Electronic Procurement:

Business Strategy Needed for GSA's Advantage System

GAO-03-328: Published: Feb 19, 2003. Publicly Released: Mar 21, 2003.

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The Congress has been seeking to increase federal agency purchases of equipment and services on line. The General Services Administration's (GSA) Advantage Internet-based ordering system is meant for conducting market research and ordering all types of products and services on line. About $84 million has already been invested in this endeavor. GAO was asked to assess how effectively GSA has managed this investment.

GSA Advantage has had only limited success as an on-line market research and ordering tool. Market research has been limited primarily to off-the-shelf office products, and sales through Advantage have never exceeded one-half of 1 percent of overall schedule sales. Because of initial design limitations, Advantage has not been effective in acquiring complex products and services, particularly information technology services that make up most of the growth in schedule sales. Recent enhancements may facilitate use of the system for buying complex services, but vendor participation has not been strong. For example, for almost half the requests for quotes, agencies received no responses from vendors. Advantage does not contain all schedule products and services, as required, and some schedule vendors complain about the cost and complexity involved in participating. While GSA has modified the Advantage system to provide better and more information on products and services, the system is unlikely to succeed without a business strategy. To date, GSA has not yet answered basic questions surrounding Advantage, including (1) if it is technically feasible to make purchases of all products and services on line given the range of activities involved with making more complex acquisitions, (2) if so, whether Advantage is the right system to do this, and (3) if not, whether Advantage could be used for smaller, simpler purchases and as an information source for making larger, more complicated acquisitions. Moreover, GSA has not thoroughly analyzed other alternatives to Advantage or developed effective measures to assess return on investment and user satisfaction. A business strategy would require GSA to not only reexamine its objectives for on-line purchasing and various solutions, but also develop measures appropriate for gauging success. As such, it would help GSA assess whether continued investment in Advantage is worthwhile and make modifications to the system that will substantially enhance its performance.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: GSA concurred with GAO's report recommendation and recognized that it was time to perform a rigorous analysis that will document the business case for an on-line market research and ordering system such as the Advantage system. GSA recognized that the lack of a documented business strategy has led to uncertainty about what GSA Advantage is and does and how success is demonstrated. To that end, GSA's Federal Supply Service (FSS) completed a business case (i.e., strategy) analysis in December 2004 to determine the role GSA Advantage should play with respect to the acquisition process. GSA recognized that the success or failure of an organization's technology projects often is based on its ability to tie technology enhancements to business needs and to adequately involve stakeholders in the capabilities and design phases of the system. To gather information for the formulation of the business strategy, FSS conducted more than 100 interviews with customers, vendors, and other stakeholders. FSS used the information gathered to identify key drivers that influence the FSS on-line business environment, identify alternative approaches (i.e., business strategies), define a set of criteria that would distinguish the alternatives, rank the alternatives, and recommend a solution. The December 2004 business strategy analysis articulated four alternatives to the evolution of GSA Advantage and described the business considerations for each approach. Consistent with GAO's recommendation, for each alternative, GSA assessed objectives for the on-line GSA Advantage system, desired system capabilities, and the dollar investment (resources) to implement the system. In January 2005, based on this alternative business case analysis, the agency selected the GSA Advantage business strategy that would best meet the needs of the FSS and its customers. Specifically, the new business strategy is to significantly enhance GSA Advantage's technical capabilities so that the system (1) provides comprehensive support to customers across the 12-step federal acquisition process, from "formulate requirements" to "close out order", and (2) creates a more robust e-commerce environment for government buyers and FSS suppliers. Under the new strategy, GSA Advantage will serve as portal or broker between buyers and suppliers and will provide customers web-based, automated capability to formulate acquisition requirements for goods and services and develop statements of work, evaluation criteria, and requests for proposals. Although GSA estimates a $124 million investment cost to implement the more technically enhanced GSA Advantage system, the agency estimates substantial monetary benefits to accrue. Specifically, GSA projects the benefits of the new Advantage business strategy to total over $1.5 billion. The monetary benefits will be derived (1) from savings from each electronic transaction processed through GSA Advantage; (2) from spend analyses; (3) from the use of templates, wizards, and a searchable procurement data repository; and )4) from competitive pricing. Finally, consistent with GAO's recommendation, GSA's new business strategy calls for reviewing and as appropriate adding new performance measures (metrics) with which to track the results and outcomes of a significantly technically enhanced GSA Advantage system. Proposed performance measures include (1) electronic transaction processing savings, (2) competitive pricing savings, (3) number of electronic postings, and (4) customer satisfaction.

    Recommendation: The Administrator of General Services should develop a comprehensive business strategy that identifies GSA's objectives for an on-line market research and ordering system, the desired capabilities of that system, the resources required to implement the system, and measures to track performance.

    Agency Affected: General Services Administration

  2. Status: Closed - Implemented

    Comments: GSA concurred with GAO's report recommendation and recognized that it was time to perform a rigorous analysis that will document the business case for an on-line market research and ordering system such as the Advantage system. In response in January 2005--after completing a comprehensive analysis of four alternative business strategies for revamping GSA Advantage--GSA determined which of the four options will be implemented to develop the most appropriate GSA Advantage system for achieving its objectives. Specifically, the agency has determined that GSA Advantage will be revamped to include significantly enhanced technical capabilities for a full-range of e-commerce functions between agency buyers and FSS suppliers. GSA plans to implement a range of technical enhancements in the short term (many in less than one year); near term (one to three years); and long term (more than three years).

    Recommendation: After developing the business strategy, GSA should determine whether Advantage is the most appropriate system for achieving its objectives.

    Agency Affected: General Services Administration

 

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