reduced funding for non-essential administrative requirements – including non-essential travel -- limited service-support contracts, and restricted hiring to critical positions only. These streamlined operations are the basis for our FY 2008 budget request.
Our FY 2008 budget request represents the minimum resources required to continue the transformational changes necessary to make GSA the premier source for cost-effective, timely and compliant Government property and procurement management services. GSA is committed to delivering products and services in an efficient and cost-effective manner while ensuring accountability to the American taxpayer through superior performance and prudent financial management.
GSA’s core values are transparency, integrity and accountability in all that we do. These core values are paramount to achieving our highest priorities, which are to:
Affirm GSA’s role and status as the premier procurement agency for the Federal Government;
Restore and enhance customer delivery and customer satisfaction by putting the customer at the center of all GSA business transactions;
Improve communication with our customers by expanding outreach to current, previous, and potential new customers;
Ensure the agency’s financial stability and return GSA’s technology offerings to a full-cost recovery basis;
Enforce sound financial management practices including maintaining our clean audit opinion from FY 2006;
Provide best value for GSA customers, resulting in cost savings for the American taxpayer;
Strengthen our relationship with the Courts, one of GSA’s largest customers, resulting in savings to the Judiciary and the American taxpayer;
Make GSA the premier platform for goods and services to support emergency response and recovery;
Facilitate opportunities for small and disadvantaged businesses, including our nation’s veterans, to ensure participation in Government contracting; and
Lead the nation in environmental solutions to reduce energy consumption.
FY 2008 BUDGET REQUEST
GSA has business sales volume of approximately $56 billion annually. We operate four revolving funds with 17 lines of business -- charging fees on a full cost recovery basis --with the vast majority of our revenue generated from business with other Federal agencies. If we measure our budget in obligations, GSA’s FY 2008 planned expenditures total approximately $20.1 billion. Almost all of GSA’s funds (97 percent) become available to GSA from customers through reimbursements for purchases of goods and services or as rent paid for space in GSA-owned and leased buildings.
For FY 2008, we are requesting a total appropriation of approximately $560 million ($442 million in net budget authority). Of this, approximately $344.5 million ($225 million in net budget authority) is for the Federal Buildings Fund (FBF) to support a $1.4 billion capital investment program to construct and maintain Federal buildings, courthouses and land ports of entry. The remaining $217 million appropriation request is for GSA’s annual operating activities--about one percent of our total funding.
PUBLIC BUILDINGS SERVICE
GSA’s Public Buildings Service (PBS) is the steward of most civilian Federal Government real estate holdings. GSA provides workplace solutions to more than 100 Federal agencies representing over a million Federal civilian workers in 2,000 American communities and abroad. Our real estate portfolio practices closely parallel those of the private sector. We focus on customer requirements, financial performance, and asset needs. By law, we are required to charge market-based rents for the space we provide which gives us the added incentive to adopt standard commercial real estate business practices and principles to guide all of our actions. Our primary strategy is to continue to restructure the portfolio of owned buildings so that it consists primarily of high quality, financially viable properties. To implement our strategy, PBS has focused on several key program initiatives, which include but are not limited to:
Expanding and strengthening our workplace delivery offerings;
Improving GSA’s leasing program;
Strengthening our relationship with the Federal Judiciary and all of our customers; and
Implementing activities to reduce Government building operating costs through efficiency and innovation.
Overall, our Federal customers are facing increased budget pressures and are seeking ways to reduce workplace costs. I am proud to report that GSA has improved the efficiency of our leasing operations, resulting in cost savings for this program in FY 2008. Beginning in FY 2008, GSA will pass on these savings to our customers by reducing our lease fee by one percent for all customers. The fee for most leased space will decrease from eight to seven percent. The fee charged for unique space in many cases will see a drop from six to five percent.
Not only are we reducing workplace cost, we are perfecting our basic approach to workspace delivery. GSA is currently establishing a new process called “Program of Requirements Plus” (POR+). The goal of this program is to develop a set of requirements that promotes national consistency and quality across transactions and deliver innovative workplace solutions. The spectrum of deliverables is scalable and includes a current assessment of the workplace, a determination of future workplace needs, space program scenarios, and design briefs. POR+ will also contribute to greater consistency in the transactional business processes used in GSA nationwide.
Ongoing customer relationships are paramount to accurate estimation and control of costs, as well as identifying opportunities to utilize workplace solutions principles. We have actively engaged the Judiciary in their evaluation of space requirements and -- as a result -- have reaped the benefits of a new spirit of cooperation and are assisting them in the delivery of efficient Federal courthouse facilities.
GSA’s mission includes the commitment to deliver space when the customer needs it and at the best value for taxpayers. The leasing program is a key tool for providing space to our Federal customers. In fact, half of the space occupied by GSA customer agencies is located in leased space. GSA’s leasing program is instrumental in continuing our legacy as the premier acquisition agency for the Federal Government. We will implement new strategies to improve our leasing program delivery, including redefining business processes and increasing the level of real estate expertise needed to improve and maintain GSA’s leasing program.
Through its National Broker Contract (NBC), GSA is increasingly using contract real estate brokers to perform lease acquisition services. The contract allows GSA to focus more on project management and the needs of the client agency. This new business model will reduce GSA’s fixed costs and increase our ability to support a variable business volume. To date, GSA has returned – or is in the process of returning -- nearly $13.9 million to our customers through rent rebates, and has delivered substantially more through reduced lease fees.
Over the last year, we have worked closely with the Judiciary, supporting our client’s needs for more efficient space requirements and producing savings to the Judiciary in rent assessments. Consistent with the direction of the President, we have assisted the Department of Homeland Security’s (DHS) Customs and Border Protection in developing a plan to provide greater security at the border without jeopardizing the free flow of trade. This is just one of the many creative ways GSA uses private sector know-how to meet the needs of the Federal Government and the American people.
GSA has an opportunity—and a responsibility —to lead the Federal Government by example and to demonstrate how we can reduce energy consumption by intelligently integrating energy efficiency into building designs while still creating places where people can work effectively. The President challenged all Federal agencies in his recent Executive Order 13423 to reduce energy consumption, increase the use of renewable energy, and continue to find new technologies. GSA is at the forefront of actively managing our buildings to reduce operating costs and energy consumption. We currently operate our buildings at costs 5 percent below private sector comparable buildings, and we pay 12 percent less for utilities. Some of this lower cost is directly attributable to the investments the Congress has authorized and GSA has executed in energy conservation projects over the past 15 years.
GSA is a leader in designing high quality, energy efficient, and environmentally friendly buildings. Through GSA’s Design Excellence program, we continue to emphasize integrated design strategies that use recycled and renewable materials and that dramatically reduce energy consumption. This will improve the quality of the work environment and create more productive, healthier workplaces. It will drive down long-term energy and maintenance expenses. It will also enable our agency customers to meet the demanding energy goals established by the Energy Policy Act of 2005. We will also apply Design Excellence fundamentals to GSA’s design-build and lease-construction commissions. This will result in cost and schedule benefits and allow GSA to consistently deliver high quality, productive workplaces that meet the mission needs of our customer agencies.
Another opportunity for improving energy efficiency is promoting sustainability and use of energy efficient design principles. GSA is a leader in sustainable design and has achieved certification for four government-owned buildings and six build-to-suit leased buildings. The agency has also registered 50 buildings under the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) building rating system. GSA will continue to lead in sustainable design by advocating for sitting of Federal facilities with consideration for local transportation and enhancing sustainability in communities. The result will be a facility with an optimal balance of cost, environmental, social, and human benefits, while meeting the mission and functional needs of the customer agency. GSA intends that sustainable design will be integrated as seamlessly as possible into the existing design and construction process.
