Look for the GSA label

State, local agencies can now buy IT off Fed supply schedule. But will government shoppers abandon local suppliers?

"I believe most [states] could take advantage of it if they choose to do so," said Richard Varn, former CIO for Iowa. Varn (center) also said budget pressures could spur many states to use the federal schedule.

Henrik G.de Gyor

The federal government is extending its buying power to state and local governments through a small provision in the E-Government Act of 2002, which Congress passed last month.

The bill, HR 2458, will let state and local agencies buy information technology products and services off the General Services Administration's Federal Supply Service Schedule 70. The provision will save taxpayers' money by allowing state and local governments to get discounts on commercial items they could not obtain on their own because of the small volumes they buy, said David Marin, spokesman for Rep. Tom Davis, R-Va., who co-sponsored the legislation.

"The benefits are clear: lower costs and more efficient and effective delivery of services," Marin said.

State and local governments will be able to take advantage of the federal government's volume discounts offered by 3,564 IT contractors.

Government and industry officials cautioned that entrenched buying practices and state regulations will slow movement by state and local governments to use the federal supply schedule, but overall they responded favorably to the new provision.

"This gives us the ability to look at more solutions and more vendors," said former Georgia CIO Larry Singer, who left his post Dec. 9. He also said the provision will let federal, state and local governments collaborate more easily and set standards for technologies such as Web services.

"So often, there are times when we can collaborate, but it isn't thought of until late in the process," Singer said. "With separate procurements, there is more of a chance for federal, state and local governments to buy incompatible systems. But buying off the schedules improves the opportunity to buy the same or similar technologies."

Both large and small IT companies stand to profit from the provision because Schedule 70 offers a broad representation of companies, said Mike Benzen, vice president of government services for Tier Technologies Inc. of Walnut Creek, Calif.

"With so many companies on the schedule, I don't see an advantage for anyone, and I believe it will look very much like the general marketplace," said Benzen, a former Missouri CIO.

Although federal law now allows states to purchase from Schedule 70, it is not entirely clear that state procurement laws will allow agencies to purchase from the schedule, state officials said.

For this reason, administrative and statutory changes may be required in some states to enable their agencies to purchase from Schedule 70, said Richard Varn, who resigned late last month as Iowa's CIO.

"I believe most [states] could take advantage of it if they choose to do so," he said. Varn also said budget pressures could spur many states to use the federal schedule.

The entire state and local government IT market is worth about $46 billion to $48 billion annually, according to Tom Davies, a senior vice president of Current Analysis Inc. of Sterling, Va., a market research firm. Of that amount, an estimated $10 billion to $12 billion could potentially be covered under the federal General Services Administration schedules, he said.

In fiscal 2002, federal agencies spent more than $22 billion on schedule purchases, including $12 billion for IT products and services. This is up from $17 billion for all schedule purchases and $11 billion for IT in 2001.

Traditionally, state and local governments have felt considerable pressure to buy from local vendors. If state agencies or departments buy from Schedule 70 without competitive bid, they risk the wrath of companies based in the state that will complain to the legislature, Benzen said.

Aldona Valicenti, CIO of Kentucky, agreed. "We have to look out for individual companies that only do business in Kentucky that might not do business nationally," she said. "In the New Economy, you want to foster businesses that you are trying to build up in your own state."

Davies also said many local and county officials already receive good prices for IT.

"The range of skills for IT services is the biggest advantage for state and local governments," he said. "The one area where it might be advantageous might be with homeland security technologies, because the federal government is leading the way."

Olga Grkavac, executive vice president of the Information Technology Association of America in Arlington, Va., said the success of the provision will depend on how well GSA and vendors market the schedule to state and local governments.

Davis made cooperative purchasing a goal after it was removed from the Federal Acquisition Streamlining Act of 1994. He included the provision in the Services Acquisition Reform Act. But after SARA stalled in committee, Davis attached the cooperative purchasing provision to the E-Government Act.

Marin said Davis has no plans to push for an expansion of the provision beyond IT. *

Government Computer News Staff Writer Jason Miller can be reached at jmiller@postnewsweektech.com. Washington Technology Staff Writer William Welsh can be reached at wwelsh@postnewsweektech.com.

About the Authors

William Welsh is a freelance writer covering IT and defense technology.

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