After more than a year, Canon is back on GSA Schedule

The General Services Administration awarded a schedule contract to Canon USA more than a year after the company dropped its pact after GSA's inspector general questioned whether it was giving the government its best prices on products.

The GSA Federal Acquisition Service announced on Thursday that it awarded the manufacturer of printers, copiers, scanners and other office equipment a multiple award schedule contract worth $110 million over five years.

In November 2007, Canon chose not to renew its Schedule contract after an audit from GSA's inspector general resulted in what the vendor called "unreasonable demands." The company joined Sun Microsystems Inc., maker of computer components and software, in dropping its GSA contracts. Sun canceled its contract in September 2007 amid an inspector general investigation into the company's pricing of information technology products and services.

Canon's new GSA contract represents an estimated savings of nearly $95 million over its previous GSA Schedule contract, which expired Oct. 31, 2007.

"When the discounts were estimated last time, they were not as favorable," said Robert Lesino, a GSA spokesman. According to rules for multiple award schedules, contractors must offer government their lowest prices.

"Canon overall, improved its offer by lowering its price and taking steps to satisfy the concerns" the IG presented, said Larry Allen, president of the Coalition for Government Procurement. "[The award] will benefit not just Canon, but contract users by restoring government's ability to take advantage of the suite of offerings and better enabling Canon to serve its installed base with more competitive pricing."

Some government procurement specialists said the award reflects GSA's effort to ensure a fair deal for government and vendors in schedule contracts after more than a year of tension between GSA and some vendors over pricing. In addition to Canon and Sun, EMC Corp., which develops software and systems for information management and storage, chose not to renew its contract when its contract expired on June 30, 2007.

"I think [the contract award to Canon] illustrates that GSA is applying new efforts to achieve constructive solutions to contracting issues," says Ray Bjorklund, senior vice president and chief knowledge officer for Federal Sources Inc., a marketing research firm in McLean, Va. "That's one of the key roles of each party at the table -- to come up with the best allocation of risk, terms and conditions that meet the requirements of the government within fiscal and regulatory constraints."

But a procurement expert familiar with the specifics of the contract who asked not to be identified said GSA's inspector general was not pleased by the award to Canon and while the contracting officer received support from some managers in FAS, other agency executives were skeptical of the deal.

The GSA contracting officer "wasn't going to go out on the limb and then find out it was sawed off behind her" because top agency officials, including the inspector general, disagreed with the award, the source said. "But there's tremendous ambivalence by those at the senior level of the agency who preferred that the issue be punted to the next administration."

Another source who asked not to be identified said GSA is making progress in managing the relationship between vendors and the inspector general, who is demanding pricing information. Top GSA managers are more involved in direct dialogue with the inspector general and negotiating solutions to audits, investigations and threats of Justice Department lawsuits, according to the source.

GSA's inspector general's office said it could not comment on the award to Canon, but "hopes the taxpayer gets a good deal."