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The Ins and Outs of GSA Contracts

Having your own schedule can lead to more government business.

by Tam Harbert

If you sell to the federal government, you've undoubtedly been asked: "Are you on the GSA Schedule?" Answering "no" doesn't necessarily preclude you from government business, because you can team with other companies and use their contracts. But if you want to maximize federal revenues, consider setting up your own General Services Administration (GSA) contract.

In many ways, a GSA contract is "your ticket to the dance," says Jason Bystrak, senior manager of channel marketing at Ingram Micro. "You almost have to have one to be considered a serious player by government procurement officers."

The GSA is the federal government's procurement and property management agency. The GSA Schedule is a collection of 43 indefinite delivery/indefinite quantity (IDIQ) contracts (also known individually as schedules); each covers a group of products or services. Information technology products, for example, have the contract called Schedule 70. About 27 percent of federal IT purchasing went through the GSA Schedule in 2006, according to INPUT, which does research and consulting on the government market.

Procurement officers prefer to purchase through the GSA because of the convenience of pre-established pricing, terms and conditions. And by having a GSA Schedule, you build up a performance record with the government, making it easier to go after other government business. That includes state and local governments, adds Bystrak, because about 40 states permit purchasing from the GSA Schedule.

How should you decide whether and when to get your own GSA contract? With pros and cons on both sides, there's no easy formula. This article explores the issues and offers advice on getting started.

Making the GSA Decision
First and foremost, follow the lead of your customers. If your most important customers are asking for GSA, it's a no-brainer.

"We reached a point where, in order to go forward into certain types of accounts with certain manufacturing partners, and to grow into certain types of business, we needed a GSA Schedule," says Wick Townsend, senior vice president for business development at Dataline, a $100 million federal government solution provider. The company has had its own GSA Schedule for seven years. "Customers wanted to deal with us as their prime contractor," Townsend says, "and the OEMs and software suppliers that we worked with wanted us to step up and offer our own prime contract."

On the other hand, customers may want to buy through a different contract, in which case you can partner with another company.

GSA Help from Ingram Micro

Ingram Micro's GovEd Alliance offers several resources to help solution providers set up and maintain a GSA Schedule:

  • GSA Pass Through Program. This program helps solution providers obtain Letters of Supply from manufacturers, a requirement to include products on a GSA Schedule. Some manufacturers will support any resellers, others only selected partners. Ingram Micro also helps resellers maintain their GSA contracts by regularly passing through manufacturer-certified information such as updated pricing and product documentation. These notifications include all data requirements on listed products, such as country of origin, warranty length, Special Item Numbers, Energy Star and Section 508 information. "A lot of legwork goes into keeping this information up to date," says Kate Carroll, senior manager of GovEd Alliance business operations at Ingram Micro. More than 80 manufacturers and about 100 resellers participate in the program, which costs $500 annually ($375 for GovEd Alliance members).
  • Discounts. Ingram Micro negotiates 10 percent discounts for GovEd Alliance members for products and services that will help with GSA contracts. These include the services of JDS Marketing, which will negotiate a GSA Schedule and help manage and maintain it; and SenSoft International's online contract management services, which help automate data uploads to the GSA web site.
  • Partner Locator. This is an online tool enabling GovEd Alliance members to enter information about their businesses, including details on their GSA and other contracts, and whether they hold small- or disadvantaged-business certifications. The listing then gives prime contractors and subcontractors a way to partner up. "We encourage resellers to team with each other," says Bystrak.

For more details, Ingram Micro's customers can contact our GovEd Services team.

Choosing Manufacturers
You'll need to determine which manufacturers you want on your schedule, and which you will be allowed to include. The GSA requires solution providers to obtain a Letter of Supply (LOS) from their manufacturers. The LOS guarantees a source of supply for the contract period, usually five years, and provides commercial data supporting the prices being offered.

But large manufacturers won't always cooperate, either because they prefer to sell direct to the government through their own contract, or because they sell only through a few hand-picked solution providers.

But a lack of certain large manufacturers doesn't mean you should forgo your own schedule. Sometimes having a schedule opens opportunities to team with large systems integrators on big government projects. In some cases, it pays to have high-quality, smaller manufacturers that aren't widely distributed.

As an example, GovBuys, a five-employee solution provider, recently got included in a group of blanket-purchase-agreement contracts for data encryption products worth more than $79 million. Having an encryption product called WinMagic from a small Canadian company on its schedule was the key, says Gary Block, president of GovBuys. "They wanted the WinMagic product, so that's how I got into the mix," he says. "Now I've got Lockheed Martin calling me."

"You almost have to have a GSA contract to be considered a serious player by government procurement officers."

- Jason Bystrak, Ingram Micro

Ensuring Your Competitiveness
There's no sense setting up a schedule if you won't be competitive. Once you determine which manufacturers to include, research those already on the GSA Schedule to ensure that you can meet or beat their pricing. This information can be found on GSA Advantage! (www.gsaadvantage.gov, the GSA's online shopping and ordering system).

