GSA’s office supply contract causes concern

The General Services Administration freezes Schedule 75 to new vendors shortly after awarding a new strategic sourcing contract for office supplies. Small busin...

By Jason Miller
Executive Editor
Federal News Radio

The blanket purchase agreement (BPA) for office supplies awarded to 15 companies this past June is expected to save the government more than $50 million a year. Already 16 agencies from the departments of Defense to Veterans Affairs to Treasury have committed to at least making the multiple award contract mandatory for consideration by its employees when buying these products.

As the BPA is just getting off the ground, the General Services Administration also suspended any new vendors coming on to Schedule 75, which is for office supplies. The suspension is for two years starting Oct. 1.

These two actions may have some unintended consequences for more than 485 vendors who currently have a schedule contract to provide office supplies to the government.

“The BPA is part of GSA’s effort to funnel some of this business or as much as possible to low cost providers and that is a way to limit choices a lot of agencies have in this marketplace,” said Mike Tucker, president of the George W. Allen Company, an office supply company, which didn’t get a spot on the BPA. “Right now we will feel the effects of the BPA in the short term. We are hearing from our customers that they are being told to try the BPA, and until they have problems they can take back to their supervisors, we will take that hit.”

Chris Bates, the president of the National Office Products Association (NOPA), added that GSA’s decision to temporarily suspend Schedule 75 caught his members by surprise.

“We have some significant concerns about scope of GSA’s decision and the potential impact on our members,” Bates said. “Our concerns deal with those current Schedule 75 contract holders and those whose contracts expire between now and the end of the moratorium. We also are asking for confirmation on how the freeze will effect dealer consortia arrangements. There are three or four of them that potentially could be impacted. There are more questions than answers at this point, and the short notice of the freeze is of concern.”

GSA and the Office of Federal Procurement Policy say the benefits outweigh the potential negatives.

Paul McDermott, the regional commissioner for the Northeast and Caribbean region of the General Services Administration’s Federal Acquisition Service, which runs the BPA, said agencies can save between 5 percent and 45 percent off the list prices under Schedule 75.

“As we try to accomplish savings across the government, we’ve got to do a better job than we do today in leveraging our buying power,” he said. “We are proud of this BPA. It certainly gives us increased leverage, and it resulted in more attractive pricing.”

Agencies spent $690 million on office supplies through Schedule 75 in 2009, and that was only a fraction of the $1.6 billion spent overall. GSA and OFPP hope to push more money through the BPA to take advantage of the volume discounts the BPA offers.

McDermott added that while some Schedule 75 small businesses may be impacted by the BPA, there was ample opportunity to bid on strategic sourcing vehicle.

“We had 75 offerors and made 15 awards and we believe that was healthy competition,” he said. “We wanted to keep it to a manageable number of BPA holders. And nothing prevents current schedule holders from reducing their prices to compete with those on the BPA. It’s up to them to decide their best approach.”

But with the strong encouragement from GSA and OFPP to use the BPA, Tucker and Bates say non-BPA holders are in a tough position, and new companies trying to get into the federal market will be shut out.

“When President Obama and the SBA say they support small businesses and here you have a schedule that has been around for a while and a lot of people, small businesses, competing every day who have gone to considerable expense of getting a schedule to do business and they now are shut out, that leaves us with a number of questions,” Bates said. “One big one is what will this happen to other schedules as well or just is this commodity group singled out?”

Bates said NOPA is meeting with GSA to try to get some of their concerns addressed.

McDermott said that small businesses are not being shut out. He said of the 500-plus Schedule 75 contract holders 50 percent did less than $100,000 in business in 2009, and 10 percent did no business at all last year.

He added that the BPA also likely will have on-ramps, or opportunities to add new companies, as needed.

This is the second time GSA has led a strategic sourcing effort around office supplies. It awarded a BPA to 13 companies in 2007 with an expectation that that agencies would spend about $400 million on it. Tucker said agencies spent only $30 million in almost three years.

“GSA and agencies are putting a much stronger push behind this,” Tucker said. “The administration wants them to cut spending by three percent a year, so a lot of agencies can see if they fall in line by using the BPA.”

McDermott said the first BPA didn’t find the success GSA had hoped so the agency is offering training, and requiring the 15 companies to offer the discounted prices when feds use their government credit card to buy office products.

“The primary reason for the suspension of Schedule 75 is we wanted to gather data and it will take two years to do a meaningful evaluation of both the BPA and schedule programs,” he said. “We want to evaluate the impact going forward, and we didn’t want companies to have to take on the cost to get and administer the schedule when most of the work is going to the BPA program.”

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