Manugistics inks SmartBuy deal

Manugistics Group Inc. became the second vendor to sign on to SmartBuy, the federal government's enterprise software licensing initiative, the General Services Administration announced today.

Rockville, Md.-based Manugistics provides supply-chain management software. The company agreed to a three-tier discount for agencies buying off its GSA Federal Supply Service schedule, said Neal Fox, assistant commissioner for commercial acquisition at FSS.

"The more the government buys, the more price decreases," Fox said.

According to Manugistics executive Jeff Holmes, the first discount is 25 percent, the second is an additional 15 percent and the third is an additional 2 percent to 7 percent.

Purchase of a single software module would qualify for a 25 percent discount. Purchase of a bundle of modules designed to address a complex business need, such as global logistics management, would bring an additional 15 percent discount, for total savings of 40 percent, said Holmes, executive vice president and president of the company's government aerospace and defense unit.

"I'm projecting that 99 percent of our sales will be at the solution bundle area," he said. The company has sold about $50 million in software to the government since 2000, he said. Its six federal customers include the Navy, Air Force and Marine Corps.

The third discount rewards agencies for cumulative government purchases. For example, the next $20 million in federal sales will qualify for an additional 3 percent discount, Holmes said. Existing customers will be given an added value ? yet to be determined ? that is equal to the 3 percent discount, he said.

The government should save more than $25 million a year because of the agreement. The agreement was negotiated by FSS and permanently modifies Manugistics' schedule contract, Fox said.

The benefits to Manugistics are two-fold, Fox said. First, the discounts associated with the three tiers may entice agencies to buy more software. Second, Manugistics officials wanted to become a direct seller to agencies, and saw that offering steeper discounts to agencies through the GSA schedule would help them do that, Fox said.

Currently, almost all Manugistics' software is sold through other companies, Holmes said.

"We're pretty excited," Holmes said. "We would love to do more direct sales to the government, and we think there will be a significant advantage to the government to buy off this agreement."

The SmartBuy program was launched in June 2003 by the Office of Management and Budget. It is managed by GSA. GSA is looking for opportunities for SmartBuy agreements by posting announcements on the FedBizOpps.gov Web site.

The first SmartBuy agreement was inked with ESRI of Redlands, Calif., last month. Under that agreement, six agencies will buy a guaranteed number of software licenses over the next five years. Those agencies will save a total of $57 million over five years, according to GSA.

Fox said some agencies have expressed interest in buying Manugistics' software through a SmartBuy agreement, but it's not known which ones will participate, Fox said.

Fox also said management of SmartBuy will shift from GSA's Office of Governmentwide Policy to its Federal Technology Service on April 1. FSS has served as an adviser on SmartBuy to both offices, he said.

(Posted 3:13 p.m. and updated at 4:10 p.m.)