Government contract spending grew 13 percent from fiscal 2007 to fiscal 2008, but sales of goods and services through the General Services Administration's federal supply schedules grew only 2 percent.

Schedule sales reached $36.6 billion in 2008, compared with $35.8 billion in 2007, according to an analysis completed for Federal Times by FedSources Inc., a McLean, Va., market research firm. It was the fourth year of slow growth. The annual growth rate reached 22 percent in 2004, then dropped to 5 percent in 2005 and has been declining ever since.

"It is becoming clear the schedules are less desirable" as a means for agencies to award contracts, said Ray Bjorklund, senior vice president and chief knowledge officer for FedSources. "Customers who could be using these schedules don't seem to be."

Federal supply schedules are catalogs of contracts maintained by GSA, and long have been the centerpiece of the agency's procurement operations.

Some observers, including Bjorklund, suspect the small increases in sales in recent years point to problems that GSA will have to remedy if it is going to successfully compete with federal agencies that offer similar products and services.

Nonetheless, GSA officials do not appear overly alarmed.

"We have been trending up 2 [percent] to 3 percent for the past few years, and we expect to see the same in 2009," said Tyree Varnado, deputy commissioner of GSA's Federal Acquisition Service. "We see this as good, steady growth. Two [percent] to 3 percent is indicative that our customers continue to come to us. I would rather see slow, steady growth than growth that is unpredictable and uncertain."

GSA's improvements

GSA says some improvements have been made and more are on the way.

Jim Williams, GSA's Federal Acquisition Service commissioner, said GSA has made progress in getting some new products and service on contracts faster.

When a company wants to add a product to its schedule contract, such as when an information technology company wants to add a printer to its schedule offerings, the contract must be modified. GSA has reduced the time it takes to modify a contract, on average, from 100 days to about 16 days, Williams said.

In addition, GSA is moving to paperless documents in an effort to speed things up, Williams said.

"We are far along in requiring companies to submit requests for modification [electronically]," Williams said. When the process is finished in a year or two, search and retrieval of needed documents will be faster and work will be more easily distributed among employees, he said.

At least one vendor notices the difference.

Beginning with GSA's Get It Right program in 2004, in response to revelations of widespread problems in the way the Defense Department used GSA schedules, "there has been tremendous changes in the way GSA does business," said P.J. Bulger, executive vice president of QinetiQ North America, which did $366 million in business via the schedules in 2008. "They are now more responsive, and they have a better work force. To get a modification done on a schedule previously took nine months. Now it takes three to six weeks."

GSA has set a higher bar for itself and has sought industry comments on how to make things better, Bulger said.

Bulger has one complaint: the audit process.

"The scope of the audits on GSA schedules continues to expand. The auditors want to audit everything about your company. If this continues, GSA is not likely to get as favorable pricing in the future," Bulger said. "Audits are so extensive, can you afford to do business this way?"

Larry Allen, president of the Coalition for Government Procurement, an industry advocacy group, also sees considerable improvement at GSA.

The business that GSA does through its assisted services program is better managed than before, Allen said.

Under assisted services, GSA handles all phases of a complex procurement, compared with the direct-buy approach of the schedules.

"Now they are only taking on projects that they can handle and handle well," Allen said. "GSA is not taking on all comers, so their business line is more easily managed and better vetted."

"It will take time to improve further, but we're not hearing as much screaming from members as we did this time last year," Allen said.

One customer who is largely happy with GSA schedules is the Labor Department.

"We check with GSA schedules before we go the open market, and we have found it is a good business tool," said Valerie Veatch, director of Labor's Office of Acquisition Management Services.

Labor's reliance on GSA schedules grew earlier in the decade when it lost some of its acquisition workforce and expertise, Veatch said.

"And when GSA first branched into offering services, our reliance on them grew," Veatch said. "It was easy and convenient."

GSA also expects more sales to state and local governments, which can buy products and services under four schedules — information technology, law enforcement solutions, disaster response and recovery solutions, and counterdrug and interdiction solutions.

"State and local governments are now looking more at the schedules," Williams said. "And we are looking at how we can help them do that."

Finally, GSA sees 10,000 green products and services in its future, Williams said. "Everybody wants to go green, and the schedules are the best place to accomplish that."

Long-term fixes needed

Some of those increased sales will come with the increased funds agencies have to spend under the ecomonic stimulus package over the next two years, but GSA will need to make more substantial fixes if it wants to increase sales long-term, Bjorklund said.

"GSA needs a clear picture of what and how the government intends to buy in the future and then be able to craft and adjust the schedules programs to that changing marketplace," Bjorklund said. With 39 schedules, many are underused and items agencies want to buy together might not be offered under the same schedule, he said.

"Maybe you need to take the 39 schedule programs and shuffle them in a different way so they're focused on a class of services and different commodity combinations," Bjorklund said.

GSA might also reconsider having different types of schedule being handled by different offices, Allen said. Currently, the IT schedule is administered by the Integrated Technology Service Office, fleet schedules by the Travel, Motor Vehicles and Card Services Office, and the rest by the General Supplies and Services Office. Consolidating management could make it easier to tailor the program to meet customer needs, Allen said.

Elise Castelli contributed to this story.

Tell us what you think. E-mail Federal Times.