General Services Administration:

Increased Direct Delivery of Supplies Could Save Millions

GGD-93-32: Published: Dec 28, 1992. Publicly Released: Dec 28, 1992.

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Pursuant to a congressional request, GAO reviewed the General Services Administration's (GSA) depot-based supply distribution system to determine if shipping directly from suppliers to customer agencies would reduce costs.

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 for Executive Action

  1. Status: Closed - Implemented

    Comments: On July 9, 1999, GSA announced it will close its eight warehouses over the next 18 months and move to a system where most supplies will be delivered directly from vendors to agencies. As GSA finalizes closures, GAO will prepare accomplishment reports.

    Recommendation: The Administrator of General Services should monitor and assess agencies' use of priority designations and consider charging them for these extra services.

    Agency Affected: General Services Administration

  2. Status: Closed - Implemented

    Comments: On July 9, 1999, GSA announced it will close its eight warehouses over the next 18 months and move to a system where most supplies will be delivered directly from vendors to agencies. As GSA finalizes closures, GAO will prepare accomplishment reports.

    Recommendation: The Administrator of General Services should identify and explore cost-effective supply sources to fill those orders that do not meet direct delivery requirements, such as orders that are uneconomical to supply and those orders for products manufactured to specifications and purchased from mandatory source suppliers.

    Agency Affected: General Services Administration

  3. Status: Closed - Implemented

    Comments: In May 1993, GSA established the Interagency Committee on Supply Management. The Committee considers improvements in governmentwide supply operations and makes recommendations to the GSA Administrator. GSA adopted a strategy that is expected to prepare the federal logistics system for the 21st century. It has added supply systems features like ordering from GSA direct delivery products over the Internet, lower direct delivery thresholds for items that have limited shelf lives, and adding a supplies contract that promotes the use of a contractor to supply agencies directly.

    Recommendation: The Administrator of General Services should establish effective networks between GSA and customer agencies to develop the most cost-effective supply system, which may include the elimination of GSA distribution operations.

    Agency Affected: General Services Administration

  4. Status: Closed - Implemented

    Comments: GSA developed an approach to test in the marketplace the report's recommendations for increasing direct delivery. GSA conducted a direct delivery test involving eight test solicitations and found that several of the solicitations appeared to support GAO's finding that increased use of direct delivery would save money with no significant impact on customer service. As a result, based on potential savings FSS is increasing the use of direct deliverables.

    Recommendation: The Administrator of General Services should develop a plan with timetables to maximize the use of direct delivery, which would reduce existing depot operations.

    Agency Affected: General Services Administration

  5. Status: Closed - Implemented

    Comments: On July 9, 1999, GSA announced it will close its eight warehouses over the next 18 months and move to a system where most supplies will be delivered directly from vendors to agencies. As GSA finalizes closures, GAO will prepare accomplishment reports.

    Recommendation: The Administrator of General Services should reduce its operational role and become more of a central management supply agency that develops effective partnerships between customers and suppliers and works with them to develop the most cost-effective supply system.

    Agency Affected: General Services Administration

 

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