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Some agencies are declaring their independence from the General Services Administration as they opt to make more purchases on their own.

GSA is the government's main buyer; agencies buy an annual $32 billion worth of supplies and services through its schedules, which offer governmentwide contracts on more than 6.8 million items. But under a new acquisition method known as strategic sourcing, where agencies analyze their buying needs and centralize contracts, some agencies are rejecting the schedules in favor of direct negotiation with suppliers.

The Postal Service found it could save money by negotiating directly with the businesses that provide supplies and services such as truck delivery. "There's more freedom off the GSA Schedule," said Keith Strange, vice president of supply management at USPS. The Postal Service has cut its $12.4 billion annual supply budget by $1.5 billion over the past four years, largely through its strategic sourcing efforts.

The Internal Revenue Service came to a similar conclusion. The GSA Schedule simply didn't offer Pat McConnel, program manager for acquisition strategic sourcing and enterprise spend management at the IRS, the flexibility he was looking for. "We started with the GSA and ended up outside the GSA because we felt that we could do better," he said.

Two years ago, McConnel was looking to lease photocopiers, and at the time only one company, Xerox Corp., offered an operating lease plan through the GSA Schedule. Today, seven contractors offer lease contracts for photocopiers through one of the schedules.

GSA spokeswoman Viki Reath said while GSA schedules might not always meet every agency needs, they do meet the "vast majority" of them. "The schedule program does provide an effective, competitive procedure to obtain commercial services or supplies with substantially less administrative burden than open market buys," she said.

By using the GSA schedules, she said, agencies can avoid the work that goes into negotiating over warranties, delivery terms, and packaging requirements, as well as making sure the contracts follow the government's rules and regulations, and focus instead on their agencies' mission.

"We are vigorously working on training agencies who do not realize all of the features and flexibility of the schedule program," she added.

GSA offers agencies blanket purchase agreements, agency-specific contracts that involves bulk discounts, as a way of negotiating further savings based on GSA schedules.

As part of its strategic sourcing initiatives, the Agriculture Department negotiated a blanket purchase agreement with BCOP Federal, an office supply provider. Agriculture now saves $2.5 million a year on office supplies. The prices in the blanket purchase agreement were about 10 percent lower than those on the GSA Schedule, which have already been discounted as much as 40 percent, according to Mark Heuer, federal business manager for BCOP Federal.

"We would go look at our spending pattern, look at the GSA Schedule to see what was available there, work with some of those vendors to get prices, and proceed from there to issue a blanket purchase agreement," explained David Shea, chief of procurement policy at Agriculture.

Brenda Bearden Cleveland, a senior principal at Acquisition Solutions Inc., a company that works with agencies on strategic sourcing, said the GSA Schedule could be a useful starting point, but agencies would generate more savings by holding additional competitions. When agencies negotiate directly with companies, they can ask for quantity discounts and value improvements that fit their needs, she said.

"If you're not competing for better pricing and performance, you're not achieving best value for the agency. It's not just a pricing game, it's really about best value," she said.

Strange agrees: "If you just stay focused on price, you miss a big part of the picture."

COMMENTS

• GSA may get very defensive about it. But, times have changed and average product quality in many areas exceeds government standards. Industries are more quality conscious and businesses demand good quality products at a good price. GSA just isn't needed like it once was. In fact, it just adds more cost to the customer. It's a lot like electronic components. Back when military started using radios, radar and other devices during WWI and WWII, people were manufacturing radios in their garages. There were no real standards which made it difficult to get spare parts that were reliable if they worked at all. So, the military developed manufacturing and test standards and an agency to make certain they got the parts that meet those specifications. After semiconductors were invented over fifty years ago, the military developed those specifications also. Now, the manufacturers build things that are far more reliable than what mil specs require and often refuse to even consider the old test specifications. A military maintainence group can often get as good of repair parts at Radio Shack as from Defense Logistics Agency and for a lot less money. But, dinosaurs like GSA and DLA still try to buy according to outdated standards and pass the cost on to the users. More and more agencies are realizing that they can get a faster reponse time and often better parts for less money if they just get their own materials. With the Internet and supersized product stores, it's a lot easier than GSA is willing to admit. It can even be automated. The original dinosuars went extinct because they couldn't change when the world did. GSA, DLA and who knows what other procurement agencies will eventually go the same way. Especially, when mission budgets are tight. The government is still very fat and wasteful. Sooner or later, they will have to lose the fat. Robert M. Posted March 7, 2005 7:22 PM