States Gain Infotech

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States Gain Infotech Buying Clout on GSA Schedule

By Dennis McCafferty

Staff Writer

To listen to General Services Administration officials, the prospect of state and local governments buying infotech off federal schedules is a given. GSA Acting Administrator David J. Barram said in a recent interview that it's a matter of months before it happens.

In fact, the GSA is putting the final touches on a start-up plan, which is expected to be presented to Congress this month, according to agency officials. Unless lawmakers voice objections, state and local governments will be able to start buying off federal schedules starting Aug. 1 on a case-by-case basis, GSA officials say. These officials then hope that, within the year, state and local government buyers will be able to make routine infotech schedule purchases.

However, not everyone is convinced that the change will spark a flurry of increased purchases off schedules. In fact, for vendors, industry observers say it will take years before any significant sales kick in. To put it nicely, they say state and local governments may be too "committed" to local business support. Or, more bluntly, the "good ol' boy" networks are difficult to break through.

Then, there's undoing bureaucratic roadblocks at state and local levels. A General Accounting Office report released last month indicates that 27 of the 50 states and U.S. territories operate under bid requirements that would significantly limit GSA schedule purchases.

"It's not a matter of it happening, it's just a matter of when," said John Cost, senior vice president of state and local services for Federal Sources Inc. in McLean, Va. "But another question is: What difference will it make?"

For example, New York state officials overseeing $800 million in purchases must first consider use of Empire State-tied contractors, the GAO reported. The National Association of State Purchasing Officials found in a 1992 survey that 45 states require sales and services to be handled by local dealers, and 31 states had laws either mandating in-state vendor or product preferences.

Then, there's the fact that state and local governments may be either apathetic or out of the loop. The National Institute for Government Purchasing surveyed 1,800 state and local governments on the topic in November. A mere 131 responses came back, or about 7 percent.

The prospect of allowing state and local governments to buy off GSA schedules gained steam in 1993, when federal officials indicated that merging government purchases would benefit taxpayers through greater volume discounts. In 1994, Congress gave the GSA the green light to allow local and state governments to make schedule buys.

But after concerns emerged about the effect of the change on governments and small businesses, Congress suspended the access and directed the GAO under provisions of the Clinger-Cohen Act of 1996 to look into the situation.

The recent report is the result of that directive, and the GAO has distributed it to the Senate Governmental Affairs and Armed Services as well as the House Government Reform and Oversight, and National Security committees.

The GAO concluded it was unclear whether state and local government purchases would drive down the cost of schedule items. Also, the report said state contracting laws and preferences to local businesses will limit any potential benefits.

Among the states and U.S. territories, 34 have said they would take advantage of schedule
purchases. Still, there was no consensus on whether schedule purchasing would be received positively, the report states. Infotech industry leaders express similar sentiments.

"It's like a turtle," said John Balena, general manager of federal operations for BMC Software in Bethesda, Md. "Everybody's afraid to stick their neck out first and get on with it. There are legal hurdles that have to be leaped over."

Casting a damper on any enthusiastic revenue growth projections, Great Falls, Va.-based Government Sales Consultants Inc. estimates that allowing state and local governments to make GSA schedule purchases would immediately account for just 10 percent of overall schedule sales growth.

Although it concedes there will be transitional hurdles, International Data Corp. is somewhat more optimistic.

"A year ago, if you asked the states, a certain percentage would say they can't use it," said Milford Sprecher, a program director over government technology for IDC in Framingham, Mass. "Now that it's becoming real, more are saying they can use it and express interest in using it."

Like any other rule change, it would take time for state and local governments to break with tradition, said Dendy Young, president and CEO of Government Technology Services Inc. in Chantilly, Va.

"Some will sit back and follow the leaders, but three or four or five years from now ... it will eventually be very positive," Young said. "It will be good for the GSA and good for the states. It assures the states that they'll get a good price for the product. It will drive the GSA schedule down another notch."

Many state and local officials are encouraged as well.

In Arizona, the city of Chandler estimated that it spends up to $2,000 per contract to get bids for items it would otherwise be able to buy off GSA schedules. A Louisiana State University official indicated the college can eliminate eight weeks in bid gathering and review by buying computer systems furniture though the GSA.

In Fort Collins, Colo., a college town of an estimated 100,000 people, Purchasing Director Jim O'Neill views the anticipated change as a godsend. There's only O'Neill and another staffer to oversee $500,000 in annual infotech purchases for the entire city.

"It's going to give a lot of the state and local governments buying clout they haven't had before," O'Neill said.

Larry Wellman, purchasing director for Fairfax County, Va., agreed. "It provides us with another option to explore to ensure we have the best price," he said. "There are times when the GSA schedule will be more expensive and times when it won't be."

Most likely, large states such as Michigan, California and Florida will encourage overworked state agency officials to buy off the GSA schedules, said Linda Cohen, a research director at Stamford, Conn.-based Gartner Group. In fact, California calls its procurement office the "General Services Administration."

On the other extreme, local governments should be most resistant to the change.

"I don't see them getting into this too much," Cohen said. "They want to see the local vendors get the cash."

The bottom line is that vendors shouldn't perceive opening the schedule to state and local governments as a free pass to booming sales, said John Cochran, vice president of federal sales for PRC Inc. of McLean, Va.

"Every state government is different," Cochran said. "It's the good, ol' boy network. If you've worked with the state or local government, they're going to want to do business. But the fact that you open this vehicle to them doesn't necessarily mean they're going to want to do business with you."


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