GSA to lower schedule fees by a quarter percent

Based on a recommendation by the Logistics Management Institute, the General Services Administration will lower the fee it charges to use the Federal Supply Service schedules to 0.75 percent from 1 percent of a contract's value.

The new fee structure will not be in place until Jan. 1, 2004, because GSA must rewrite a contract clause and vendors must redo pricing and collection structures.

GSA hired LMI of McLean, Va., to evaluate the Industrial Funding Fee to see how much the agency could reduce the fee and still have enough money to run the program effectively.

The reduction likely will mean a 0.25 percent drop in schedule prices for agencies because vendors will be expected to reduce their prices by a quarter of a percent, said Larry Allen, executive vice president of the Coalition for Government Procurement, a Washington industry association.

"I think it was inevitable that GSA would have to drop the fee and it is a pretty good move on their part," Allen said. "This shows GSA is being competitive in the governmentwide acquisition contract marketplace by having one of the lowest administrative fees."

NASA's Scientific Engineering Workstation Procurement contract charges 0.65 percent and the National Institutes of Health's Chief Information Officers Solutions and Partners 2 Innovations contract charges 1 percent for task orders with large businesses and as little as 0.50 percent for task orders worth more than $10 million with small companies.

Allen said this was the first time GSA has tinkered with the fee and he expects future adjustments to be much easier because of how GSA will write the new contract clause.

A July 2002 General Accounting Office report pressured GSA into looking at the fee structure. GAO found that the GSA schedules ended up with a surplus of more than $56 million in 2001 and the revenue exceeded costs by 53.8 percent. In fiscal 2002, agencies spent a record $22 billion on the schedule and GSA earned about $210 million in fees.