GSA puts moratorium on IT leasing

Starting April 5, agencies temporarily will be unable to lease information technology products from contractors under the General Services Administration Federal Supply Service's (FSS) schedule.

A 60-day moratorium GSA issued March 29 affects millions of dollars worth of agency contracts, said Larry Allen, executive director of the Coalition for Government Procurement, a Washington, D.C., industry group.

Agencies leased more than $50 million in IT products in the first half of fiscal 2002 alone, he said.

The notice sent to FSS contractors states that the moratorium blocks new leasing orders, but contractors can continue to maintain equipment already installed at agencies.

It also requires that any new orders on existing lease blanket purchase agreements (BPAs) must first be submitted to a GSA contracting officer for review and approval. BPAs are standing contracts that allow agency officials to order from a pre-defined set of products or services.

However, the moratorium does not affect the many other governmentwide IT contracts that offer leasing, such as the National Institutes of Health's CIO-SP2i contract.

"This is a highly unusual move," Allen said of GSA's moratorium. "Leasing has been growing in popularity."

Leasing has been named by members of Congress as one of several areas of concern over possible harmful effects of procurement reform. But there are many examples of where leasing has helped agencies get technology for immediate needs, such as homeland security, when outright purchase could not be justified within tight budgets, Allen said.

"Agencies rely on these contracts," he said. "Pulling the leasing rug out from under them is going to harm the federal government's ability to do its job."

GSA officials could not be reached for comment.