General Services Administration officials received a grim message in a January executive briefing that described the agency’s weak financial condition. They were warned that failing to take immediate action could cause permanent damage to Federal Technology Service programs and GSA overall.

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Internal financial information, which GSA officials would not release but Federal Computer Week obtained, shows that as of January, fiscal 2006 revenue for the agency’s Information Technology Fund was 26.7 percent — or $597.5 million — less than the agency’s forecasted numbers. The agency’s regional offices all missed projections for several reasons, including lower business volume than expected and the defection of important customers to other procurement means, according to a January 2006 GSA report, “Information and Technology Fund and Professional Services Variance Report.”

The figures show a continuing trend that began with a 16 percent decline in IT Solutions business in fiscal 2005 after five years of rapid growth, according to GSA documents.

Numbers reveal regional weaknesses
The IT Fund fuels FTS’ telecommunications and IT procurement services. According to the report, all 11 GSA regions were underperforming on regional IT, nine of them were bringing in less than expected in professional services business, and five of them failed to meet planned business goals in regional telecom services.

National IT services, not divided into regions, also failed to meet revenue expectations, but some individual programs fared better than expected, the report states.

The regions brought in a total of $1.6 billion in IT Fund business as of January compared with a goal of $2.2 billion.

In the Regional IT Solutions Program, revenue for the Heartland Region, which includes Iowa, Kansas, Missouri and Nebraska, was $103.7 million less than expected, the largest regional shortcoming in dollars, according to the report. Region 8, which contains the Rocky Mountain states, had a smaller monetary shortfall at $71.9 million less than planned, but it had the largest percentage drop of the regions at 85.6 percent.

For many of the regions, the cause of revenue problems was a loss of business among the Defense Department and military services. For example, revenue for the Northeast and Caribbean Region, which covers New Jersey, New York, Puerto Rico, the Virgin Islands and Europe, fell $30.9 million — or 53.2 percent — short of its goal because it lost an Army program at Fort Monmouth, N.J., as a customer.