Small IT Firms Should Protest Expanded GSA Schedules

Guest Commentary

Small IT Firms Should Protest Expanded GSA Schedules

By Kenton Pattie

Small IT companies: Will you get a General Services Administration contract so you can continue to sell to state and local governments?

Are you willing to sell nationwide to federal agencies just so you can have access to your local government market?

Are you willing to pledge your lowest prices to any government or school board in the United States, regardless of the size of the contract?

Does it bother you that Congress might help billion-dollar IT companies get direct access to your local customers?

Some big IT companies are willing to let their federal prices and terms become their prices and terms for any government - large or small - as a trade-off for having the federal government be their marketing and sales window.

Preparing and submitting bids is costly and requires national sales and marketing. But, they argue, sales costs will drop if the GSA is opening local government doors in Boise, Idaho, and Baton Rouge, La.

Small companies argue there is already intense competition for local government IT work, that prices are low already and therefore there is no need for a new federal channel.

Increasingly small companies are skeptical about legislation that will give huge national companies unfair advantages in penetrating local markets.

The House member who advocates this new federal centralized cooperative purchasing is Rep. Tom Davis, R-Va., His district includes Fairfax County, Va., which is the home of the federal sales offices for many of the major IT firms. Currently, these companies annually dominate approximately $20 billion worth of U.S. government work.

But through GSA, the traditional Federal Supply Service contract could triple in size if state and local sales are included. While Davis argues his legislation would help the major systems contractors, the GSA window includes all computer-based technologies, products and services.

If you are in IT as a manufacturer or reseller you will be affected by this legislation.

While Congress said "No" to Davis, he will probably introduce his amendment as a new bill. He is a member of the House Committee on Government Reform and Oversight, which will hold hearings next year, and has the support of Rep. Dan Burton, R-Ind., the chairman of the committee.

The Davis amendment appeals to companies that like the concept of a single centralized federal contract that will bring in dozens of state and local sales - one play all the way. Davis argues this will save localities millions of dollars because they will no longer have the costs of solicitation and bid opening.

While much state and local IT business is served by small and medium-sized resellers, under federal cooperative purchasing companies would enjoy the federal imprimatur and marketing advantages that will help dominate the state and local market.

What marketing advantages? GSA publishes catalogs for local governments and exhibits at trade shows for local government leaders promoting use of the FSS schedules. Only companies willing to do business the GSA way can get into these catalogs and exhibit promotions.

The GSA system will eventually bypass local bidding. Sure, local governments have buy-local preferences, bid requirements and minority-owner preferences. But once they get pressured by U.S. government-approved prices of the giant companies, they will drift away from neighboring firms.

Local governments that like the service, training and expertise of local resellers and service companies will see these resources dry up as more and more business is done by the big national companies.

Local resellers will never know about the business they lose because this business need not be advertised. GSA is assuring state government leaders they get the lowest prices on FSS contracts. Bidding would be unnecessary. GSA is saying "It's optional. You can bid the work, too." But, state legislatures will pass legislation saying GSA is an acceptable substitute for local bids.

This boils down to a small business vs. big business issue. At some point, the small IT companies will rise up in opposition to this massive takeover of their business being plotted by the giant firms. If you don't like the idea of Congress giving a competitive advantage to big companies, speak up.

Kenton Pattie, an independent lobbyist, is president of the National Center for Fair Competition. He formerly served as vice chairman of the Small Business Legislative Council.

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