GSA Procurement

The law requires that federal contracts exceeding $500,000 include subcontracting plans that maximize opportunities for small businesses, especially those owned and managed by socially and economically disadvantaged individuals. GAO reported in 1989 that several utilities providing services to the federal government declined to sign formal contracts because they objected to the statutory requirements for subcontracting plans. In most instances, federal agencies had no choice but to accept and pay for these utility services without a contract because alternative sources were unavailable. This report provides updated information on the number of utilities that supply service to the General Services Administration (GSA), how many utilities had entered into contracts with GSA, and how many had submitted subcontracting plans.

GAO found that: (1) about 1,000 utilities provide services to GSA; (2) 365 of the utilities provide services costing more than $25,000 annually, and thus are required to enter into written contracts with GSA for such services; (3) as of November 1992, 119 of the 365 utilities had not signed written contracts with GSA, some declining because they believe that federal regulations do not apply to them since they are state and locally regulated; (4) 146 of the 1,000 utilities are required to set goals for subcontracting with small and small disadvantaged businesses, since their contracts cost over $500,000; (5) as of November 1992, only 55 percent had complied with the subcontracting plans requirement; (6) 31 utilities failed to update their subcontracting plans annually, complaining that GSA procedural changes are too burdensome; (7) 39 of 119 utilities that did not sign written contracts were required to submit subcontracting plans, but only 4 had done so; (8) GSA made substantial efforts to have utilities sign contracts and submit subcontracting plans and is considering administrative enforcement; (9) GSA may have difficulty collecting damages for noncompliance with subcontracting goals or refusal to submit subcontracting plans, since GSA cannot objectively estimate the subcontracting goals; and (10) GSA has not sought court injunctions to direct unsigned utilities to comply with contracting regulations because it must prove it has exhausted all administrative remedies first.