How GSA Could Have Saved Taxpayers 75%

on April 24, 2012 at 8:00 AM

The scandal that’s pushed GSA into the ethical spotlight could have been easily avoided if the agency’s officials had followed their own rules and cost-saving measures to plan the event that’s now led to a criminal probe, ruined reputations and lost taxpayer trust.

In fact, according to industry experts, if they had used GSA contracting vehicles, new technology and negotiating power to achieve sharp discounts, the event for 300 attendees at a four-star Las Vegas hotel likely would have cost less than a quarter of the $823,000 GSA spent.

There is no way I can even get to half of what GSA spent here. Even being overly generous, I dont know how you get to much over $200,000.” – Larry Allen

“I added up all of the costs I know about from running similar events for a similar amount of people for 20 years,” said Larry Allen, president of Allen Federal Business Contractors which advises businesses on getting government contracts. “There is no way I can even get to half of what GSA spent here. Even being overly generous, I don’t know how you get to much over $200,000. That’s why there is so much outrage. You can put on a good event at a nice, non-luxury hotel for 75% less than what GSA spent.”

Beyond the obvious unnecessary expenses such as a clown and private parties, a series of four congressional hearings last week raised many questions about the GSA planners’ decision to spend top dollar on high-end versions of necessary services for the $823,000 2010, Las Vegas event, including:

  • $59,000 for an audio-visual firm
  • $12,500 commission to an outside event planner
  • $75,000 to a company that led GSA staff members on a bike-building event
  • $95 per night per diem rate with the M Resort and Casino that included posh suites and an agreement to spend $41,000 in additional catering charges to get the government room rate
  • $136,504 on six pre-planning trips to Las Vegas

Allen said: “They could have avoided a lot of the issues now under the microscope if they had used their own schedule, hadn’t put family members up at the hotel at the government rate and had negotiated lower prices at Las Vegas’s many hotels.”

Peg Hosky, president of Hosky Communications, a government relations company, said that while Las Vegas isn’t the best place for government conference deals, GSA could have easily gotten better deals.

“The GSA planners didn’t have to pick Vegas but if they did, there are so many rooms available that they could have gotten a far better deal,” she said. “When you are looking to purchase 300 rooms you are a large buyer. You should be able to negotiate good rates for what you need from any hotel.”

Here’s how GSA could have saved taxpayers 75%:

  • Opted far cheaper arrangements in less glitzy cities such as Kansas City, Dallas, Tampa or San Diego and avoided the excesses of the casino capital.
  • Searched – a commercial site that helps government planners find the cheapest hotel rates and a quick way to negotiate steep discounts for government per diem rates. They also could have directly contacted government sales directors at any major hotel such as Hyatt and Marriott and negotiated a deal.
  • Used the GSA schedules to negotiate lower costs for audio and video services via a small business set aside as required for every government agency and looked for many other services including catering and team building activities. The schedules include private vendors offering a wide array of goods and services to the government at competitive prices. Hosky estimated the audio visual expenses for a conference for 300
    people could range from $20,000-$27,000 if the GSA planners had tapped into the many offerings on the GSA schedules.
  • Arranged a tele- or video conference call or just one trip at the most for preplanning. Offsite conferences may soon be events of the past in light of the Las Vegas debacle and the drive for federal agencies to save money. Experienced conference planners typically negotiate lower rates.

No one has been able to explain for certain why GSA planners did not do a better job of seeking out lower-priced services, although the Justice Department is investigating possible kickbacks and bribery.

Answers will likely come from a probe into the activities of Jeffrey Neely, the career senior executive who hosted the conference. DOJ will examine alleged contracting improprieties and other violations in connection with the conference. Neely, now on administrative leave but still collecting his $179,000 annual salary, and his staff approved numerous contracts that were not competitively bid, as federal rules require, officials said. Neely’s wife was given a government hotel rate at the conference. It could take DOJ lawyers months to sort out this spending spree and bring evidence before a grand jury.

Allen said he could think of a couple reasons why GSA planners didn’t use the GSA schedules to get the best deal.

“One, they may simply have not known you can get these things through the schedule,” he said. “The second is that GSA’s Public Building Service division (which ran the conference) has always been reluctant to use the Scheduled program. They feel that you don’t get good values from it. Historically, there has been an anti-schedules bias in PBS. Many in PBS view the program as a poor stepchild in GSA. That attitude could have really cost them here.”

As for what’s next for GSA and government conference planning, Allen predicts: “Agencies will seek more authority to do their own real estate deals and not pay GSA fees,” he said. “GSA will have to re-justify itself to its customers, real estate or otherwise.”

Please see additional coverage of the GSA spending scandal:

GSA Case Catapulted To DOJ

GSA Hearing Reveals Bribery Investigation

GSA Officials Created Made-Up Awards

Another GSA Official On Leave

GSA Inspector General’s Report

GSA Chief Martha Johnson Resigns