GA 1.13:GGD-93-44

United States General Accounting Office

Report to the Chairman, Committee on
Government Operations, House of
Representatives

Results in Brief

Accounting Office
Washington, D.C. 20548

General Government Division

B-229245

January 29, 1993

The Honorable John Conyers, Jr.

Chairman, Committee on Government Operations

House of Representatives

Dear Mr. Chairman:

This report responds to your request that we follow up on our 1989 report concerning the refusal of certain utility firms to enter into written contracts with the General Services Administration (GSA)1 and to submit subcontracting plans for the maximum practicable use of small and small disadvantaged businesses.2 You asked us to provide updated information on the number of utilities that supply service to GSA, how many utilities had entered into contracts with GSA, and how many had submitted subcontracting plans.

Our objectives, scope, and methodology are described in appendix I, and the details of our analysis are presented in appendix II.

The number of utilities providing service to GSA, about 1,000, has not
changed since 1989. GSA's policy is to purchase utility services by written
contract when the annual cost of such services is estimated to exceed
$25,000.

According to GSA, 365 of the 1,000 utilities meet this criterion. Most of the remaining utilities—including many municipalities-provide low-valued water/sewerage services and do not meet the written contract criteria.

GSA has increased the number of utilities under contract. We reported in 1989 that GSA had entered into 67 areawide written utility contracts, under which service is provided to several agencies in a certain area. As of November 1992, GSA had increased this number to 82. In addition, as of

'Procurement: Public Utilities' Compliance with Subcontracting Plan Requirements (GAO/GGD-89-32, January 26, 1989).

2Federal Acquisition Regulation (FAR) defines a small business as a concern, including its affiliates, that is independently owned and operated; not dominant in the field of operation in which it is bidding on government contracts; and qualified as a small business under the criteria and size standards set by the Small Business Administration (SBA). According to the Small Business Act, as amended, contractors are to presume that socially and economically disadvantaged individuals include Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and other minorities, or any other individual found to be disadvantaged by the SBA.