GSA struggles to keep up in tech sales

Annual sales of information technology products and services at the General Services Administration are not keeping pace with the overall rate of government IT spending, according to a new report from a market research firm.

According to numbers published by the Reston, Va., firm INPUT, and available on GSA's Web site, annual sales through the agency's multiple award schedule contracts for IT declined more than $200 million in fiscal 2006 over the previous year, falling to $16.3 billion from $16.5 billion.

A $600 million decrease in the sale of IT services accounted for a significant portion of the decline in multiple award schedule technology sales, according to INPUT's analysis.

"Overall federal IT services spending continues to grow at an attractive pace, so the decline in schedule spending reflects a conspicuous move by buyers to other contract vehicles," said Ashlea Higgs, an analyst at INPUT.

Increasing competition from department-specific multiple-award contracts was one external factor contributing to GSA's falling sales, the report stated.

"We see more and more vendors increasing their business development investment in nonschedule task order vehicles and in teaming with their peers to stay in front of agency buying preferences and contract consolidation," Higgs said.

GSA officials contested the figures, however, arguing that IT sales in fact increased by 1.8 percent, or $290 million, in fiscal 2006 over fiscal 2005. According to GSA, sales for the IT Acquisition Center and Schedule 70 were $17.35 billion in fiscal 2005 and in fiscal 2006 the agency did $17.64 billion in business.

A spokesman said the agency's calculations were based on an accrual accounting method, which included all financial commitments in the total, while the numbers from INPUT were derived from a cash-based accounting system where only money that has changed hands was counted.

Regardless of the accounting system used, Higgs said, the trend of agencies finding sources other than GSA to procure their IT services is continuing. He noted that even using GSA's figure of a 1.8 percent increase, the agency's fiscal 2006 sales did not keep up with inflation.

GSA is in large part a self-sustaining governmentwide procurement shop that covers its operating costs from the reimbursements it receives from agency customers. According to a year-end agency statement, the agency's information technology fund finished fiscal 2006 $96 million in the red.

GSA Administrator Lurita Doan has pledged to reduce to 30 days the average time it takes for businesses to get listed on its contract schedules, which are lists of available contracts and which account for about 80 percent of the agency's information technology solutions portfolio. In September, the average time for a business to get listed on schedules was 100 days.

It remains unclear whether this effort will increase agency purchases off the contract schedules.

Office of Management and Budget officials have said they want to look at the growth of agency multiple award contracts, also known as MACs, and are interested in creating a formalized approval process.