General Services Administration

The General Services Administration (GSA) has not effectively managed the modernization of its wholesale distribution centers, which store and issue supplies--everything from paints and ladders to photocopier paper--to federal agencies worldwide. Its attempt to develop crucial software has failed, wasting millions of dollars. While GSA believes that it can develop the needed software in-house, the projected completion data is over 3 years away, with no guarantees of cost effectiveness. Because of poor planning, GSA has also wasted millions of dollars buying and moving into the Palmetto (GA) distribution center. GSA has improved its planning for its second center in Burlington (NJ) however. Many of the unnecessary costs associated with Palmetto have been avoided, largely because local management followed established procedures.

GAO found that: (1) efforts to modernize and automate GSA distribution centers have been costly and ineffective, since GSA has not developed the software needed to automate the centers; (2) GSA has spent $3 million on an unsuccessful attempt to develop software to automate its distribution centers, an effort that failed primarily because it failed to conduct an adequate needs assessment and the project lacked effective oversight; (3) GSA has initiated a second software development effort to develop the needed software, which seems to be better planned and managed and should result in a more effective needs assessment; (4) since GSA has no plans to survey the software market to identify or compare alternatives for developing software that meets its requirement needs, it has no assurance that the project will be cost-effective; (5) GSA incurred millions in unnecessary costs in acquiring and moving to its first modernized distribution center, but did not encounter similar problems in the acquisition of its second center; (6) in acquiring the first facility, GSA overestimated its space needs, which could cost the government about $9 million over the life of the lease, failed to include modernization specifications in the lease solicitation process, and poorly designed and managed its move from the former facility to the new center, incurring an additional $1 million in labor costs; and (7) the lease cost could be increased by as much as $5 million, since GSA did not include an overtime pay rate and did not allow a lease provision based on erroneous railcar usage information that would protect the government's financial interest.

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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