GSA is a leader in “green buildings” and sustainable design. The Energy Policy Act of 2005 mandated the application of sustainable design principles in the citing, design, and construction of Federal facilities. GSA’s FY 2006 Appropriations Act required us to examine the use of multiple “green building” rating systems. Other mandates (including the Resource Conservation and Recovery Act (RCRA) Section 6002, Executive Order 13123, and Executive Order 13101) promote the use of products with recycled material content, sustainable design principles, and environmentally preferable qualities. In addition, the Environmental Protection Agency (EPA) and other stakeholders are focusing on the indoor environment in terms of furnishings and build-outs; they are looking for fewer volatile organic compounds, as well as better natural lighting and light quality, acoustics, and indoor air quality.
By continuously demonstrating and testing these new technologies, we can select strategies for the wide array of buildings in our inventory. GSA will continue to explore and implement new technology and innovation in its new construction program, but some of our best opportunities for improving energy efficiency lie in building modernizations. For example:
We realized a 60% drop in energy consumption following modernization of the Bennett Federal Building in Jacksonville, FL.
At the Duncan Federal Building in Knoxville, TN, we saved approximately 1.7 billion British thermal units (BTUs) in FY 2005 and will save 400,000 gallons of water every year.
Future initiatives include:
Incorporating the sustainable design practice of “green roofs” in our projects. “Green” or “planted” roofs range from small tray systems to entire garden roofs. Green roofs reduce energy costs by insulating buildings and reduce the “heat island” effect associated with large buildings in urban areas.
Incorporating favorable local climates and other conditions into building design in order to minimize energy consumption. For instance, GSA has recently completed a remarkable new Federal building in San Francisco that uses natural ventilation to cool the building. The multi-story tower reduces energy consumption by relying on the low humidity and moderate temperatures of the Bay area rather than mechanical air conditioning.
Deploying Combined Heat and Power (CHP) systems, which use the heat from electricity production to heat water and operate air conditioning systems. One example of this technology in practice is the Food and Drug Administration (FDA) campus in White Oak, MD. The 5.8 megawatt CHP facility installed there has reduced energy consumption by more than 37 million kilowatt-hours, resulting in savings of $1.4 million in energy costs and $2.1 million in annual operations and maintenance costs.
Our FY 2008 budget requests $8.1 billion in New Obligational Authority (NOA) for PBS. This annual request authorizes GSA’s use of the rent paid by our customer agencies for the space they occupy which is deposited into the Federal Buildings Fund (FBF), a quasi-revolving fund established by Congress in 1972. GSA achieves economies of scale for the Federal Government, and the unique structure of the FBF allows us to deliver those savings to customer Federal agencies and the American taxpayer. For FY 2008, we are requesting $615 million in NOA for the Construction and Acquisition program. These funds are needed for critical facility projects for the Department of Homeland Security (DHS), the Food and Drug Administration (FDA), and the Judiciary.
Our $615 million request for the Construction and Acquisition program includes:
$377 million for two agency consolidation projects
$319 million DHS Consolidation in Washington, DC (St. Elizabeths Campus)
$58 million FDA Consolidation in Montgomery County, MD
$155 million for seven land ports of entry facilities
$47 million for courthouse construction
$27 million for general infrastructure and development and
$9 million for non-prospectus construction projects.
The Repairs and Alterations (R&A) program remains GSA’s top priority for our Capital Investment program. We are requesting NOA of $804 million in order to continue to address the $7 billion backlog of repairs and alterations projects. The R&A program focuses on the highest priority projects based on GSA’s continuing effort to evaluate and restructure our real property portfolio.
Our $804 million request for the Repairs and Alterations program includes:
$356 million for three major modernization projects
$171 million for the Thurgood Marshall Courthouse in New York, NY
$172 million for the Eisenhower Executive Office Building in Washington, DC
$13 million for the Joint Operations Center in Washington, DC
$76 million for three limited scope projects
$36 million for the Internal Revenue Service Enterprise Computing Center in Martinsburg, WV
$27 million for the Nebraska Avenue Complex in Washington, DC
$13 million for the C. Clifton Young Federal Building and Courthouse in Reno, NV
$350 million for the non-prospectus program, which consists of small projects that maintain the 1,500 Federally-owned buildings between major modernizations.
