Weaving Better Blanket Purchase Agreements

usiness on the General Services Administration schedules has grown like Topsy, in no small part thanks to the growing popularity of blanket purchase agreements (BPAs). A BPA is akin to a charge account established with a schedule vendor for recurring supply or service needs. "You compete the requirement once, holding a mini-competition against existing contracts on the schedule. You pick one and have a good contractor and just place orders," says Chip Mather, senior vice president of Acquisition Solutions Inc., a Chantilly, Va., consulting firm.

BPAs are especially popular on the burgeoning information technology schedule. "Two years ago, zero percent of our schedule business was in BPAs. Now half is," said Joel Lipkin, vice president for business development at Government Technology Services Inc., at a GSA conference on BPAs in April. Perhaps the best example of how IT business is migrating to BPAs is the Air Force, which is exiting the world of long-term, painfully negotiated and often protested information technology contracts. The Air Force's personal computer contract series, Desktop I through V, came to an end early this year, replaced by a set of BPAs.

The Air Force's new Information Technology Tools (IT2) program, is built on leveraging the service's huge buying power across a few top companies to get low prices on high-quality products.

BPAs are the building blocks, says Col. Glenn Taylor, director of the Air Force Standard Systems Group commercial information technology product area directorate at Maxwell Air Force Base, Ala. BPAs are flexible, provide support for IT interoperability, and help the service meet its objectives for supporting small and disadvantaged businesses, Taylor says. To get the best possible prices--30 percent to 40 percent off schedule prices in many cases--the Air Force presents solid data to vendors on the size of its past purchases and limits the number of awards in each commodity area, says Maj. Terry Slemp, IT2 acquisition manager.

GSA encourages agencies to aggregate their requirements, using the prospect of high-volume sales to win low BPA prices. Some vendors complain that agencies demand discounts without delivering sales volume. "After GSA beats us down to our best prices, agencies march in [with BPAs] for better pricing and promise their business," Art Hawck, marketing director of Virginia IT services firm Cencor, said at the May conference. "The volume has to be there in conjunction with the prices."

With data to support its purchasing projections, the Air Force expects to get BPA vendors' lowest prices and conducts weekly nationwide price comparisons to make sure it does. "Over the last eight months we've been challenged on prices [by buyers] two to three times a month," Taylor says. "We've always beaten [the non-BPA prices]." Adds Slemp, "We invite vendors in to explain why they're not offering us their lowest price if we find lower prices."

In addition to constant vigilance, the Air Force uses competition to keep prices low, awarding BPAs for the same items to several vendors. "We can leverage our volume yet still have competition and an adequate source of supply given the crazy IT buyouts, mergers and bankruptcies," Slemp said at the conference. BPAs are agreements, not contracts, and the Air Force lets companies know it will quickly walk away should price, quality or service slip. "We don't like to think of it as a threat, but it probably is," says Slemp. While it took $18 million and 18 months to negotiate the Desktop V contracts, the Air Force invested just 26 days and $60,000 to strike its three BPAs for desktops. That makes the prospect of ending and striking agreements much less daunting.

It's almost as easy for contractors to bid on BPAs as it is for agencies to issue them, so many schedule vendors are BPA boosters. GSA encourages the use of oral presentations rather than written proposals, so bidding costs much less. Firms also can offer discounts to BPA holders without offering them to all other government buyers, making it easier and less costly to offer very low prices. But the simplicity of BPAs can be deceptive, according to Lipkin, when firms don't factor in the cost of keeping customers happy once the BPA is awarded. "It's so easy to get into a BPA, you have to be careful to weigh the post-award costs and returns," he said at the GSA conference.

Some agencies, mistrustful of the ease of issuing BPAs, persist in adding extra contract terms, thus opening themselves to bid protests otherwise almost unknown on schedule purchases. "We all are learning that you don't do BPAs that duplicate what already is in the schedule," Lipkin told April conferees.

The Air Force recently decided to issue Commerce Business Daily notices of all new BPAs and to publish the list of firms invited to bid. Taylor explains the moves as an effort to be more open with his industry partners. But the Air Force had taken heat from vendors shut out of the three large BPAs issued between March and April for using a private-sector review of vendor past performance to narrow its invitation list. Mather predicts that adding formal procedures to the BPA process will result in problems for agencies. "We recommend they follow GSA procedures and keep it simple," he says. Taylor conceded the Air Force is "probably a little bit more vulnerable" and that new BPAs probably will take up to a month longer to seal, but, he contends, the service is putting more rigor into doing BPAs than any other agency.