The big freeze


The big freeze
GSA’s decision to suspend office supplies Schedule 75 takes dealers by surprise
There is concern amongst the US dealer community over the recent decision of the General Services Administration (GSA) to put a two-year freeze on new suppliers on its Schedule 75 for office supplies for federal government agencies.
The GSA stopped accepting new vendors on Schedule 75 from 1 October for a period of 24 months, giving only a few weeks’ notice that it intended to do so.
In 2009, Schedule 75 accounted for around $690 million in business for approximately 540 approved vendors. The three biggest vendors – Staples, Office Depot and OfficeMax – accounted for $67 million of those sales, but that still leaves over $620 million between the other vendors – mostly small and medium-sized businessess – at an average of over $1 million each.
The GSA says that the moratorium is to allow it to evaluate the effectiveness of the schedule as it looks to implement cost-saving measures.
According to the Administration, 50 percent of the schedule holders sold less than $100,000 worth of goods and services over the past year, while about 10 percent had no sales at all, leading to an administrative burden.
NOPA President Chris Bates told OPI that he accepted there may be an issue with a certain number of vendors on the schedule, but that he had been surprised at the lack of notice given by the GSA – just a few weeks – especially as getting onto a schedule such as this can be a lengthy, as well as costly, process.
Bates added that the decision appears to contradict noises coming out of Washington supporting small businesses.
Question marks?
Apart from the inability of new businesses to apply for Schedule 75, Bates said that one of NOPA’s main concerns regarded companies currently on the schedule, but the contracts of which will expire during the freeze period.
"What happens to these suppliers- he questioned. "Can they re-apply for a schedule as normal, of do they have to wait until the end of the two years-
He also pointed to members of dealer organisations and supplier consortia such as AOPD and George W Allen’s GoverNet group which have their own group-based schedules. Currently, it is unclear whether they can add new participants to the programme or not.
"There are a number of unanswered questions at this point in time," he said.
In an update just prior to OPI going to press, Bates said that it appeared that GSA was sticking to its guns to apply the freeze, and that NOPA was hosting a conference call to discuss the issue with affected members.
The GSA’s freeze on Schedule 75 comes as it is trying to push eligible agencies into buying their office supplies using the recently awarded FSSI Blanket Purchase Agreement (BPA) for office supplies. This BPA includes 15 suppliers divided into three pools. A number of small businesses are included, including, but obviously nowhere near the number as on Schedule 75.
Bates said the association had to "push pretty hard" to move the number of suppliers in Pool One (which does not include the big boxes) from three to seven, and that even then, a number of proven Schedule 75 suppliers were still excluded.
After the relative failure of the previous office supplies BPA – which reportedly only attracted $40 million in total sales – the GSA has secured the support of 16 federal agencies that have said they will give "mandatory consideration" to purchase off the new agreement.
This new BPA, says the GSA, will achieve $52 million in annual savings, and comes as part of wider White House plans to cut back on government spending.
What the implications could be for the small business community as a whole are still not clear.
According to small business association CGP, small businesses accounted for $12.2 billion out of the $37 billion spent through GSA schedules in 2009, but it is rumoured that other commodity group GSA schedules could be in line for freezes similar to that of Schedule 75.
Bates concluded: "At this stage, we’re still being cautious about it because there have been a lot of decisions coming out of GSA and the White House that have changed the playing field and we’re trying to understand what these new boundaries are. The main question is: ‘How can dealers that were aggressive and competitive continue to play a significant role in this commodity group?’"