The GSA juggernaut

The General Services Administration's schedule program, for the moment at least, looks like an irresistible force.

For federal buyers, the schedule has become an IT purchasing default setting of sorts. "Different agencies have preferences for the different [governmentwide acquisition contract] vehicles they use," said James Kane, FSI's president and chief executive officer. "But every agency knows how to use GSA."

For vendors, a schedule contract — or at least access to one — is becoming a must-have item.

With that kind of clout, it's hard to imagine the schedule facing much in the way of immovable objects, yet there are a couple of challenges. First, GSA's vehicle trails others when it comes to being able to modify contracts, some observers say. That's an important consideration for agency buyers and vendors trying to keep up with the frantic pace of technology change.

Second, GSA's online efforts lack universal praise. A General Accounting

Office report released earlier this year recommended that GSA develop a comprehensive business strategy to define objectives for online market research and ordering.

That said, GSA officials are working to smooth contract changes and boost the sophistication of their GSA Advantage

e-commerce Web site. In addition, officials plan to reduce the industrial funding fee from 1 percent to 0.75 percent, which observers say will only add to the schedule's appeal.

"The reduction...will continue to make the program more competitive," said Alan Bechara, president and general manager of PC Mall Gov.

Gearing Up for Competition

GSA's competition comes from a bevy of multiple-award contracts and governmentwide acquisition contracts (GWACs). Many of those programs offer a GSA-like mix of products and services, while some seek to differentiate themselves by offering a specific focus. NASA's Scientific and Engineering Workstation Procurement (SEWP) III, for example, focuses on high-end computing, while the National Institutes of Health's Electronic Commodity Store (ECS) III bills itself as a vehicle for homeland security technology.

GWACs such as SEWP III and ECS III are noted for for facilitating speedy technology upgrades. The ability to update products on the fly is a key draw for customers. But on the GSA schedule, "it takes longer to make a modification than is practical sometimes," said Jack Littley, senior vice president of program and information services at GTSI Corp. He said vendors who want to add products to the schedule or change their pricing must go through an extensive approval process.

GSA officials have acknowledged

the issue. Neal Fox, assistant commissioner of GSA's Office of Commercial Acquisition, told a seminar audience earlier this year that he wanted to make it easier to update contracts, noting that the schedule modification process was too burdensome. Fox joined GSA last

year, after having run the Air Force's Commercial Information Technology-Product Area Directorate (now known as the Standard Systems Group Acquisitions

Division).

Littley said GSA has solicited ideas for improvement from industry leaders. The goal is to modify the process so vendors can automatically amend contracts if they have an approved markup rate on products, according to Littley.

This method "will allow you to get things on the contract very quickly," Littley said. "That's the big advantage some of those other contracts have had."

Littley praised Fox for listening to industry representatives and working to put best practices in place.

Kathy Conrad, a vice president of Jefferson Consulting Group LLC, said she has not found the existing process to be cumbersome, but added that it's important for agencies to make contracts as flexible as possible. Her firm assists clients with the government procurement process.

"Responsiveness on modifications, given the pace of change in the technology industry, is absolutely critical," she said. "As [buyers] evaluate which vehicles to run their business through, that is a significant factor."

At press time, there was no word on when GSA's revised modification process might be in place. A GSA spokeswoman said the agency is still in the planning stages.

Online Efforts

GSA is also trying to stand out in the online world at a time when nearly every contract shop has an e-commerce site. GSA is pushing its GSA Advantage site beyond the traditional online catalog fare. For example, officials are building agency-specific electronic storefronts, which capitalize on GSA Advantage's e-commerce infrastructure.

Two examples are the Defense Department's Virtual IT Marketplace and the Air Force's AF Advantage. VITM lets DOD customers shop for software under the department's Enterprise Software Initiative, which offers product discounts based on enterprise licensing arrangements.

Using VITM, customers can search for products (by name or part number, for example), view pricing across multiple GSA-based blanket purchase agreements and place orders. A recent search for part No. D75-00277 (Microsoft Corp.'s Biztalk Server) turned up four BPAs with prices ranging from $5,538.25 to $7,714.71.

The virtual store helps DOD users navigate through the numerous BPAs available, said Al Iagnemmo, director of the

E-business Division at GSA's Federal Supply Service. "That's the whole gist of VITM — to get BPA pricing available to the DOD community."

AF Advantage, meanwhile, is currently a pilot program at Wright-Patterson Air Force Base. It operates much the same way as VITM, offering GSA and BPA pricing, Iagnemmo said. The system also includes an

e-purchase log for purchases made outside the system — at a local office supply store, for example. Purchases made directly via AF Advantage don't have to be logged.

This draws customers to AF Advantage because it's easier for buyers to use, and Air Force officials like it because instead of people going off base and spending more than they need to, they stay within AF Advantage and get the cheaper GSA/BPA pricing.

Iagnemmo said officials plan to deploy AF Advantage at other major bases this fall. He said GSA will build virtual stores for other agencies as well, such as the Department of Veterans Affairs, which is working on specifications for a virtual store that VA hospitals and clinics can use.

Mary Haefner, project manager at the VA's National Acquisition Center, is developing the specifications for the VA's GSA Advantage storefront. Beyond capitalizing on the existing infrastructure, she cited the opportunity to learn from other agencies' initiatives as an advantage of working with GSA. She has looked at VITM and AF Advantage in particular.

"Someone else has done it already, and I know what will work," Haefner said. That knowledge will reduce the cost of creating the VA's virtual store, she added.

Fee Falling

The current round of schedule tweaking will continue into next year, when GSA lowers its industrial funding fee from 1 percent to 0.75 percent. Vendors pay the funding fee to maintain the program, but their costs are ultimately passed on to federal consumers. The reduced fee is scheduled to go into effect in January 2004.

"At less than 1 percent, our fee becomes truly trivial and gives GSA a major advantage over other vehicles where the fees are much higher," Fox said. "When you combine this low fee structure with the fact that all GSA prices are discountable, based on quantity buys and other factors, our customers are getting a great deal."

Industry executives generally agree that the lowered fee will help GSA. The reduction is "going to make [GSA] that much more competitive," Kane said.

Some schedule holders, however, would like to see GSA negotiate further fee reductions based on the size of a given transaction. Negotiable fees are featured

in such vehicles as the Commerce Department's Commerce Information Technology Solutions

program.

Despite the drawbacks, vendors and buyers appear to be drawn to GSA. Asynchrony Solutions, for example, has found the GSA schedule to be almost a prerequisite for expanding the company's business with federal agencies, said Bob Elfanbaum, vice president and co-founder of Asynchrony Solutions. The company's schedule presence helped it land an enterprise software deal with the Defense Information Systems Agency.

Kane, meanwhile, cited the universal acceptance of GSA schedule transactions among federal buyers. "It's a remarkably flexible vehicle," he said.

***

GSA Advantage: By the numbers

8,979 Federal Supply Service vendors

10,535 Contracts

75,000 Searches every business day (nearly 4 million searches on the last day of fiscal 2002)

230,543 Registered customers (more than 400 new customers register every day)

Source: General Services Administration, June 2003