Serving up higher IT sales

First listed on the schedule just two years ago, information technology

services have become a powerful engine driving the growth of the General

Services Administration IT schedule.

The GSA IT schedule has become increasingly popular with agency procurement

shops. The most recent GSA figures show that sales through the Federal Supply

Service's IT schedule ballooned more than 50 percent last year, reaching

$7.8 billion in fiscal 1999, up from just more than $5 billion in fiscal

1998.

IT services, which GSA placed on the schedule in 1998, is the primary

reason for the run up in sales. Services have quickly become a large portion

of total sales as agencies find that it's nearly as easy to buy services

off the schedule as it is commodity items such as PCs and packaged software.

For the fourth quarter of fiscal 1999 — the government's traditional buying

season, when agencies unload billions of dollars before the fiscal year

ends — services sales totaled just less than $1.4 billion. Hardware and

software sales totaled almost $1.7 billion.

"I think we're seeing the maturing of purchasing services on schedule,"

said Bill Gormley, assistant commissioner of the FSS Office of Acquisition.

"People are finally getting comfortable with what they have to do to purchase

the services their program people need."

"It's a reflection of the way the federal government as a whole is moving,"

said Larry Allen, executive director of the Coalition for Government Procurement,

an industry group that represents 300 vendors on the GSA schedule. "People

are searching for integrated solutions rather than buying pieces here and

there and putting them together. And rather than sinking a lot of administrative

time and procurement effort to administer their own contract, they are going

to the schedules."

Even taking into effect the ease of buying off the schedule, contracting

experts inside and outside government agree that services contracts are

more difficult to assemble than hardware and software contracts.

In the past, agencies often used services contracts to hire people by

the hour, serving as what is often called a "body shop." But under current

federal procurement policy, services contracts must include a detailed statement

of work that outlines the agency's needs and contains specific performance

goals that the vendor must meet. The Office of Management and Budget developed

the new rules to reduce the practice of agencies staffing program offices

with contractors assigned to no specific task.

As more vendors list IT services on the schedule, some procurement experts

worry that agencies are buying the simplified labor-hour services, not the

new performance-oriented service solutions. "They're not really good service

contracts," said Chip Mather, senior vice president at federal consulting

firm Acquisition Solutions Inc. "I think a lot of the orders going against

the schedule are for "time and materials' and "level of effort' contracts."

Mather and others worry that no one may check to ensure that the services

contracts sold off the schedule are following the new rules. "There should

be some oversight and some accountability," he said.

Because of questions raised about how agencies buy multiple-award schedules — such as the GSA schedule, the Transportation Department's Information

Technology Omnibus Procurement contract and others — Congress has authorized

the Office of Federal Procurement Policy to study multiple-award schedule

contracting. OFPP plans to study blanket purchase agreements and services

sales. OFPP does not plan to complete the study until at least the end of

the year, according to sources.

GSA also has been holding training sessions for agencies and vendors

on how to buy and sell services on schedule to ensure that everyone understands

how the schedule is supposed to work, Allen said.

"GSA has been very careful about pointing agencies in the direction

of not [using the schedule as a body shop]," he said. "GSA went out of its

way to put in specialized ordering instructions, and they have a lot of

feet out on the street to train and educate people. If there are people

out there using the schedule as a body shop, then you've got to look at

each individual agency for the fault."

Many of the larger services contracts are BPAs, under which an agency awards

a separate IT contract for specific needs and services to one or more vendors

that are on the schedule. The agencies developing these large-scale contracts

often put months of work into the acquisition plan and statement of work,

Gormley said.

"The larger scale the acquisition, the more clearly they are doing intense

presolicitation work," he said.

For example, the Wright-Patterson Air Force Base procurement staff developed

an advisory and assistance services BPA. The new contract will replace the

current indefinite-delivery, indefinite-quantity contract, which expires

this year. The Air Force program office has been working on the acquisition

plan for more than nine months, Gormley said.