Once again, GSA finds itself in the center of a hubbub

Tom Temin: I’m glad you can fit us in between the Baroni Center work and all the consulting you’re doing. It’s good to have you as a regular contributor here. And GSA, once again, looks like from your standpoint, is responsible for a lot of the policies that the new administration wants to take over.

Emily Murphy: And GSA historically worked so closely with OMB that it would be surprising if it weren’t in the center of it. But even I’m surprised at exactly how pivotal GSA is being right now. I honestly can’t imagine a day where I, as the GSA administrator, sent a list of contractors to other agencies and told them to review them. It would have gotten as much response as it has gotten since the memo went out from GSA. So GSA is really taking on an incredible amount of significance at this point.

Tom Temin: And this contract review, though they weren’t necessarily acquired these contracts under GSA vehicles, though, were they?

Emily Murphy: GSA is looking at the contracts that were under GSA vehicles, but they’re suggesting that based on the top contractors out there, and that’s the federal procurement data system. That’s part of Sam, which is run by GSA. I think that’s where they’re pulling their data from and looking at that. And there it seems to be pulled based on NAICS codes and looking at who’s doing consulting work. It’s GSA resources that are putting together the lists, but it is not necessarily a GSA contract vehicle. That’s also consistent, though, with GSA, that it was reported last week that the GSA FAS commissioner is looking at doing more consolidation of civilian agency contracting at GSA.

Tom Temin: Yes, because there was an earlier order than the one that they’re looking at, Booz Allen and all these big companies, Accenture and so forth, where they were looking for DoD contracts, beginning with those that were done through GSA vehicles.

Emily Murphy: And looking at GSA schedules and GSA contract vehicles is the right place to start. And I want to stop and say that there’s absolutely nothing wrong with going back, especially the beginning of a new administration and reviewing how you’re spending money and making sure it’s consistent with how you should be spending money. I’m sure that you and I know I every once in a while, sit back and look at all the subscriptions I have, and you know, and look at my budget and make sure that where I’m spending my money aligns with my priorities. Government should be doing the same thing. If I’m a contractor, though, I’m probably very nervous about this. If I’ve been planning that I have a five year or ten-year runway on something, and I’ll all of a sudden may be looking at a quick pause on it. I’ve got to move quickly to position myself and to figure out how I’m going to reallocate my resources.

Tom Temin: Yeah, especially your workforce.

Emily Murphy: Yes, exactly. Especially my workforce. But hopefully these contractors are looking at as an opportunity also to go in and build some relationships with the new leadership. Explain to them where they add value, see where the leadership’s concerns may be and see where there’s a meeting of the minds. DOGE has made no secret that they’re looking for cost-cutting. GSA has made no secret of the fact that they’re concerned about contracts that are just for producing reports or providing analysis or advice. So it’s a chance for those contractors to go in and say, yes, here’s what we’re doing, here’s what we’re actually producing in terms of results, and here’s what’s driving our prices, because ultimately, the contractors we have and the cost we paid for them are a result of the contracts and the regulations that the government puts out. This may be a chance for a meeting of the minds.

Tom Temin: All right. And the other question, too, though, is as they look at the contracts by those contractors, many of them are involved in operations of the government, not just producing reports. To go back to the Booz Allen example, they’re the operator of the Thrift Savings Plan website, which provides all of the front end and activity capabilities for TSP account holders, millions and millions of them. You wouldn’t want to cancel that one, or even pause it, because you’d have an uproar from anyone with a TSP account.

Emily Murphy: Yes. And again, that’s why I was saying that it’s a good chance to go in and explain exactly what that company is doing for the government, because Booz Allen, and since we’re using them as an example, has so many different projects across the government that just pulling data from SAM is not going to give you the insights or just pulling data from the GSA schedules program is not going to give you any real insight into the work that’s being done. So this is a chance to go on and explain here on a project by project basis is what we actually do and what we deliver. And here’s where there are opportunities where we agree that things could be shifted or done differently. And here are things that are just critical to government operations and that you’d want to proceed with caution.

Tom Temin: So in other words, as a contractor, you should be prepared to answer the same question is if you were at a dinner party and someone said, well, what are your contracts actually do for the government? If you can answer that question, you can probably answer the administration.

