LUXURY-TYPE ITEMS

GAO Statement, pp. 7 and 8, enc. I:

"It was not until March 31, 1970, that criteria was established to eliminate or restrict the use of luxury or sensitive-type itcs and not until April 29, 1950, that criteria restricting the use of multiple award schedules was established. However, no written operating procedures have been developed to implement these guidelines."

FSS Response:

Agencies have been asked to provide justification and requirements for items on schecule which might be luxury or subject to misuse. Upon evaluation of agency responses, procedures will be finalized which will assure that future usage of these schedules continue to be validated. These criteria and those addressing the reduction of multiple award schedule iters have been issued to each project group for use in conducting their product line and acquisition strategy review. The procedure for conducting product line and acquisition strategy revices (referred to as the 43 step procedure) is being modified to make these criteria an integral part of each such project.

GAO note:

The date in the first paragraph above should be March 31, 1930, not March 31, 1970.

PROCUREMENT OF SCHEDULE ITEMS FROM LESS EXPENSIVE SOURCES

GO CRAFT AUDIT. 6/11/20

GAO Statement, p. 4, enc.

I:

roted that procedures were not completely developed on the policy ratter craconian & a collection and use of insar. ition relating to the procurat or scrocute itas from less extensive sources. Although FSS has rot want beown to collect or use this cata, we believe FSS made significent progress by relaxing the schedule mandatory use requirements. Agencies are now permitted to purchase iters "off-schedule" if an identical item is less cxpensive." (Underlining added)

FSS Response

We do not agree with all aspects of the GAO comments.

1. Crarational procedures were developed on 10/1/73 by our Office of Cost 2nd Pricing (660) covering the receipt, analysis and disposition of

ncy purchase orders issued pursuant to the provisions of FM2 101-26. 01-4 (7). Copics of purchase orders issued pursuant to the FMR provision are forwarded to FCC by the using agency at the time of issuance. Trese criors are registered at time of receipt.

2. Thus far, 147 purchase orders have been received. Analysis has been completed on d5 and appropriate action taken. Analysis is continuing on the remaincer. This is clear indication that we are adhering to the substance of the GAO recommendation.

3. We have proposed certain chances in the FOUR prescribing escape provisions. These proposed changes are the result of a lack of information received from the agencies with respect to the purchase orders received to date. This results in a duplicate effort in SS since the information required would have been available as a result of the using (ordering) agency purchase exception. It should also eliminate the submission of numerous purchase orders which we have been receiving that are not issued pursuant to the FIMIR exception.

In summary, we have made significant progress in implementing this recommendation.

REPORT BY THE

Comptroller General

OF THE UNITED STATES

Poor Management Of GSA's Self-Service Stores Leads To Needless Duplication And Potential For Fraud

The General Services Administration's (GSA's) self-service stores are to

--provide Federal agencies with an efficient and economical retail supply system and

--consolidate unnecessary agency stock

rooms.

The Self-Service Store program does neither well.

GSA lacks control over self-service store inventories, operations, and shopping plates. This lack of control provides the potential for further fraud in GSA's program.

Although the program is intended to eliminate agency retail outlets, GAO found that agency retail outlets were large GSA store customers. Several of these agency retail outlets were in the same buildings as GSA stores.

GAO recommends that GSA completely reevaluate its program and work closely with the Office of Management and Budget to eliminate unnecessary agency retail outlets.

In your September 10, 1979, and October 22, 1979, letters, you asked that we determine if the General Services Administration's Self-Service Store program implements the intent of the Federal Property and Administrative Services Act of 1949, as amended. Our review disclosed that the program does not. In fact, the problems we found were similar to those identified in the First Hoover Commission's report to the Congress in 1949, before the General Services Administration was created. This report contains recommendations to the Administrator of General Services.

We are sending copies of this report to the Administrator of General Services; the Director, Office of Management and Budget; and the chairmen of the House and Senate Committees on Appropriations, the Senate Committee on Governmental Affairs, and the House Committee on Government Operations.

S. Staats

Comptroller General
of the United States

REPORT BY THE COMPTROLLER
GENERAL OF THE UNITED STATES

POOR MANAGEMENT OF GSA'S
SELF-SERVICE STORES LEADS
TO NEEDLESS DUPLICATION AND
POTENTIAL FOR FRAUD

DIGEST

The General Services Administration's (GSA's)
Self-Service Store program (SSS) fails to ful-
fill the intent of the Federal Property
and Administrative Services Act, as amended,
to

--provide executive agencies with an effi-
cient and economical supply system and
--consolidate unnecessary agency stockrooms.
GAO found that GSA lacks effective

--control over store inventories,

--management oversight of store operations,
and

--control over shopping plates issued to
Federal activities. (See ch. 3.)

GAO also found that GSA stores

--mispriced supplies causing customer
overcharges and inventory variances,

--failed to reorder out-of-stock supplies,

--stocked defective supplies, and

--experienced security problems. (See ch. 4.)

Also, GAO found Federal activities operating
their own stores and stockrooms in the same
buildings as GSA stores and other Federal
activities' stores and stockrooms.

Sales to these Federal activities represent
a large portion of several GSA stores' busi-
ness. In fact, some GSA stores might not
exist if it were not for a few Federal activ-
ities which stocked their stores from the
GSA stores. GAO also found Federal

Tear Sheet. Upon removal, the report cover date should be noted hereon.

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PSAD-80-64