$15 million for an energy program that will save 140,000 million BTU per year in Federal buildings.
$7 million for the design of a Federal building in Kansas City and a project to repair and modernize the 70-year-old steam distribution system in Washington, DC.
To support our operating programs, GSA NOA request includes: $156 million for the Installment Acquisition Payments program; $4.4 billion for the Rental of Space program, which will provide 183.8 million rentable square feet; and $2.1 billion for the Building Operations program, a $129 million (6 percent) increase over the FY 2007 request which is primarily driven by utility and fuel rate increases ($66 million), other inflationary increases ($24 million), and security charges from DHS for vacant space ($27M).
GENERAL OPERATING APPROPRIATION REQUEST
While only about one percent or $217 million of the total proposed FY 2008 budget is funded through appropriations to GSA’s operating accounts, these activities are a vitally important part of GSA’s total program. These funds support the development and implementation of Government-wide policies and standards; the automation and consolidation of duplicative Government systems through electronic government projects; the website of the Federal Government, USA.gov and GobiernoUSA.gov; and a variety of other services, including support of Former Presidents, the GSA Inspector General (IG), and donations of surplus real and personal property to state and local governments and non-profit organizations. And, GSA provides support to more than 1400 Senate State and House District offices through a Memorandum of Understanding with both the U.S. House of Representatives and the U.S. Senate. Our 19 Congressional Service Representatives (CSRs) are located throughout GSA’s 11 regions to assist Members in the areas of office space, procurement, communications, relocation services, and asset management.
The FY 2008 President’s Budget requests an increase in appropriation of just $8 million over the FY 2007 full year Continuing Resolution funding level of $209 million.
• Nearly half of this increase represents transfers in from other Federal agencies to support the consolidation of civilian Boards of Contract Appeals (BOCA), pursuant to Public Law 109-163. Consolidation of seven civilian BOCAs into a single organization will increase the efficiency and effectiveness of government-wide operations, as it will promote uniform and standard practices and rulings across most civilian Federal agencies.
Additional funding is requested to fund electronic Government projects and other Government-wide initiatives, such as a Federal Real Property management information system. These solutions improve agency performance and enhance productivity by increasing automation; establishing common, enterprise-wide standards; and reducing the number of providers of common services across the Federal Government.
Funding has been allocated for the IG suspension and debarment team, information technology (IT) network upgrade, and increased payments to the working capital fund.
Our budget also requests increased funding for increases in general pay and inflation.
GSA AND CITIZEN INFORMATION AND OUTREACH
GSA has changed the relationship citizens have with their Government by making official Government information accessible to the public through multiple channels, including the Internet, telephone, e-mail, and print publications. GSA’s USA Services initiatives serve citizens directly by providing easy-to-find authoritative sources of information. Our goal is for USA Services to be the first place citizens, businesses, visitors to the U.S., and other governments turn to for official Government information every day and especially during national emergencies.
GSA’s Governmentwide leadership and assistance allows other Federal agencies to provide better service to their constituents by sharing best practices and managing networks across governments. USA Services also develops Governmentwide standards for web content and provides citizen contact centers and Governmentwide contracts for citizen-service activities. USA Services uses the full spectrum of Federal Government communications channels to ensure the public can find up-to-date, consistent, and official Government information quickly and easily. These channels include:
USA.gov -- the Government’s web portal (formerly FirstGov.gov);
GobiernoUSA.gov - the Spanish-language website
1-800 FEDINFO - the National Contact Center;
Print publications from Pueblo, Colorado; and
E-mail address available separately and on USA.gov.
By centralizing control of these channels, equipping them with a single comprehensive database of continually refreshed official information, and focusing on the needs of the public, USA Services has dramatically improved the delivery of Government information to citizens.
