By Steve Kelman

Blog archive

The Lectern: Vendor coupons and other losses

I told my executive ed students (almost all federal GS-15s and military O'6s) last week that I'd lived a long time around Boston, and offered advice on restaurants, places to visit, etc. (I said I was too old to be good at clubs, though.) After class, a student asked me how to get to the nearest Macy's, where she wanted to do some shopping.

Knowing she was a contracting officer, I volunteered to give her some Macy's discount coupons we had around the house, but weren't planning to use. (I have a hard time throwing away coupons, just in case.) Her eyes brightened up. The next day I brought them in, and she put them away, now armed for her shopping adventure.

When I was at the Office of Federal Procurement Policy, a member of my staff once mentioned to me that most contracting officials loved to use discount coupons. As a coupon fanatic myself, my eyes lit up. After that, I often asked audiences how many of them used coupons to shop when I did town hall meetings with contracting officials. Usually, about 80 percent (men and women) raised their hands.

At the end of the 1996 fiscal year, coupons came to government contracting. The General Services Administration had recently eliminated the rule that prevented GSA schedule vendors from providing temporary discounts. (This was a classic example of a rule that supposedly existed to protect the government from contractor malfeasance, but in fact was a disaster for the government and the taxpayer.) The elimination of the rule led, among other things, to the spread of blanket purchase agreements as a way to negotiate lower schedule prices on IT hardware. But at the end of fiscal 1996, it also inspired a number of vendors actually to offer coupons providing 10 percent or 20 percent temporary discounts off schedule prices.

These coupons don't seem to exist any more.

There are two lessons to all this, I think. One is that the contracting culture emphasized, and emphasizes, getting a good deal. This is a good thing -- good for the government and good for taxpayers.

The second is that there was a time when the procurement environment was one that encouraged vendors to figure out innovative ways to serve government customers. That environment produced good ideas, such as using discount coupons. That's not the environment now, either for contracting officials or for vendors. Keep your nose clean, produce a lot of documentation, and prepare for the next audit or headline is what is on the minds of both government and industry instead. This is not a good thing.

Posted by Steve Kelman on Mar 11, 2008 at 12:09 PM


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