General Services Administration:

Distribution Center Modernization Was Mismanaged

GGD-92-71: Published: May 20, 1992. Publicly Released: Jun 10, 1992.

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Pursuant to a congressional request, GAO examined the General Services Administration's (GSA) efforts to modernize and automate its wholesale supply distribution centers.

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 for Executive Action

  1. Status: Closed - Not Implemented

    Comments: GSA has suspended plans for further depot modernization on the basis of dramatic changes now occurring in the Department of Defense, as well as budget constraints now imposed on civilian agencies. As these changes are assessed, GSA will begin developing an understanding of its distribution needs for the next decade.

    Recommendation: Before modernizing any other distribution center, the Administrator, GSA, should ensure that existing procedures are effectively implemented to prepare and follow move plans.

    Agency Affected: General Services Administration

  2. Status: Closed - Not Implemented

    Comments: GSA has suspended plans for further depot modernization on the basis of dramatic changes now occurring in the Department of Defense, as well as budget constraints now imposed on civilian agencies. As these changes are assessed, GSA will begin developing an understanding of its distribution needs for the next decade.

    Recommendation: Before modernizing any other distribution center, the Administrator, GSA, should ensure that existing procedures are effectively implemented to incorporate modernization design factors in original lease solicitations to allow full and open competition.

    Agency Affected: General Services Administration

  3. Status: Closed - Not Implemented

    Comments: GSA has suspended plans for further depot modernization on the basis of dramatic changes now occurring in the Department of Defense, as well as budget constraints now imposed on civilian agencies. As these changes are assessed, GSA will begin developing an understanding of its distribution needs for the next decade.

    Recommendation: Before modernizing any other distribution center, the Administrator, GSA, should ensure that existing procedures are effectively implemented to complete a cost-benefit analysis when relocation plans are being considered.

    Agency Affected: General Services Administration

  4. Status: Closed - Not Implemented

    Comments: GSA suspended modernization plans based on changes now occurring in DOD, budget constraints, and increased use of vendor direct delivery. As part of the continuing process improvement and reengineering effort, the shift to new computer equipment is still planned.

    Recommendation: Before modernizing any other distribution center, the Administrator, GSA, should ensure that existing procedures are effectively implemented to develop, test, and implement the critically needed software.

    Agency Affected: General Services Administration

  5. Status: Closed - Implemented

    Comments: The conclusion of a market survey, completed in May 1993, was that no software package was identified that satisfies all of the functional and operating requirements. As a result, GSA will continue the software project solely with GSA resources.

    Recommendation: The Administrator, GSA, should survey the software market, including both private and government sources, after completing the design of the ADP system, to identify the best alternative for meeting software needs.

    Agency Affected: General Services Administration

  6. Status: Closed - Not Implemented

    Comments: GSA has suspended plans for further depot modernization on the basis of dramatic changes now occurring in the Department of Defense, as well as budget constraints now imposed on civilian agencies. As these changes are assessed, GSA will begin developing an understanding of its distribution needs for the next decade.

    Recommendation: Before modernizing any other distribution center, the Administrator, GSA, should ensure that existing procedures are effectively implemented to include provisions on overtime and railcar usage in leases that adequately protect the financial interests of the government.

    Agency Affected: General Services Administration

 

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