GSA’S ROLE IN EMERGENCY MANAGEMENT
GSA has always played a prominent role in responding to incidents such as hurricanes, floods, wildfires, and acts of terrorism. As an active participant in the DHS’s National Response Plan, GSA supports prevention, preparedness, response, and recovery functions. GSA stands ready to provide emergency relief supplies, facility space, office equipment, office supplies, telecommunications, contracting services, and personnel as needed by responding agencies.
To better coordinate these efforts, this year, GSA successfully established a new Office of Emergency Response and Recovery (OERR) that reports directly to the Administrator of GSA. Our goal over the next two years is to ensure that we deliver on our commitment to unified disaster response and recovery solutions. Within GSA’s Federal Acquisition Service (FAS), we are integrating our logistics and acquisition planning efforts with the Federal Emergency Management Agency (FEMA) and other agencies with emergency responsibilities. GSA is also maintaining emergency operations space to be used by those agencies as needed. As part of a coalition directed by the Department of Agriculture’s U.S. Forest Service, GSA supplies wildfire suppression equipment for strategically located caches around the country, and directly to field units fighting active fires on Federal lands.
During times of disaster, the Government-wide web portal—USA.gov—ramps up to provide the most up-to-date disaster information for citizens and links to other Federal agencies dealing with crises.
We are increasing our focus on state and local governments, to improve our response to natural disasters and other national emergencies. Last year, the passage of Section 833 of the Defense Authorization Act of FY 2007 ensured that state and local government customers certified by DHS as eligible for disaster recovery assistance are authorized to purchase products and services using all of GSA’s multiple award schedule contracts. We plan to reach out to these new customers to offer training opportunities on the proper use of schedule contracts.
FEDERAL ACQUISITION SERVICE
The FY 2008 President’s Budget submission is the first budget submitted since the establishment of FAS on October 6, 2006, pursuant to the GSA Modernization Act of 2006 (P.L. 109-313) (“Modernization Act”). The FAS organization unites the former Federal Supply Service (FSS) and the Federal Technology Service (FTS) organizations. Prior to their consolidation into FAS, FSS provided commercial products and services to Federal customers, while FTS provided telecommunications and IT services. The reorganization equips FAS with the legacy business lines to move toward more standardized and transparent processes, more effective and efficient availability of business products and services, more logical and smoother processes for customers and vendors, and better alignment of the delivery of services in an ever-changing and increasingly complex business environment.
The FY 2008 FAS budget maximizes the flexibilities of the Modernization Act to improve the products and services GSA offers to our Federal customers. During FY 2007, we are moving and refocusing our FAS operations to address the changing Federal marketplace and better meet customer demands.
Acquisition is key to the newly established FAS. From products, services, and technology to vehicles, travel, transportation, and property management solutions, GSA manages widely-diverse offerings and many different methods for acquiring these offerings. GSA will need to provide efficient service delivery of overlapping product offerings and solutions while continuing to promote competition, procurement integrity, and consistent pricing structures. We will assess the various financial models and determine which can best achieve full cost recovery for GSA, as well as ensure rigorous fiscal discipline and best value for our customers.
Achieving financial health in all business models and programs is essential.
GSA is working to refine and better manage a balanced portfolio of acquisition solutions, including the Multiple Award Schedules (MAS) program, Strategic Sourcing, Alliant, Networx, Government-wide Acquisition Contracts (GWACs), Global Supply, and Assisted Acquisition Services. Our multiple channels for marketing will help our customers select the solution and level of service that is right for them. GSA will address diverse customer needs through more vigorous business case and business process improvement practices.
GSA will be a leader in technology-related acquisition. Two prime examples are the Networx and Alliant programs. The Networx program, which includes both Networx Universal and Networx Enterprise, has a combined contract ceiling of $68.1 billion over the 10-year life of the contracts. Networx Universal was awarded on March 29, 2007, and it will provide worldwide continuity of vital mission-critical services that underlie Government operations at the best prices in the marketplace. Networx Enterprise is scheduled for award in May 2007.
