Schedule 70's rocky road

GSA works to keep IT catalog current

"Any time you convince your customers you can't do your job, that's foolishness," says former FSS official Neal Fox.

Rick Steele

When any of the 12 bureaus that make up the Commerce Department need to order PCs or services such as programming, chances are their procurement officers will use the General Services Administration's Federal Supply Service's IT Schedule 70.

"A large portion of what we buy is IT, and we certainly rely on schedules for a lot of the routine stuff like IT support services and equipment," said Michael Sade, director for acquisition management and procurement executive of Commerce's Office of Acquisition Management.

Schedule 70 customers number in the thousands and range from major federal agencies, such as the Commerce Department, to state and local governments.

Schedule 70, GSA's primary vehicle for IT equipment, software and professional services, has been around since the mid-1970s.

"We award basic contracts and negotiate fair and reasonable prices based on information that vendors provide us on pricing and policies," said Roger Waldron, acting senior procurement executive and acting deputy chief acquisition officer for GSA. "The ordering process allows customers to order directly from vendors."

Changing market

Schedule 70 is the largest of the 43 schedules GSA runs and comprises more than one-third of federal IT spending.

Among Schedule 70's customers, the Defense Department always has been the largest, "to the tune of 55 percent to 60 percent of sales," said Neal Fox, a consultant and former FSS assistant commissioner for acquisition.

But in fiscal 2005, Schedule 70 had only $16.5 billion in sales, a 2 percent decrease from $16.8 billion in 2004, according to market research firm Input Inc. of Reston, Va.

The slip in sales comes after years of double-digit growth. In 1995, sales were $1.8 billion. By 2000, they had grown to $9.2 billion, and in 2003 they reached $14.7 billion, according to GSA. The decline came after five years of annual increases that averaged more than 15 percent, Input said.

Multiple factors contributed to the slowdown, including new customer behaviors and rising competition from government-wide acquisition contracts and other multiple-award contracts, experts said. GSA also has suffered contracting scandals, and is transitioning from a mostly commodities-based schedule to one more heavily weighted toward services.

The agency also is in the midst of a reorganization, which includes consolidating FSS and the Federal Technology Service into the Federal Acquisition Service. Congress recently signed off on the reorganization, and the Senate Homeland Security and Governmental Affairs committees last month passed legislation to create OneFund, which will merge the IT and general supply funds.

"There are many factors at play in Schedule 70 sales," said Ray Bjorklund, senior vice president and chief knowledge officer at market research firm Federal Sources Inc., McLean, Va. "Certainly, the procurement policies of the leading customer [the Defense Department] have dampened the interest in using the schedules. Even though Defense Department policy has continuously supported the use of schedules under the principles of the Economy Act, the additional levels of oversight applied in decisions to use the schedules have caused Defense Department customers to seek paths of less resistance in the procurement process."

'Right' is Wrong

The contract problems go back to results of an audit released in 2004 by GSA's inspector general that cited repeated problems across the 11 regional offices of the Federal Technology Service.

GSA's "Get It Right" campaign was established to correct these problems by improving the acquisition process with more oversight, education and training. Some experts haven't seen it as being very helpful, but rather as a hindrance to timely acquisitions.

"They turned it into a get-it-perfect program, which never works," former FSS official Fox said. "They brought in all these checkers checking the checkers, so it takes forever to take an assisted-services contract through. Any time you convince your customers you can't do your job, that's foolishness."

Get It Right is too substantive, said Larry Allen, executive vice president of the Coalition for Government Procurement, an industry association in Washington.

"They kept their foot on the Get It Right pedal, creating an outsized impact. A little Get It Right goes a long way. A lot of Get It Right creates a scorched-earth policy," he said. "Both GSA staff and customers feel that way. You have to jump through more and more successive hoops."

"GSA is a bit in the crosshairs now," said Stan Soloway, president of industry association Professional Services Council in Arlington, Va. Industry group One GSA Coalition has been formed to give one voice as GSA goes through its reorganization.

"The physical reorganization is not unimportant," Soloway said, "but we're more interested in the agency reflecting modern business practices and consistent policies. It's still working through that."

