Scheduling Savings

Though the federal government's giant IT cooperative purchasing program is finally open to state and local governments, using it is proving harder than originally thought.

by / February 4, 2004
The General Services Administration (GSA) has opened its giant store of technology goodies to state and local government buyers. While many procurement officials have peered through the glass to see what's inside few have come in to make a purchase.

The "store," known as Schedule 70, provides a complete array of IT products and services. In 2002, federal agencies used Schedule 70 to contract for more than $13 billion in IT products and services -- a whopping 275 percent increase from 1998 when purchases totaled $4.8 billion, according to the GSA.

When President George W. Bush signed the E-Government Act of 2002, he authorized the GSA to offer its Schedule 70 contract to states and localities, giving them access to a list of nearly 3,500 vendors and nearly a half-million line items.

Most experts agree the change could transform IT procurement in the public sector. The National Association of State Procurement Officials (NASPO) participated in writing the rules so states could take better advantage of Schedule 70. But it could be some time before states reap any benefit from those advantages.

One problem, according to Denise Lea, NASPO president and purchasing director for the state of Louisiana, lies with existing state statutes, many of which either limit or forbid states from purchasing from Schedule 70.

"In Louisiana, we can use the GSA schedule only with state contractors," she explained. "We haven't been able to get the state Legislature to change that rule."

Another potential problem is price. "States are matching and beating GSA prices," said Vern Jones, chief procurement officer for Alaska and chairman of the Western States Contracting Alliance.

Schedule 70 became available to state and local governments on May 7, 2003, under an interim rule, which means comments are still coming into the GSA.

The GSA said it recorded $5.1 million in sales to state and local governments on Schedule 70 from May to September 2003, and that by mid-December, approximately 1,000 contractors out of 4,000 had signed the modifications allowing state and local governments to purchase products and services from the schedule.

Because the situation is so new, a number of officials believe it's too early to tell what sort of impact Schedule 70 will have on state and local IT purchasing.

"We haven't seen a surge in usage of GSA contracts, which is a function of their newness," Jones said. "I don't see a big ground shift yet toward the GSA schedule."

The GSA, however, has been pleased with the activity it has seen so far, according to Roger Waldron, director of the GSA's Acquisition Management Center.

"It's hard to judge its success yet because we don't know if state and local governments are going to use it," Waldron said.


Scheduling the Benefits
Cooperative purchasing from Schedule 70 would be commonplace by now if its authorizing legislation had been passed in 1998, when it was first proposed that state and locals join the federal government on cooperative IT purchasing.

But opposition from business groups forced Rep. Tom Davis, R-Va., who introduced the bill expanding Schedule 70, to back away from its original intent. In the meantime, the federal government steadily increased its spending on GSA contracts. In 2002, federal agencies contracted for $21 billion off GSA schedules for products and services, $13 billion of which went toward IT.

Now that state and local governments can buy from Schedule 70, purchasing officials point to several benefits when using the GSA's cooperative purchasing agreement. State and local governments can take advantage of the federal government's volume discounts offered by IT contractors.

States and localities can also collaborate with federal agencies more easily, which can impact the setting of standards for the public sector. It also can help support local vendors and small businesses. More than 80 percent of the contractors on Schedule 70 are small businesses, according to Waldron. "One-third of the purchasing dollars go to small firms," he said.

But many barriers must be resolved before Schedule 70 works smoothly for state and local governments, according to a report published in February 2003 by Input, a Virginia-based market research firm.

For instance, local governments find it easier to purchase from established statewide contracts, for legal and accounting reasons, which would have to be adjusted if they buy from federal schedules.

Legal jurisdiction is another problem. According to Input, the GSA hasn't said whether states will have jurisdiction over contract disputes or other legalities involved. That's important because states prefer to oversee projects in their own state.

But with the open schedule, reported Input, states can now compare prices from their current statewide contract, the federal schedule and independent contracting, which could result in better contract prices.

The GSA's Waldron also noted that state and local governments must expect a learning curve as they begin using Schedule 70. "The challenge is using it effectively," he said.

The GSA offers training assistance, such as videos and online help, to help state and local governments understand how the schedule can benefit them and what changes they may need to make to their procurement process to take advantage of the program.

Once states and localities start using it, Waldron believes they will find Schedule 70 to be a "streamlined acquisition tool with a very flexible process to follow."

Federal agencies already using Schedule 70, he said, have found it cuts a lot of lead-time on procurement and offers them great access to the marketplace.
Tod Newcombe Features Editor