General Services Administration

Millions could be saved each year if the General Services Administration (GSA) had suppliers ship more orders directly to customer agencies. Customer agencies could save because GSA's processing fee for directly delivered orders is much less than for orders filled from its depots. Taxpayers could save if GSA reduced depot inventory and operations. GAO estimates that, for a one-year period ending February 1991, only seven percent of GSA's nearly $1 billion in projected total sales was directly delivered. Had GSA maximized direct deliveries on its total sales, it could have saved as much as $107 million annually, in addition to a one-time saving of as much as $240 million through a reduction in inventory investment. Further, depot operations could be significantly cut because the remaining sales would not sustain existing operations. GSA could then further streamline its operations because these remaining sales are for millions of low-value, low-quantity orders that may be uneconomical and can be bought locally. GAO questions whether GSA should continue to run its depots at current levels, suggesting instead that GSA reduce its operational role and become more of a central supply management agency that provides governmentwide leadership and sets policy.

GAO found that: (1) GSA could save millions of dollars if it shipped orders directly from suppliers to customer agencies; (2) federal agencies pay nearly three times as much in processing costs for orders filled at GSA depots than those filled directly from suppliers; (3) for a 1-year period ending February 1991, GSA only delivered 7 percent of its supplies directly to customer agencies, even though 83 percent of its inventory had the potential to be delivered directly to customers; (4) if GSA maximized direct delivery, it could significantly reduce depot operations and achieve a savings over time of up to $240 million; and (5) GSA could further streamline operations by considering other supply alternatives for filling low-value, low-quantity orders.

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.

Director: Team: Phone: