GSA pumps up cooperative purchasing

Buylines | Policies, strategies and trends to watch

A recent Input Inc. report shows that state and local purchases
under the General Services Administration's information
technology schedules grew to $361.2 million in
2007, a marked increase compared to 2006. Input
projects sales under cooperative purchasing to continue to grow at a
compound annual rate of 24.6 percent, surpassing $1 billion by 2012.

How are these numbers significant?
They certainly are not a large percentage of
the market: Input reported that the
addressable state and local IT market in
2007 was $54.8 billion, meaning that
schedule sales accounted for less than
1 percent of the spending. The numbers
are not yet large, but they demonstrate
that cooperative purchasing is gaining
traction and should be considered part of
any technology manufacturer's public-sector
market strategy.

I emphasize commercial technology
manufacturers because year-over-year
spending was up in hardware, software
and wireless but decidedly down for IT
services under cooperative purchasing. To
me, this makes a lot of sense. The GSA
schedule is a unique contract that incorporates
product-specific terms and conditions,
a characteristic that means a lot to
buyers and sellers of manufactured technology
but has no relevance to IT service
contractors. This means GSA has an
opportunity to provide value to the extent
that its contracts include license, maintenance
and support terms consistent with
how manufacturers ? and their authorized
representatives ? actually license and support
their products.

So GSA has an advantage over competing
state cooperative purchasing programs
? such as the Western State Contracts
Alliance and U.S. Communities ? to the
extent that it includes license grants or
similar product-specific terms in its schedule
contracts.

Another feature of schedule contracts
that can lend itself to a company's market
strategy across the public sector is the dealers'
ability to perform sales and transaction
processes on behalf of a schedule contractor.
This lets manufacturers set up programs
under a schedule contract whereby
authorized dealers ? usually small businesses
? can support local customers without
GSA having to maintain hundreds of
contracts for a manufacturer's items.

A long-term advantage GSA has is the
recent Disaster Recovery Purchasing
Authority granted by Congress under
Section 833 of the John Warner National
Defense Act of 2007 authorizing the GSA
administrator to let state and local governments
purchase products and services from
federal supply schedules to facilitate recovery
from a major disaster; terrorism; or
nuclear, biological, chemical or radiological
attack. According to GSA, more than 60
percent of schedule contractors ?
11,000 of 18,000 ? across all commodity
areas have signed the contract modification
that includes purchasing by
state, local, tribal and educational entities
for this purpose.

We know of no recovery purchases
made via schedules so far, but we
understand that GSA is developing an
outreach and educational effort targeting
state and local entities. GSA has
been rather quiet about cooperative
purchasing and the value it
has provided contractors and
buyers in the past couple of
years. But based on some
conversations at GSA, I'm
optimistic that the agency is
preparing to show buyers and sellers how
to use the unique contract type and ordering
procedures of schedule contracts at the
state and local levels.

Cooperative purchasing is voluntary.
It is not a mandate or a requirement. It has
to be a good idea, a shared vision for all
involved. GSA could do a lot for its contractors
? and for buyers at the state and local
levels ? if it developed a few success stories
and case studies illustrating the value of the
program to all the stakeholders.

Steve Charles (steve_charles@immixgroup.com)
is co-founder of consulting firm immixGroup
Inc.

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