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[ Market Watch ]
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GSA Schedule growth slows down
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by Andrew Mohr, Esq. and C. Kelly Kroll, Esq.
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It seems every year or so when we write a GSA Schedule Update that we start off by gleefully reporting on the skyrocketing GSA Schedule sales before delving into the mundane administrative news. After all, money makes the world go round. This year is slightly different.
Although GSA Schedule sales overall increased by more than a billion bucks last year, the increase was less than explosive. In fact, for the first time in 15 years, GSA Schedule sales actually declined under the Group 70, Information Technology Schedule -- GSA's flagship Schedule representing almost half of all GSA Schedule sales. Reported sales under the GSA IT Schedule dropped from $16.8 billion in Fiscal Year 2004 (FY04) to $16.5 billion in FY05.
And it's not just the IT Schedule that has seen fewer sales. Among other Schedules, sales have also dropped under the Group 58 I, Audio/Video GSA Schedule contract. While in FY04, sales under the Audio/Video GSA Schedule came in at almost $209 million, in FY05 the number dropped to just under $201 million -- an almost four percent decrease in sales.
These dips might seem small, but in the past GSA Schedule sales have grown by leaps and bounds, often averaging a 15 percent increase from year to year. In FY92 reported GSA Schedule sales came in around the $4 billion mark. In FY04 that figure had blasted to just over $32.3 billion.
Each year GSA aggressively added more and more types of commercial products and services to its offerings, making GSA Schedules the premier contracting vehicle in government procurement. GSA continued to streamline the Schedule program to make procurement easier for both its customers and the contractors.
And the hard work paid off. GSA was king and every contractor wanted a Schedule. A great majority of clients who came through our doors did so because a contracting officer had told them they needed a Schedule before they could do business with that agency. Now, however, while sales are expected to continue to increase, it's evident that the growth rate is tapering off and the boom days may be over. Ouch -- that hurt to even say it.
While there are many causes of this recent decline, it's clear that GSA must be proactive if Schedules are to maintain their premier status. How GSA will respond to the recent turn of events should be interesting to see and more than likely the subject of future articles.
For example, a GSA official recently told us that GSA is contemplating the reduction of the Industrial Funding Fee from .75 percent to .5 percent. Instead of speculating on the future, however, let's look back on the past year and summarizes what GSA has been doing.
State and local procurement is up. One bright spot for the IT Schedule this year has been the continued increase in GSA Sales to state and local governments under the Cooperative Purchasing program. In FY05 reported sales were at almost $192 million dollars. This was an increase of approximately 150 percent from FY04.
While the Cooperative Purchasing program continues to apply only to purchases off the IT Schedule or under IT-related SINs on the Corporate Schedule, increased use by state and local governments may pave the way for adding the Cooperative Purchasing program to additional Schedules, such as the AV Schedule. Apart from the Cooperative Purchasing program, we still see GSA Schedules as the unspoken, driving force behind a lot of state government, non-Schedule business.
Contract compliance is way up. As we have reported in the past, GSA continues to plow ahead with its Get It Right program regardless of the impact. GSA's contracting officers continue to take an inordinate amount of time to approve normal run-of-the mill modifications in their efforts to Get It Right (see Government Video, November 2005).
GSA has increased the number of "contractor assistance" visits it pays to its contractors ("I'm from GSA, I'm here to help you"), so now almost every vendor can be assured that it will receive at least one visit from GSA. The scope of these audits has also increased to include not only the payment of the Industrial Funding Fee, but also Small Business Subcontract Reporting, Trade Agreements Act compliance, and "outside the scope" issues (GSA checking to make sure you aren't selling anything off Schedule that isn't authorized to be there). GSA is also contemplating the resurrection of post-award audits to ensure that contractors are complying with their obligations under the Price Reductions clause -- a practice that, practically speaking, that has been shelved for many years.
New registration requirements. New requirements added to the GSA Schedule program and federal contracting overall include the obligation to register with the Central Contractor Registration database and the Online Representation and Certification Application Web site. While it sounds easy enough, contractors must diligently keep both profiles up to date and current. An out-of-date address or mistyped Tax Identification Number in CCR can hold up contract payment or even contract award.
A word of caution is also necessary with respect to ORCA. While the representations and certifications requested here would typically pertain in most procurement scenarios, unless a contractor is 100 pecent sure of what they will be supplying or developing under any future procurement, it's best to keep in mind that not all the representations and certifications will necessarily apply. ORCA gives contractors the option to supply specific information to the contracting agency for a specific procurement, and whenever possible a contractor should opt to do so.
New offices, new people. Did you know that several of GSA's offices in Arlington, VA, moved? Apparently, in mid-March the boxes were packed, the lamps bubble-wrapped, and GSA moved a few blocks down the road. The new address is Crystal Park #4, Arlington, VA. The IT Acquisition Center is located in Suite 606, and its new phone number is (703) 605-2700.
Also, the Federal Supply Service will soon be merging with the Federal Technology Service. The two branches will be known as the Federal Acquisition Service, although the merger has no practical effect on the GSA Schedule program.
There are also many new faces popping up all over GSA. We have had few clients who have had no less than four different contracting officers in the span of the past year. As with the Get It Right program, this has significantly affected the time in which it can take to get a modification approved. A simple Name Change has been known to take more than six months; a Novation Agreement almost a year.
The worst part, however, is probably the disconnect between the contractor and GSA. GSA used to often trumpet the fact that it worked closely along side its contractors -- a partnership so to speak.
Today, a contractor is lucky if they know the name of their contracting officer. By the way, the best way to do this is to look it up on Schedules e-Library. Look your contract up today and see what it says. The good news here is that a hiring freeze recently went into effect, so the most recent batch of contracting officers might be around for a while.
Small business subcontract reporting. GSA has moved its online small business subcontracting report system from the Vendor Support Center. Going forward, large business contractors are required to register and report their subcontracting goals online through the electronic Subcontracting Reporting System (eSRS).
The days of the Standard Forms 294 and 295 are gone, however, the information requested online is substantially the same as that requested on these forms. GSA is also reaching out to its large business contractors and making sure that they are filing on time. If you are a large contractor and haven't been contacted yet, you will be.
Mass modifications. GSA continues to update and modify most GSA Schedule contracts through the Vendor Support Center. Contractors are normally sent an e-mail notification regarding the updates, but failure to receive the notification seems to frequently occur, so a contractor is well-advised to check the Vendor Support Center Web site every now and then for any updates. Failure to accept the modifications in a timely fashion can result in contract termination.
As always, the GSA Schedule program continues to evolve, and for the most part improve. The next year should be very interesting. We'll keep you posted.
Andrew Mohr is a partner in the law firm of Cohen Mohr LLP and a Professorial Lecturer at American University in Washington, DC, who specializes in government and commercial contracts, including GSA schedules. C. Kelly Kroll is an associate at Cohen Mohr with extensive experience in GSA Schedule contract proposal preparation, negotiation, and administration. Contact them at (202) 342-2550, fax (202) 342-6147, or at www.cohenmohr.com.
MORE INFO
eSRS www.esrs.gov
Vendor Support Center http://vsc.gsa.gov
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