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GSA will cut fees on schedule purchases.

The General Services Administration plans to cut fees on GSA schedule purchases to 0.75%, from the current 1%. but the change probably won't take effect for another year.

A proposed rule will be published shortly, said Patricia Mead, Deputy Assistant Commissioner of GSA's Federal Supply Service.

The Office of Management and Budget asked for the reduction after a General Accounting Office study showed GSA is pocketing huge profits. GAO said revenue from the fees, known as industrial funding fees, exceeds the cost of operating the schedules by 53%.

"Future adjustments certainly might be necessary" because revenues fluctuate from year to year, Mead said in an interview. "Industry has told us, 'Please don't do it too often.'"

Changing the fees causes a major administrative headache for both GSA and its contractors. "We will try to make it more painless in case we have to do it again," Mead said. The proposed rule will ask for public comment on how to handle future adjustments and will probably take effect in January 2004, she added.

Angela Styles, administrator of OMB's Office of Federal Procurement Policy, said GSA and other agencies that operate government-wide acquisition contracts "are required to adjust their fees so that total revenues do not exceed actual costs."

GAO found that GSA reaped $151 million in profit from the fees over the past three years. Although the money is supposed to be returned to the Treasury, the investigators said GSA used the excess revenue to buy vehicles for the government's fleet and to maintain its stockpile of supplies.

"Program customers are, in effect, being overcharged for the contract services they are buying," GAO said.

Other agencies that operate GWACs--the Departments of Transportation, Interior and Commerce, NASA and the National Institutes of Health--do not report their fee earnings to the Office of Management and Budget, the report said.
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Publication:Set-Aside Alert
Date:Dec 13, 2002
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