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[ Market Watch ]
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GSA Schedules:
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by Andrew Mohr
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The federal government spent over $235 billion for commercial item goods and services in fiscal year 2003. Services comprised the lion’s share of the commercial item procurement budget at about $130 billion, with goods second at $85 billion and real estate at a steady $20 billion.
For more than 10 years, the federal government has bought more commercial item services than goods. Overall, the federal government spending on commercial items has tracked the overall economy rather well, and should increase to help combat terrorism.
GSA’s Federal Supply Service Multiple Award Schedule Contract program has grown in importance and stature as the federal government’s preeminent contract vehicle for buying commercial items. Just 10 years ago, the federal government placed orders worth $713 million with GSA Schedule contractors. In fiscal year 2003, that number increased to $25 billion. That’s quite an increase.
We expect that very large number to continue to grow even larger. For one, the federal procurement contracts work force has shrunk in recent years, making Schedule contracts an easy route to take for an agency’s overworked buyers.
Unlike open market orders or formally advertised contracts, orders more than $25,000 placed under a GSA Schedule contract aren’t required to be advertised in FedBizOps — and are much less vulnerable to protest. Also, GSA’s Schedule contract program now offers a much wider array of goods and services than ever before, so chances are if an agency needs a commercial item, it’s available on someone’s GSA Schedule contract.
And thanks to the cooperative purchasing provision of the E-Gov Act of 2002, the Group 70 Information Technology (IT) Schedule contract now allows states and local governments to place orders against GSA Schedule contracts. That’s 50 states, 3,139 counties, 19,365 incorporated municipalities, 30,386 minor subdivisions, 3,200 public housing authorities, 14,178 school districts, 1,625 public educational institutions, and 550 Indian tribal governments.
Taken together, the federal government on the one hand, and the state and local government market on the other, combine for more than a $450 billion market. While cooperative purchasing is limited to the Group 70 IT Schedule contract for now, there are many audio and video products that qualify for placement on that Schedule.
As previously noted, commercial item services are increasingly important as they related to the sale of goods. It’s less frequent that a vendor will sell standalone hardware to an activity, or merely need to install and repair equipment. Contractors now need to customize and enhance equipment, design and implement systems, interconnect equipment from other manufacturers, and provide software, security, networking capability, and system support. That is, vendors need to provide a total solution. Agencies would rather go to one or two vendors for their needs rather than four or five.
Since it’s not always easy for a vendor to offer all things to all agencies, GSA Schedule teaming arrangements have grown in importance. Teaming agreements allow two or more GSA Schedule contractors to offer goods and services to an agency customer.
The teaming agreement can either be a joint venture, which is basically a partnership or a prime contractor/subcontractor relationship. The goods and services offered to the customer must be on the GSA Schedule of at least one of the team members.
Then there’s GSA Schedule Blanket Purchase Agreements (BPA), which are equivalent to a mini-Schedule with an agency. A GSA Schedule contract BPA permits agency-wide procurements by its specified ordering activities.
So there you have it. GSA Schedule contracts are the primary acquisition vehicle. With rolling open seasons to get a Schedule contract, no maximum order limitation restricting the size of orders, no publication of contract opportunity, best value awards, and spot price reductions, GSA Schedules are where it’s at.
Andrew Mohr is a partner in the law firm of Cohen Mohr LLP and a professorial lecturer at American University in Washington, DC. He can be reached at (202) 342-2550, fax (202) 342-6147, or amohr@cohenmohr.com.
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