Emily Murphy: Exactly. I don’t think that they’re looking to just get rid of all contractors. That’s not going to be the way that, especially with the reductions in force it is and the early the government is going to need very strong industry partners. But those industry partners have to be good partners in it. And they’re trying to figure out this is new leadership, don’t necessarily have a lot of experience contracting in the government. So they’re trying to understand the rules of engagement, what’s being purchased, how things can be better structured, what rules and regulations are driving costs, and where are the opportunities for savings?

Tom Temin:  And there’s some other issues that look a little puzzling, like the purchase card, $1 cap. What’s that all about?

Emily Murphy: So I think it’s, again, an effort to root out fraud and to make sure that the government is getting a good deal. And there was a fear that I think and I’m speculating on this, that the that purchase cards, there were so many purchase cards out there. Some were associated with vehicles because they’re the fleet cars, there are the travel cards. There were the purchase cards that were held by lower-level non-warranted employees, and they’re the purchase cards that are held by government 1102 contract specialists. So trying to understand where those are and also trying to figure out whether or not they’re a good deal for the government. Now, I’ve written about purchase cards when I wrote about micro purchase thresholds last year, and I think that there’s a lot to be lost if we discard the purchase cards. Last year, the government got over half $1 billion in rebates. I recently did some analysis that said that if we use the purchase card as a method of payment for all contracts, up to $1 million, not as a method of contracting it still have an underlying contract, but a method of payment could save an additional billion dollars in terms of rebates. Now, whether all those contracts should exist goes back to our first conversation but looking at the method of payment and saving the $70 in transaction fees, that to me is a good deal. But it’s got to be something that the current leadership is comfortable with and believes that they’ve got a handle on what’s being purchased and making sure that there’s no fraud in the system. And it’s also an opportunity for them to look at, are there better ways of administering this program? Are there alternative providers who could provide higher levels of rebates, better levels of transparency? What kind of data do they need? And so I think it’s going to be an important question that they’re going to have to answer. And they’ve got a 30 day pause on this dollar threshold. So it’s going to be interesting to see how that works itself out because the government does need those purchase cards.

Tom Temin: Yes. And if they use them in the way that you suggest for all the contracts, up to $1 million, it’s the equivalent of getting points on your personal card by buying a car with it, and not just a quarter milk.

Emily Murphy: Exactly. And if you think about the IT modernization that this administration is signaling that they want to do, those rebates could pay for a lot of that modernization.

Tom Temin: All right. And then the other thing you oversaw and probably pay attention to still at GSA, is the other side of the house, the Public Building Service, where I think something north of 60% of the people are being let go. They’re trying to wind down the leases and so forth throughout the nation. I wonder, are they letting go of the people too soon? I mean, get rid of the leases, then get rid of the people or? What’s your assessment?

Emily Murphy: I don’t know what the current data looks like, but I think that it’s going to be a delicate balance as to how you manage. I think the lead today is GSA’s actual return to office, or Monday was GSA as return to office date, so that they’re actually having their employees come back to the facilities at that point. A lot of other agencies are doing that. And at the same time, they’re talking about releasing a lot of that real estate. They’ve got 360 million square feet of office space, and they’re looking to go down to about 180 is what I’ve seen reported. I don’t think anyone should be surprised that they’re looking at scaling back this way, because if you look at last fall, Congress passed the Water Resources Development Act, and it had in it some pretty tough requirements that any building that hadn’t been at least 60% occupied in the last six months was supposed to be disposed of. So GSA has got a challenge to comply with that law. I’m going to be curious how they use the Public Buildings Reform Board as part of this process, as they start to go through and identify which buildings need to be disposed of, as they look at how they’re going to consolidate, as they look at. They’ve talked about getting rid of the old GSA headquarters building at 1800 F and co-locating with another agency or moving into other space. It’s going to be a big challenge to move that many people around to dispose of that much property, and at the same time be reducing the size of the workforce managing it. Which isn’t to say that once the Public Building Service is has 180 million square feet portfolio, that you wouldn’t need the same number of people. That stands to reason. But I am curious about how the timing and all of this is going to work.