Sun narrowly escapes GSA delisting

The General Services Administration almost pulled Sun Microsystems' products from the popular GSA schedule contracts during the peak of the federal buying season because of a spat over prices.

GSA notified the 14 government technology GSA schedule resellers in late July that within 30 days they would no longer be authorized to offer Sun products to federal customers.

The agency granted Sun a reprieve Aug. 14 after the company agreed to drop some of its prices. A routine government audit had found that Sun offered better discounts to some commercial customers than to the government, according to sources close to the situation. GSA requires the private sector to offer discounts that equal or exceed those extended to a company's most favored commercial customer.

Sun's GSA schedule contract is under renegotiation as part of a review that occurs every five years when the time comes to consider extending the periodic option on companies' 20-year general schedule contracts.

Officials must determine the terms under which Sun would remain on the GSA schedule by Feb. 15, 2006, when a temporary extension of Sun's general schedule contract expires.

Mike Abramowitz, director of strategic programs for Sun's Federal division, said the company has granted some better discounts to private-sector organizations than to GSA. "But there's always a rationale to why certain companies get certain discounts," he said.

Despite the temporary reprieve, GSA is probably not satisfied with the discount it negotiated, said Julie Akers, a vice president of Federal Schedules, a consulting firm.

"GSA got pushback from industry and also perhaps from the government," Akers said. "We're at the end of a busy buying schedule."

GSA has been under pressure from its inspector general and the Government Accountability Office to be more aggressive about auditing vendors to ensure advantageous pricing for the government. A GAO report earlier this year shows that eight of the 10 information technology schedule contracts it had reviewed lacked enough documentation to ensure that the government receives the best price.

Some sources familiar with the negotiations between GSA and Sun said the company took a cavalier attitude toward GSA's pricing demands and threats to remove it from the general schedule. Others have said a power vacuum created by an ongoing reorganization of GSA's acquisition services has allowed the pricing disagreement to boil over at the worst moment possible, during the peak government buying season.

Abramowitz said the GSA contracting officer responsible for the Sun contract is acting professionally. "We're both seeking to get the best things for our constituency," he said.