Networx Universal increases the number of telecommunication services currently offered on FAS contracts by one third and includes new services that will provide standard compliant, high-speed optical networks that will ease the required transition to the IPv6 protocol. To date, GSA’s telecommunications programs have saved the American taxpayer hundreds of millions of dollars while enabling higher speed networks with greater security, higher capacity, and enhanced content.
The Alliant acquisition is GSA’s new multiple award/indefinite quantity contract vehicle for providing worldwide IT solutions to Federal agencies. Alliant represents the next generation of GWACs for GSA and replaces Millennia and ANSWER, several older GSA programs. Alliant offers the greatest flexibility possible for efficiently and effectively supporting the Federal Government’s daily operations, and Alliant Small Business is a set-aside for small businesses. Alliant is scheduled for award in June 2007 and Alliant Small Business is scheduled for award in August 2007.
GSA is dedicated to helping service-disabled, veteran-owned small businesses do business with the Federal Government. We have recently launched an effort to help these businesses understand more about contracting with the Federal Government. GSA is also reaching out to help Federal agencies meet their service-disabled, veteran-owned small business socioeconomic goals.
In December 2006, as a result of Executive Order 13360, GSA awarded the first Government-wide contract set aside exclusively for small technology firms owned by service-disabled veterans: the Veterans Technology Services (VETS) Governmentwide Acquisition Contract. GSA issued the first task order on this contract in March 2007 for $495,523. GSA is actively encouraging both the Department of Defense (DoD) and the Veteran’s Administration (VA) to support this contracting vehicle.
GSA has made environmental initiatives a priority—especially the use of various types of alternative-fueled vehicles in the GSA Fleet program. The original equipment manufacturers currently are focused on producing only ethanol (E85) and hybrid-electric vehicles, which do not qualify as alternative-fueled vehicles. The future trend is toward more E85 models and the introduction of fuel cell vehicles. We will continue to evaluate which of these options, or mix of options, offers true savings and value for our customers and the taxpayers. GSA is assessing emerging opportunities and has already made leveraged buys of alternative-fueled vehicles. These vehicles are concentrated in six major markets to encourage the development of infrastructure—service stations, service, and resale markets—in the private sector.
GSA Fleet currently provides 51 percent of Federal motor vehicles, excluding the United States Postal Service. Annual growth continues through customer consolidations and wide-ranging management support. Savings are generated through the realignment of customer agency staff and economies of scale. We project that GSA Fleet will grow through consolidation by approximately 3,000 vehicles per year.
Because of the Federal Government’s purchasing power, we are able to obtain large volume discounts for our Federal customers. In FY 2006, almost 60,000 vehicles were acquired, averaging 28 percent below commercial pricing for the top ten models. Although it is difficult to forecast the future shape of the automotive industry, we expect to continue to achieve similar results. GSA offers pre-owned automobiles and alternative-fuel vehicles for purchase by the public through GSA Fleet auctions.
Through its managed solutions, GSA is helping agencies achieve their mandated deadlines in a variety of programs:
In October 2007, GSA was the Homeland Security Presidential Directive 12 (HSPD-12) managed service office for 40 agencies, assisting them in meeting an October 27, 2006 deadline to provide new employees with HSPD-12 certified credentials.
GSA’s E-Authentication program is leading the way for identity management across the Federal Government, international governments, and industry.
The E-Travel initiative estimates a 315 percent return on investment and $380 million in savings are projected over the next ten years. Agencies using the system are complying with the Federal Travel Regulation.
In June 2008, Federal agencies are required to have an IPv6-capable backbone for their networks. GSA is analyzing alternatives as to how to best assist agencies in successfully achieving this milestone.
The Strategic Sourcing program clearly demonstrates the value of GSA. The Ground Domestic Delivery Services Blanket Purchase Agreement was awarded in September 2006 and is being utilized by 32 agencies with discounts ranging from 4.8 percent to 24 percent off the pricing from multiple award schedules.
