The General Services Administration is leaving dozens of vendors under Schedule 75 for offices supplies in the cold with the news that it doesn’t plan on accepting new offers or renewing current schedule holders’ contracts for at least another nine months, and probably more like 12 months.
Large and small companies alike are facing the loss of their schedule contracts as many are coming to the end of their evergreen 20-year contract. And some, such as 3M, will be without a spot on schedule, which brought in $518 million in sales in fiscal 2015, altogether for several years to come.
3M saw its Schedule 75 contract expired Feb. 28. While large business has received almost no sales through the schedule over the last few years, it’s an example of the increasingly shrinking industrial base agencies have to choose from.
On the other hand, the largest small-business vendor under Schedule 75, ABM Federal Sales — which brought in $311 million in revenue from sales under Schedule 75 since it started federal business — saw its contract expire in April. ABM holds a spot on the Office Supplies strategic sourcing contract, known as OS3, so it’s not cut out of the market altogether.
In all, GSA’s multiple award schedule portal shows nine companies had expired contracts under Schedule 75 in 2015 with another 11 are scheduled to end in 2016, five more in 2017 and eight more in 2018.
“There is a concern that if it takes GSA another year or two to open up Schedule 75, it’s going to take businesses off the schedule, especially if they can’t reapply,” said Michelle Hermelee, president BH Sky Associates LLC, a consultancy that helps companies manage their GSA schedule contracts. “I suggest to our clients that they get involved, talk to the acquisition folks, voice their comments and concerns. Vendors also can be proactive and do some of the necessary requirements that are pretty common or standard across all schedules so they are ready when it does open, not starting from beginning.”
But it’s more than sheer numbers — the delay in reopening the schedule is impacting many vendors who have been doing business with agencies for decades.
“There is a lot of frustration about Schedule 75, especially among small businesses,” Hermelee said. “I think they are feeling deflated, especially those that didn’t get on OS3 or now see Schedule 75 isn’t reopening. It seems like they are looking at other options with so many roadblocks to do business on the schedules program.”
The fact that businesses see so many roadblocks with Schedule 75 in particular was evident at the recent industry day GSA held to get feedback on the future of the contract.
To completely transform the Schedule with revisions to special item numbers, pricing, solicitation format and language.
A hybrid of options one and two, with moderate revisions to the existing Schedule 75.
“A clear majority of those responding to the survey, 45.7 percent, picked the third option as making the most sense for the future of Schedule 75,” said a GSA spokeswoman in answering email questions from Federal News Radio. “This market research is essential as we put together a final strategy for the reopening of Schedule 75. This feedback will also be extremely useful as we consider any future changes in the Schedule. Generally speaking, the next steps include analyzing all the feedback we’ve received from Industry and then forming our strategy for reopening Schedule 75. Once that’s decided and approved by GSA leadership and OMB, we’ll announce our final strategy for the reopening of Schedule 75. We hope to have a final decision before the end of this fiscal year.”
But according to the slides presented at the industry day and obtained by Federal News Radio, almost as many respondents, 41.3 percent, chose option one, reopening the schedule with no changes.
“It is disappointing to see that Schedule 75 will remain closed for the foreseeable future.” said Roger Waldron, president of the Coalition for Government Procurement. “GSA should immediately reopen Schedule 75 to ensure customer agencies enjoy the benefit of a full commercial product set and competitive market pricing for office supplies. ”
Hermelee and others said the attendance at the industry was surprisingly small, less than 100 vendors.
She also said the questions from the vendors were much lighter than expected, meaning either everyone understood what GSA was proposing or everyone was frustrated with what GSA was proposing.
“I thought GSA did a good job. There was a lot of the leadership there and they gave a good presentation and answered industry questions,” she said. “They emphasized the back-and-forth dialogue and the need to hear from industry and continue to want our feedback.”
The decision to reopen Schedule 75 to new offerors or renewals is important beyond whether or not vendors can continue to do business. GSA’s drawn-out decision making process could also be hurting competition for agencies.
Overall, Schedule 75 continues to be the avenue of choice for agencies to buy office supplies. GSA’s latest figures show agencies have spent $98.5 million through the schedule versus $44.5 million through OS3 for fiscal 2016.
OS3 is rebounding after a poor 2015. GSA’s figures show for quarter 2 of 2016, OS3 saw a 74 percent increase in year-over-year spending — $30.8 million vs. $17.6 million in 2015.
While offices supplies spending overall is down by almost $100 million since 2011, it’s still a half a billion dollar industry and the number of vendors competing for business dropped by almost a quarter during that time.
Few would argue that Schedule 75 — or any schedule for that matter — isn’t in need of a refresh. But while GSA makes its decision on how to move forward, it should reopen Schedule 75 even if it’s only for those existing vendors whose contracts are expiring and even if the extension is only for two years. This would ensure there is enough competition and stop the trickle of vendors losing their spots after 20 years of service to the government.