GSA sked hits new high with PC buys

For the first time, agencies are more likely to buy desktop computers, workstations and servers using the General Services Administration's schedule contracts than from other multiple-award contracts or individual competitions.

Market research firm Input reported last week that agencies made 55 percent of their fiscal 2002 computer hardware purchases, about $3.4 billion, via GSA Schedule 70, which covers information technology products and services. The report tracked a steady rise in the use of the schedule, managed by GSA's Federal Supply Service. In 1998, the first year covered in Input's survey, agencies bought only 35 percent of their computer hardware from the schedule.

Input looked only at hardware purchases, said senior analyst Lauren Jones Shu, who conducted the survey. The survey only counted cases in which agencies bought the hardware themselves, not those in which integrators supplied it as part of a project.

Shu's findings show that federal agencies are increasing use of the schedules to cut the time and expense of buying hardware, she said. "It's easy to order online," she said. The schedule "reduces the time needed to get a solution up and running. Using traditional procurement methods, the average formal solicitation takes 268 days."

Neal Fox, assistant commissioner of GSA's Office of Acquisition, said that the schedules have a large chunk of the federal IT marketplace, and it is constantly growing. Although the overall IT market is much larger than the narrow segment Input examined, the growth the firm measured mirrors the general growth of use of the schedule contracts, he said. Agencies bought $21.3 billion worth of products and services through the schedules in 2002, up 28 percent from $16.6 billion in 2001, Fox said. GSA projects that schedule sales will top $26 billion this year.

The system is popular because agencies don't have to spend resources on conducting straightforward transactions, said Larry Allen, executive vice president of the Coalition for Government Procurement, a Washington, D.C., industry group.

"Agencies need to focus all of their resources on their core missions," he said. "Having the GSA schedules [available] means they are free to do that. Not every customer uses the schedules program correctly every time, but when the rules are followed — and they are in the great majority of cases — the government gets very good competition, and they get good values."

The attitude in government toward the schedule contracts has been changing during the past several years, said Hope Lane, director of GSA schedule services at Aronson and Co., a Rockville, Md., consulting firm. There are some agencies that have resisted using them, she said, largely because of a small but core number of officials who resist new ideas.

"It's not usually agencywide," she said. "But we're seeing more and more of that go away. As soon as one person retires and a new person comes in with awareness of the schedules system, they start using it."

The schedule contracts' popularity increases the importance for businesses wanting to work with the government to appear on the list.

"I'm not sure you can be successful without being on the schedule," said Richard April, senior director of marketing at Cyber-Ark Software Ltd., a developer of security products. "It makes it easy for government procurement guys to get hold of our technology." For many small companies, they must join larger partners and piggyback on their schedule listings, which is the path Cyber-Ark officials have chosen.

Companies also can't regard the competition they go through to get their offerings listed at a discounted price as the end of competition, said Mary Karen Wills, a partner at Beers & Cutler LLC, a Washington, D.C., consulting firm.

Agencies should solicit multiple proposals from schedule holders, but sometimes they hold mini-competitions to get even lower prices, she said. Agencies are discovering that they have more leverage and more incentive to seek better values than they did in a stronger commercial market.

"They're looking for even deeper discounts," Wills said.

"The schedules are the broadest marketplace available to a purchaser," said Alan Chvotkin, senior vice president and counsel at the Professional Services Council. "There's an advantage to incumbency in this marketplace. There's an advantage to familiarity with the government marketplace. Those who are new to the scene and trying to break in may find it frustrating."