Effectiveness of GSA's Practice of Centrally Purchasing Low Dollar Value Items Under Nonstores Program

GAO reviewed the General Services Administration (GSA) practice of centrally procuring low dollar value items under the nonstores program. Under this program, the Federal Supply Service (FSS) annually makes thousands of low demand procurements in which the total value of the items purchased is less than $500.

The administrative cost to centrally purchase these items frequently exceeds the value of the items. Most Federal agencies can purchase these items at reduced administrative cost. Historically, executive agencies were required to submit all requisitions for nonstores items in excess of $25 to GSA for procurement action. An August 1980 change provides that GSA is a nonmandatory source of supply when the total line item value is less than $100. Raising the dollar level of nonstock centrally procured items was necessary because of the higher cost of preparing and processing requisitions. However, without a means of enforcement, this regulation will not decrease the large number of GSA procurements under $100 in value. GAO found that the cost to locally purchase low dollar items is frequently less than the cost to GSA to accomplish the same procurement through the nonstock central procurement process. Agencies incur less administrative cost because they can quickly and accurately determine that the item is needed. The process of identifying exactly what is needed is the largest portion of the administrative cost of GSA. GAO believes that the low dollar, low demand nonstores central procurements as currently operated should be discontinued. Some agencies have remote activities which may not be able to purchase some items; however, these should be infrequent and subject to careful review.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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