Cooperative buying overdue

For years, states and localities have been pushing to take advantage of the cost savings of purchasing goods and services through the General Services Administration's multiple-award schedule contract program. As of late last month, it appears they may get their wish.

Last month, GSA issued a proposed rule implementing the E-Government Act of 2002. The rule would, among other things, authorize state and local governments to purchase goods and services under GSA Schedule 70 — the information technology schedule. Considering that the state and local IT marketplace's annual value is estimated to be in the neighborhood of $40 billion (not a bad neighborhood by any standard), this change could dramatically expand the potential customer base for IT schedule contractors.

The proposed rule incorporates a number of creative provisions designed to meet the E-Government Act's requirements without running afoul of other federal laws.

The most notable rule automatically transforms the purchase order between the vendor and the buyer into a new contract -to which the United States is not a party — every time the vendor voluntarily accepts an order from a state or locality. This new contract incorporates all the schedule contract's terms except the dispute clause, among a few others.

Additional clauses cannot be added to the new contract or to any purchase order under the new contract — it's either GSA's way or the proverbial highway.

This prohibition, however, could create a significant obstacle for states that have laws requiring that certain clauses, such as nondiscrimination clauses or rules that apply to subcontracting with local vendors, be incorporated into all state contracts. Presumably, in such situations, procurement officials would have to choose between finding a way around the state law or forgoing the GSA schedule as a viable procurement vehicle.

Another creative aspect of the proposed rule is the way it handles disputes. Disputes between a purchaser and a vendor will be resolved by whatever federal or state court has jurisdiction over the parties, "using principles of federal procurement law...." Move over, GSA Board of Contract Appeals, here comes the federal procurement experts of Jefferson Parish, La., Judicial District Court — and the hundreds of other state and local courts that now may be called upon to interpret the Federal Acquisition Regulation and GSA regulations.

In the end, with only a little tweaking, the proposed rule likely will become final. The adoption of cooperative purchasing is long overdue. It is good policy to permit states and localities to take advantage of the federal government's negotiating power, and it is likewise good policy to provide contractors access to the massive state and local IT marketplace without requiring them to submit to 50 procurement regimes.

Aronie is an attorney with Fried, Frank, Harris, Shriver & Jacobson in Washington, D.C., and co-author of "Multiple Award Schedule Contracting." Aronie specializes in the federal procurement process. He can be reached at (202) 639-7336.