New GSA Program Steers Federal IT Buying to Small Businesses

Small businesses often find it challenging to gain access to the federal information technology market, despite efforts by government agencies to smooth the procurement process for small companies.

In a move to provide more opportunity for small businesses, the federal General Services Administration (GSA) has awarded a bundle of IT contracts to small firms under the National Information Technology Commodity Program (NITCP), a new vehicle designed to streamline procurement for routine items. The NITCP provides a one-stop shop for IT products, giving government agencies a fast and effective way to order IT commodities at deeply discounted prices, GSA said.

GSA revealed in mid-December that so far it has awarded 43 blanket purchase agreements (BPAs) under the NITCP to small businesses including women-owned, disadvantaged, veteran-owned or service-disabled veteran-owned businesses. “The primary goal of the NITCP is to lower the prices and the cost of acquisition for the most commonly purchased IT products, saving taxpayer dollars and allowing federal, state and local agencies a fast and easy purchasing option,” said Mary Davie, acting commissioner of the GSA Federal Acquisition Service.

GSA quietly started to roll out the awards late last spring, and then picked up the pace during the summer and fall.

Six IT Contract Packages

The potential total value of the six contract packages, which range in duration from three to five years, is US$650 million. The breakdown by IT function, the number of awards, the potential value of each package, the contract duration, and the month of the award are as follows:

  • Data Center Equipment: Twelve firms; $267 million over one to three years; November 2012.
  • Laptops, Desktops, Notebooks, Netbooks: Eight firms; $275 million over one to three years; September 2012.
  • Video Teleconferencing Equipment: Nine firms; $44 million over one to three years; August and September 2012.
  • Computer Monitors: Nine firms; $18.1 million over one to five years; August 2012.
  • Computer Tablets: Three firms; $32 million over one to three years; May, 2012.
  • Mobile Devices and Equipment: Two firms, $13.5 million; one to three years; May 2012.

The BPAs provide a centralized strategic sourcing solution to drive down prices by leveraging buying power throughout the government and making procurement of IT commodities more efficient, GSA said. Pricing under the NITCP is discounted from the awarded vendor’s negotiated GSA-schedule published prices. In addition, BPAs awarded through the NITCP offer further lowered prices through volume discounts, vendor on-the-spot discounts, and reverse auctions.

The NITCP initiative is providing another channel to the federal market for small businesses that find themselves competing against major national IT companies, or stretching to deal with the detailed contracting requirements for federal procurements.

“GSA provided a great opportunity to these small businesses. During a time when government-issued funds are uncertain to contractors, these companies were presented with an opportunity to enter the government market, gain new business and increase revenue,” Shanae Newman, vice president of VBP OutSourcing, told the E-Commerce Times. VBP assists contractors in meeting federal accounting and auditing requirements.

Marketing Leverage for Small Firms

“A great benefit for the contractor is the fact that they now have their foot in the door of the government market. Naturally, small businesses have lower overhead and general and administration rates, which benefit the government tremendously. Agencies will find themselves spending less money on these contracts versus directly working with a larger supplier,” Newman said. “This is a cost-effective approach for the government. With hard work, fair rates, and undeniable service, small firms can continue their work with the federal government and bid on more contracts as they become available.”

These agreements will “eliminate the need for every government agency to initiate and manage an RFP for every project, which is very time-consuming not just for the government, but also for individual bidders. Instead, a central federal agency painstakingly vets individual companies in order to provide a single list of approved providers for each product category,” John Samborski, CEO of Ace Computers, told the E-Commerce Times.

“This means, for example, if FEMA is looking for a high-quality, reliable, cost-effective mobile workstation provider, it doesn’t need to start from the ground up,” he said. His firm qualified for several of the BPA awards.

“We’ve been in business for just about 30 years. During that time we’ve found the federal procurement process to be fair. As long as small businesses are willing to play by the rules and follow the specified procedures, they’ll recognize that government opportunities are equally open to them,” Samborski said.

The NITCP initiative “is an important vehicle that helps agencies cost-effectively acquire the tools and resources they need in an easy, efficient manner,” said Ronald Segal, CEO of Spectrum Systems, another of the selected firms. “As a small business we now will be competing against other small business with similar size standards instead of large business and the OEMs directly,” Segal told the E-Commerce Times.

“The NITCP organization has been reaching out to federal agencies to increase awareness of the IT Commodity BPAs to foster ease of use, competitive volume discounts, and to provide agencies another option to meet their small business social-economic goals,” Segal said. “Agencies are able to select line items from our catalog offering on GSA Advantage, and place their orders directly using the tiered discount pricing. We are looking forward to responding to upcoming solicitations that will only be released to the NITCP BPA holders to build our IT commodity business and bring new opportunities to the OEMs that we represent.”

The NITCP initiative is to be viewed as the “leading source and first choice for providing IT commodity end-to-end solutions for federal customers,” according to the Federal Acquisition Service within GSA.

One Arrow in the Quiver

That may be an overly ambitious goal, since there are other federal contracting mechanisms that are also available to both agencies and vendors. “Commodity IT acquisitions represent only a small fraction of total IT buys. Most are made as a systems engineering or total solution purchase. The NITCP program may have a marginal benefit for the commodity sector, but this is not enough to say that it will have a large impact on federal IT spending,” Larry Allen, president of Allen Federal Business Partners, told the E-Commerce Times.

“The original price negotiated by GSA for NITCP program items may be lower than some existing contracts, but that is a temporary benefit versus other IT contract mechanisms. Now that everyone knows what those prices are, savvy contractors can elect to match or beat those discounts on other vehicles,” he said. “I am not sure what GSA is doing with larger businesses here. If I were a large business, I think I’d be inclined to selectively match or beat NITCP prices via my existing contracts and then rely on my significant market ID and sales reach to counter the smaller resources of NITCP holders,” he added.

“This tells me that NITCP is just another arrow in the IT procurement quiver. It may be used, but likely won’t become the dominant arrow for anyone,” Allen said.

Still, GSA is aiming to generate $1 billion in commodity IT transactions under the NITCP program over five years. That may be a small slice of the federal IT pie, but for some small businesses it could be manna from heaven.

John K. Higgins is a career business writer, with broad experience for a major publisher in a wide range of topics including energy, finance, environment and government policy. In his current freelance role, he reports mainly on government information technology issues for ECT News Network.

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