SEWP business is up, fee down
Popularity of SEWP IV prompts NASA to lower the contract’s service fee
- By Matthew Weigelt
- Sep 21, 2007
NASA said it received so many orders in the first five months of its new governmentwide acquisition contract that it lowered the fee it charges agencies to place orders.
As NASA transitioned to a fourth round of contracts, its Solutions for Enterprisewide Procurement (SEWP) generated revenues that beat expectations. In 2007, SEWP III revenue hit $378.7 million and SEWP IV, awarded in May, earned $358.2 million so far this year, according to budget documents. Despite an $18 million dip in total revenue compared with last year, SEWP revenue from 20,374 orders in 2007 reached $737 million.
We didnt expect to do that with a new start, said Joanne Woytek, NASAs SEWP program manager.
Because of the increase in business, NASA lowered SEWPs service fee from 0.65 percent to 0.6 percent, Woytek said.
In May, NASA awarded its most recent round of SEWP contracts to 38 prime contract holders. Shifting from one set of contracts to another usually slows business, Woytek said. But that didnt happen, and all SEWP IV contractors have at least one order, she added. The contract covers high-end computers, servers, network equipment and storage devices, but not services.
According to NASAs contract data, the Veterans Affairs Department is the biggest contributor to SEWPs success. In July 2006, VA decided not to renew its Procurement of Computer Hardware and Software contracts and instead buy from SEWP.
VA was responsible for 41 percent of SEWPs revenue in 2006, spending $143.9 million on 3,908 orders, according to documents. Those orders represented 56 percent of the total number of SEWP orders that year. In 2007, VA was responsible for 29 percent of SEWPs revenue and 36 percent of the contracts total orders.
In 2006, NASA spent $36.3 million under SEWP, but in 2007, it increased its SEWP spending to $65 million, documents show. The General Services Administration is another major SEWP customer. It spent $30.4 million on contract orders this year up from $14.7 million last year.
GSA has faced financial challenges in recent years, losing business and customer confidence. Most recently, Sun Microsystems announced that it plans to withdraw from its GSA schedule contract in October. GSAs Office of Inspector General and Sun have been mired in a dispute over documents the OIG wanted the company to provide so the office could perform an audit.
Industry experts say publicity and political intervention, including a request from Sen. Charles Grassley (R-Iowa) for GSA to cancel Suns contract, cast a cloud over the companys schedule business.
Some industry leaders say the dispute could raise concerns among other companies doing or seeking to do business with the government via schedule contracts. Whatever the outcome, it put the fear of the IG audit in my customers, said Hope Lane, who leads Aronson and Co.s GSA schedule consulting practice.
Woytek dismissed such concerns and said anyone involved with a GWAC must recognize that oversight comes from all sides, including the Government Accountability Office, the Office of Management and Budget and inspectors general.
The revenue from Suns schedule contract was relatively small, industry analysts say. The company had $8.1 million in revenue under the contract in 2006, which was not enough for it to make the list of the top 140 companies holding Schedule 70 contracts.
John Slye, manager of federal industry analysis at Input, said Sun likely has plans for making that money back through other government sales.
Woytek said Suns pullout from the GSA schedule program wont affect SEWP revenues because agencies must go through the companys resellers to buy Sun products under SEWP.
Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.