The General Services Administration is culling the IT schedule herd. Over the last year, GSA has canceled the Schedule 70 contracts of about 1,000 vendors.
Kay Ely, GSA’s director of IT schedule programs in the Federal Acquisition Service, said removing 1,000 vendors who weren’t meeting the minimum annual sales requirement of $25,000 a year is saving the agency about $3.2 million a year in administrative costs.
“The cost savings has been a nice benefit because we certainly want to save money wherever we can. We’ve saved well over $3 million on administrative fees. It’s $3,200 a year to keep a contract even with no sales,” Ely said Tuesday after speaking at the National Contract Management Association’s 2014 World Congress conference in National Harbor, Maryland. “This is really about meeting our customer needs, meeting mission needs. If we have that many contracts that are not producing sales then somehow we are missing the mark.”
GSA first introduced the idea of culling the schedules in 2012. Steve Kempf, the former commissioner of GSA’s Federal Acquisition Service, said at the time that there were some cases where 60 percent of all vendors on some schedules made little or no sales.
The schedules remain one of the most popular ways to buy goods and services in the government. In 2013, GSA said schedules sales accounted for about $34.8 billion, down $5 billion from its high in 2010.
The continued popularity of the schedules, especially the IT schedule, is part of the reason GSA is trying to ensure agencies have access to vendors providing latest and greatest goods and services.
Skating to where the puck is going to be
Ely said the IT schedule still has about 5,000 vendors. But, she said she hopes those 5,000 or more are meeting customer needs in a more consistent and effective way.
“We talk a lot at GSA about skating where the puck is going to be and that’s really what we are trying to do — have those contracts in place so our customers have what they need down the road,” Ely said. “The other benefit and something for us to work through is Schedule 70, like the other schedules, is continuously open. So for every one we cancel, we have new that are coming on. We have 30 to 40 new offers a month.”
Ely said the culling of the schedules is part of an ongoing effort to improve how the IT schedules work.
Another recent example is GSA issued a request for information earlier this month asking vendors whether it should create a new special item number for cloud computing services.
“The benefits of adding the new Cloud SIN would be to clearly differentiate cloud services versus non-cloud IT products and services, provide industry partners the opportunity to market distinctive solutions and offerings on IT Schedule 70, enable granular level reporting on cloud sales which facilitates better decision making, and help our customers make smarter buys using quality data,” GSA wrote on its Interact blog site.
But the decision to cancel vendors’ schedule contracts for non-compliance with the sales quota is causing some concerns in industry.
Alan Chvotkin, senior vice president and general counsel for the Professional Services Council, said GSA is right to look at why some companies aren’t doing any sales on the schedule.
“For many companies, the GSA’s schedule programs isn’t only for sales through the schedules, but it’s used for other purposes. Without really investigating why, our members are concerned we will see companies dropped off the schedule when it’s really a vehicle into the federal marketplace, not necessarily sales against the schedules,” he said. “I think GSA is clearly aware of that and there has to be some balance.”
Chvotkin said GSA spent many years on a huge sales campaign, adding companies and getting more agencies to use the schedules. But now the federal environment is changing and agencies are buying goods and services differently.
“It may be a worthwhile effort to cull from the current Schedule 70, but at the same time that schedule program is going through a revision,” he said. “All of those evolutions need to be taken into account before you take a singular action such as dropping people from the current schedules.”
Other industry sources say GSA’s actions make sense and some are upset because the agency is finally doing what they said they’d do years ago.
Ely said GSA is listening to industry’s concerns and trying to keep the lines of communication open by giving those vendors who are at risk of losing their schedule contracts plenty of opportunity to meet the basic requirements.
“This year alone, I know we set aside about 500 contracts that we were going to look at that didn’t meet the sales criteria, and 200 we ended up canceling and 300 we ended up reassigning to the contracting officer because through our conversations with those vendors they were able to get sales,” Ely said. “We were able to get them marketing techniques. We actually gave them some tools our website they weren’t aware of.”
In fact, GSA’s training and education of these vendors has helped them increase their IT schedule sales to state and local markets by 38 percent last year.
Ely said the GSA’s Productive Contracts team communicates by email and phone with every schedule vendor at risk of having their contract canceled.
“When we first started this a couple of years ago, we talked about that’s part of the risk in doing something different and sometimes that’s what keeps people back,” she said. “But what we decided was how can we mitigate that risk, and it’s all about those conversations and planning for those ultimate discussions you may have to have with other stakeholders like folks on the Hill who may have an interest in a particular contractor.”
Ely said another benefit of this reduction effort is senior contracting officers have seen their workload of managing schedule contracts cut by 50 percent. Ely said that change has freed them up to work on more complex issues.