GSA should be reviewing its business model and asking if it has the right schedules and the right business mix, he said.

"The world has changed," he said. Today there are more than 20 enterprise multiple-award contracts that compete with Schedule 70.

"They offer very similar scopes of work and complexity such as GWACs, but are intended just for that agency," he said. "We're going from a world of one-off single contracts to GWACs, to pulling back to internal contracts such as the Enterprise Acquisition Gateway for Leading Edge [Eagle] solutions for the Department of Homeland Security and SeaPort-e for the Navy. It has to have an effect."

Commerce's Sade said agencies in his organization use a lot of other contracts. The National Oceanic and Atmospheric Administration, for example, orders workstations from NASA's Scientific and Engineering Workstation Procurement program. And the Commerce Department has its own GWAC, Commits NexGen, which offers IT services through a pool of small-business partners.

"It's part of our mission, which is to support small business," Sade said. "It's been quite successful in helping small businesses grow."

Another challenge GSA faces is combating the Commerce Department's general philosophy about schedules.

Commerce Department officials believe schedules are for commodity acquisitions, Sade said. They don't use schedules for more specialized purchases.

"We're trying to push performance-based contracting," he said. "We're looking for innovative solutions. When you're using a schedule and using it right, you're tied to their products and solutions."

Another problem GSA has seen emerge is that customers are having difficulty keeping Schedule 70 separate from the Mission Oriented Business Integrated Services schedule, Fox said.

"Customers many times like to mix and match the scope, especially if you're buying complex services," he said. "When I was [FSS] assistant commissioner, I tried to solve the problem with a one-schedule program so you wouldn't have divisions. I think that's something GSA needs to do ? merge the schedules to where they're no longer separated."

Another view

Schedule 70 has a broad spectrum of contractors that include large and small businesses, 8(a), small disadvantaged businesses, women-, veteran- and service-disabled veteran-owned businesses and HUBZone businesses.

Aside from profit, what motivates companies to seek a place on Schedule 70 is that once an item is awarded, the schedule ordering procedures are far easier than dealing with RFPs and other contracting methods, said Steve Charles, co-founder and executive vice president of immixGroup Inc. of McLean, Va.

However, the experience of applying for the award can vary, depending on which contracting officer is assigned and how complicated the contracting process is, he said.

The most straightforward method is to use eOffer, a Web-based application that lets vendors electronically prepare and submit their schedule offers and contract modification requests.

"It's a cookbook approach for putting together a contract with simple disclosure and a simple offer," Charles said. "I wouldn't recommend it for more complex offers for a company that sells in different ways to different customers in the commercial marketplace."

Sally Cook, a program manager at GTSI Corp., Chantilly, Va., is enthusiastic about eOffer.

The application "gives you more direction and tells you immediately if you haven't done something. You get step-by-step help along the way," she said.

ITS Corp. of Oxnard, Calif., provides IT and engineering solutions to federal government agencies. It won a Schedule 70 contract in 1998.

"It was our first experience with GSA," said Rosanne Satterfield, ITS' senior vice president for GSA relations. "Our first customer through the schedule was the Customs Service, and it was a very small piece of business." Today about 20 percent of the company's $100 million in annual revenue comes from the GSA schedule.

As a result of the reorganization and external pressures from Congress, GSA already has implemented some changes that include new Schedule 70 offerings.

To meet Homeland Security Presidential Directive-12, for example, Schedule 70 has introduced security products and services for public-key infrastructure, digital certificates and personal-identity verification.

Wishing on an agency

There are those who have a wish list for GSA where Schedule 70 is concerned.
"If there's any one area that Schedule 70 could benefit from, it's training," Satterfield said. With the changes in organization, "training, education and outreach are necessary, so that the personnel responsible for contracts have a sound and fundamental knowledge of how to use the vehicles and a definition of IT, because we've found that has changed over the years."

Market competition needs to set prices, Cook said. "Cut back on the contracting officer load and get more people in there," she said.

The agency also needs to improve the timeliness of acquisition support to help customers meet mission requirements, GSA's Waldron said.

"We're planning easy to use contract vehicles," he said.

Caron Golden is a freelance writer in San Diego.

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