Memo to GSA: Contracts with high access fees don’t fly with customers

The General Services Administration wants to increase its market share of federal agency acquisitions. That’s a good goal, especially since GSA is the federal government’s central acquisition agency.

But goals can’t turn into “musts” at the expense of experience and the reality of customer choices. It’s common sense to periodically re-evaluate goals and make sure that they’re still in the best interests of you and your customers.

Two recent GSA decisions to maintain programs with flagging sales and high access fees seem to indicate, however, that at least some at 18th and F streets feel that goals must be pursued no matter what. If true, they’re no longer “goals” but “obsessions.”

First up is GSA’s insistence on continuing its office supplies strategic sourcing initiative.  Currently operating under the third iteration of this program, the agency recently issued a request for proposals for its revised Schedule 75 office products contract that contains language for OS4.  The two acquisition methods are being combined for the first time in several years, an indication that sales for the weaker party can’t justify keeping it running on its own.

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What is the weaker acquisition method?

A quick look at the numbers shows this: In fiscal 2016, OS3 sales were $26 million, according to Federal Procurement Data System information. Sales for Schedule 75 were $69 million in 2016.  The difference continued in 2017 when OS3 sales were $25 million versus $54.6 million for Schedule 75.

GSA will argue, correctly, that the programs are not 100 percent the same. They undeniably are, however, in the same “class” and a key current GSA priority is identifying “best in class” contracts as part of its Category Management initiative. The goals here are to reduce duplication and encourage customer use of contracts that offer a full array of reasonably priced solutions and offer competitive access fees.

Based on these criteria, OS3 falls short, and OS4 will as well.

Both programs are smaller in scope than the competing Schedule 75. Both have 2 percent access fees, more than twice the fee for the GSA Schedule of 0.75 percent. Agency customers can find broader selection, negotiate deeper prices, and have a lower access fee when buying from the Schedule.

Another example is GSA’s Human Capital and Training Solutions (HCaTS) contract. This contract also charges a 2 percent access fee and shares many features with related GSA Schedule contracts.

One contract in the same class is GSA’s 738X Schedule for Human Capital Management and Administrative Support Services. Comparing FPDS sales information for these two contracts shows much the same thing as the office supply example. Sales in 2017 for HCaTS were $22.6 million, while sales for 738X where $141 million.

The customer choice couldn’t be clearer: Contracts with good selection and reasonable access fees are preferred over high fee, limited section vehicles.

GSA needs to recognize that it can meet its goal of increased market share by using existing contracts and without maintaining specialized, duplicative programs. Terminating low dollar programs and putting those resources into contracts that drive business and could use the extra help further strengthens its position.

Larry Allen is president of Allen Federal Business Partners, a consulting firm to federal contractors, an adjunct professor at George Washington University, and former head of the Coalition for Government Procurement.  His clients include one GSA Schedule 75 contractor with under $400,000 in reported 2017 sales.