The GSA Modernization Act of 2006 established the Acquisition Services Fund (ASF) to collect receipts from customer Federal agencies and to finance operations of the FAS organization. The ASF is a full-cost recovery revolving fund that covers both direct and indirect costs (salaries, benefits, and operational costs) through fees charged to Federal agencies for services rendered and commodities provided. The FY 2008 budget reflects $9.9 billion in obligations, representing an increase of $302.3 million from the FY 2007 spending level.
The FY 2008 FAS budget and operating plan are based on a frank assessment of past business performance and realistic assumptions about the future. However, we are not out of the woods yet on implementing the new organization and achieving full cost recovery in our operations. In FY 2006, GSA realized negative operating results in the former FTS organization, due in part to an unexpected downturn in business volumes. The FY 2008 FAS budget reflects these realities in the form of reduced revenue estimates in FY 2007 and inflation-only increases in FY 2008 projected revenue. The FY 2008 budget also reflects GSA’s efforts to mitigate these losses.
As part of my overall effort to reduce GSA’s operating expenses, we have held the FY 2007 and FY 2008 budgets to minimal requirements to improve customer service. The FY 2008 FAS budget maintains GSA’s position as a world-class provider of goods and services in the Federal sector. FAS will not only benefit our client agencies, but the taxpayers as well, by leveraging the Federal Government’s considerable buying power to lower costs—providing the best products and services through total, innovative solutions to meet Federal agencies’ missions at best value. The new FAS enables us to improve customer service; provide greater business flexibility for acquisition solutions; enhance financial management, accountability and oversight; and increase effectiveness and efficiency.
FAS is now operating in four portfolios to provide integrated solutions to customer acquisition needs, rather than disparate and independent products and services. Those portfolios are:
The Information Technology Services (ITS) portfolio provides Federal agencies with a full range of end-to-end IT and telecommunications solutions. These services were previously provided by FTS with the IT schedules and FSS with their Government-wide Acquisition Contracts (GWACs).
The Assisted Acquisition Services (AAS) unites three former FTS businesses to create a single organization that effectively compliments the ITS portfolio by providing management services that assist agencies in acquiring and deploying ITS products and services, as well as a full range of other professional services.
The General Supplies and Services (GSS) portfolio consists of three former FSS business lines combined to provide a full line of personal property services, including maintaining stocks of supplies, procuring furniture, managing supply schedules, and disposing of surplus personal property.
The Travel, Motor Vehicle and Card Services (TMVCS) portfolio consists of several former FSS programs that are unified by their highly-leveraged purchases for the benefit of the entire Federal Government.
Services provided include: travel and relocation services, freight management, motor vehicle acquisition, fleet management, and charge card services.
To support the reorganization, the FY 2008 submission contains newly developed and revised performance goals to measure customer satisfaction, access for vendors of all sizes, and GSA operational efficiency. Specifically, the FY 2008 FAS budget includes measures of customer savings in telecommunications, IT solutions, travel, and transportation; new surveys of customer satisfaction in long distance and credit card services; and aggressive goals to drive down operating costs in every portfolio. The FY 2007 and FY 2008 performance targets communicated in the FY 2008 budget reflect GSA’s continued commitment to ensure that, with the implementation of FAS, GSA will continue to deliver efficient, effective, more flexible, and compliant processes and services—expert solutions, from the simple to the complex, for all customer needs.
GSA’s FY 2008 Budget request aligns with the President’s Management Agenda and my vision for GSA. I will continue to fight against wasteful spending and duplicative programs within GSA. While we have made great strides in improving GSA’s operations in FY 2006 and FY 2007, many challenges lie ahead. Our task now is to keep moving forward, build on our recent successes, and leverage all our talents, abilities, and energy to provide direct and meaningful savings to taxpayers while maintaining focus on accomplishing the GSA mission. Approval of our budget request for FY 2008 will lay the foundation to achieve our mutual goals.
Mr. Chairman that concludes my formal statement. I look forward to continuing this discussion of our FY 2008 budget request with you, with the members of the subcommittee, and with your staff.