Debbie Wolland, president of consultancy JDS Marketing Group, sometimes advises solution providers against getting their own schedules if their manufacturers have little or no control over pricing in the commercial marketplace. That's because under the GSA, you have to sell at or below the lowest commercially available price. If there's a price war going on, a GSA contract could slice your margins to the bone.

Making a Commitment
If you want your own GSA Schedule, be prepared to commit time and money to establishing and maintaining the contract. Key steps include:

  • Filing the paperwork, including paying for a third-party survey of your past performance
  • Negotiating with the GSA, which drives a hard bargain
  • Maintaining your contract by updating price lists and product information on a regular basis

"You almost have to have a full-time person to manage your GSA Schedule," notes Bystrak. Solution providers without a government expert on staff often turn to consultants for help.

Working with someone who knows the process and has experience with the GSA can pay off in the long run. "Otherwise, the GSA will have its way with you during the negotiations and you'll end up with much less favorable terms and conditions than your competitors," says Mark Amtower, founding partner of consultancy Amtower & Company, which focuses on doing business with the government. (Note that Ingram Micro offers the GSA Pass Through Program, a service to help solution providers negotiate and maintain their contracts. (For details, see the "GSA Help from Ingram Micro" section above.)

You'll also be required to adhere to stringent terms, conditions and government regulations -- such as filing quarterly sales reports with the GSA and paying an industrial funding fee of 0.75 percent of sales (which supports GSA operations). You are also subject to auditing by the GSA, so you must keep good records and be willing to open your books to public scrutiny. The GSA requires you to match or beat the discounts you give to your best customers, so you'll have to make that information public. "Disclosure of those practices sometimes scares people off," says Dataline's Townsend.

You also must carefully adhere to the laws regulating sales to the government. The Trade Agreements Act, which implements many multilateral and bilateral international trade agreements, specifies that only products made in the U.S. or in countries specified in the act can be sold under GSA contracts. And the Federal Acquisition Regulation (FAR) is the primary regulation governing all federal executive agencies in their acquisition of supplies and services with appropriated funds. There can be substantial penalties for violating the government's rules. In 2005, for example, OfficeMax paid $9.8 million to settle allegations that it submitted false claims when, under its GSA contract, it sold products made in countries not permitted under the Trade Agreements Act.

Tips for Initiating Your GSA Contract

Ingram Micro's GovEd Alliance offers several resources to help solution providers set up and maintain a GSA Schedule:

  • Download and read a copy of the GSA solicitation for information technology products and services from www.fedbizopps.gov. Click the button at the bottom for vendors and then Find Business Opportunity on the left. Scroll down to Search by Solicitation/Award number, enter number FCIS-JB-980001B and then click Start Search at the bottom of the page.
  • Obtain a Past Performance Evaluation (PPE) report on your company from Open Ratings. The PPE form is included in most contract solicitations. If not, you can get one from Open Ratings or by contacting Carolyn Kell of Dun & Bradstreet at kellc2@dnb.com or (800) 999-3867, ext. 6746. You'll need to provide at least six references, preferably more.
  • Sign up for Ingram Micro's GSA Pass Through Program to get Letters of Supply and pricing data needed for your GSA submission.
  • Complete the solicitation and make sure your offer complies with the Most Favored Customer policy applicable to all multiple-award-schedule contractors. Compare your prices to competitors' to make sure you're in the ballpark. (You can do this research at GSA Advantage!, www.gsaadvantage.gov.)
  • Submit your offer with your current commercial price list, discount schedule and, if required by the solicitation, references from customers.

Remember to Market
Once you get your GSA contract, you'll have to market it. Simply having a contract is not going to attract new business or higher sales, experts say. "I hate it when people get a schedule and then expect the phone to start ringing off the hook," says Wolland.

Townsend, whose company generates 40 percent of revenue through its own GSA Schedule, agrees. "The GSA Schedule is simply a vehicle, a way to purchase," he says. "If you don't have a customer-facing sales and business development group, then GSA will do nothing for you."

Your primary marketing responsibility with the GSA is simply educating your customers, says Bystrak. Make sure clients know you have a GSA Schedule and how easy it is to purchase from it. This is especially important at the state and local level, where procurement officials may not be aware of the GSA option. When the GSA became available to states as a purchasing vehicle, "it opened up a lot of business for us," Townsend says. "But since it's relatively new, you need to educate."

Solution providers should become deep information resources for government procurement officers, Amtower suggests, and should be proactive in keeping the government current on the latest developments. Manufacturers are not always good at informing the government about the latest products, price changes, programs and market trends. That's where solution providers can add great value.

It's also best to target your marketing to specific agencies, instead of trying to reach the entire government. "Focus on small beachheads, maybe a couple of agencies," says Amtower. "Start there, find the sweet spots and expand those over time."

 

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