Schedule A expands 15 percent

Buoyed by the new flexibility in the General Services Administration's program regulations GSA Schedule 70A business for workstation- and mainframe-related products and services grew dramatically during fiscal 1996.

Overall Schedule A revenue for the fiscal year which ended Sept. 30 reached nearly $650 million - about 15 percent more than fiscal 1995 revenues according to a new report by IDC Government a Falls Church Va. market research firm. That 15 percent increase is the highest growth rate on Schedule A since the beginning of the decade.

Schedule A had grown 3 percent in the preceding year but 1996 "is the first year of sharp growth " said Payton Smith a research analyst at IDC Government. The schedule had seen declining sales in recent years experiencing a 27 percent drop in fiscal 1993.

IBM Corp. remained the top schedule vendor with $142 million in revenue although its business dropped about 6 percent compared with 1995. Bob Baxter who manages Schedule A for IBM said hardware sales actually increased in fiscal 1996. He noted that software sales declined because of the expiration of licenses for operating systems and other software.

Digital Equipment Corp. ranked second saw its business grow 14 percent to about $61 million.

However three vendors each saw their business grow more than 30 percent: Hewlett-Packard Co. Silicon Graphics Inc. (SGI) and Sun Service an education and services arm of Sun Microsystems Inc. Additionally Edgemark Systems and Information Handling Services which did not have contracts in 1995 ranked among the top 10 vendors in 1996.

These vendors attributed much of the growth in schedule business to regulations that came into effect during 1996 including the removal of the maximum ordering limitation flexibility for doing spot pricing and the addition of services to product offerings.

"I think that overall GSA is becoming a very desirable contract vehicle for the government " said Edithe Timmerman government business manager for Sun Service. Sun Service provides hardware and software maintenance service and plans to add professional services to its Schedule A offering Timmerman said."I have to credit GSA for their changes and their new buying rules which have made buying from [the schedule] a lot easier and a lot faster for the customers " added Harry Fuchigami senior manager for contract programs at SGI. "That contributed a lot to the increase."

SGI was among the big winners. Not only did it rank fourth among schedule holders with more than $33 million in revenue it also saw a lot of business pass through Edgemark which resells SGI's Indy Indigo2 and new O2 workstation product line. Edgemark the sixth-ranked Schedule A vendor earned more than $30 million despite getting its contract three months into the fiscal year.

In particular the O2 desktop workstation introduced last year expanded the SGI customer base said Lee Raesly vice president of Edgemark Gaithersburg Md. "We have had customers who in the past would have considered buying a Windows NT workstation instead " Raesly said.

But Edgemark is less interested in selling off-the-shelf computers and more focused on selling packaged solutions including applications networking and related services. That sort of packaging is much more feasible under the new regulations which allow schedule holders to offer supporting services.

HP which saw its schedule revenue grow 42 percent has taken a similar approach to Schedule A business said Charlie Trentacosti marketing manager of HP's Government Business Unit. HP put together a services organization that works in conjunction with channel partners to provide solutions to federal agencies. "And that is what people are looking for today: solutions as opposed to products " Trentacosti said. HP also noted a strong reception for workstations and servers based on its new 64-bit PA-8000 processors he said.

Services also played a big role in helping Digital see its business grow 14 percent after a decline in revenues the preceding year. Digital earned about $21 million - or a third of its revenue - with "a very broad portfolio of services " said Dianne Baumann GSA program and contracts manager at Digital. The company also saw high demand in solutions such as data warehousing mail and messaging and Unix-to-Windows NT migration Baumann said.

According to vendors the ability to offer services to support products or product bundles has made the GSA schedule a viable alternative to standard indefinite-delivery indefinite-quantity contracts.

Edgemark has a plan to grow 50 percent during fiscal 1997. The company hopes to meet this aggressive target despite competition from NASA's Scientific and Engineering Workstation Procurement II because of the great flexibility that is now part of the schedule business. "We've put other contracts in place but GSA remains our primary method of serving the government " Raesly said.

Digital also expects to see agency buyers become more reliant on the GSA schedule. "When you have large IDIQ procurements being processed and award dates being delayed GSA is the perfect vehicle to turn to meet agency requirements " Baumann said.

Eventually the increased business could lead to better deals for the government said Mike Miller senior vice president of federal operations at Computer Associates International Inc. which ranked 10th for 1996 with $18.7 million in revenue - a 14 percent increase. "You will see that the value of the GSA schedule will go up [and] GSA will have more leverage [with vendors] and be able to negotiate better and better prices " Miller said.

Another major software player Oracle Corp. is the fifth-ranked Schedule A supplier. Oracle saw growth of 13 percent which a company spokesman attributed in part to software maintenance revenue.

Government Technology Services Inc. the top B/C contract holder for microcomputer-related products reported a nearly 38 percent drop in Schedule A business primarily because of its loss of SGI's contract schedule at the beginning of the fiscal year.

GTSI which also carries products by Sun Microsystems said it is less concerned with performance on a particular GSA schedule than with its ability to offer a broad range of solutions whatever the source said chief executive officer Dendy Young. "The distinction between Schedule A and Schedule B/C is diminishing" with a significant overlap in product price points Young said.

Featured

Stay Connected

FCW Update

Sign up for our newsletter.

I agree to this site's Privacy Policy.