GSA Federal Schedule Contracts: Pros And Cons


You may have heard that the path to government contracting riches is paved with a General Services Administration (GSA) multiple-award schedule (MAS) contract, also known as a Federal Supply Schedule contract.

Contracts awarded via the GSA's MAS program are indefinite-delivery, indefinite-quantity (IDIQ) contract vehicles against which government buyers can place orders directly with the schedule holder for commercial products and services (including of-a-type variations) that the contractor agrees to sell at prenegotiated prices and terms and conditions. GSA puts the items, prices and terms in an online catalog visible to all on the Internet.

But while its true schedules hold advantages for sellers and buyers alike, there is no guarantee that you will end up with orders: Of the 5,400-odd companies in possession of a schedule contract for information technology products and services during federal fiscal year 2010, about 39 percent did no schedule business whatsoever. Another 17 percent didn't do business worth more than $100,000.

There's a lot to think about when embarking on the GSA schedule process. You need to consider your position in both the private- and public- sector marketplaces, and your plans for the next five years in both sectors before making decisions about your go-to-market strategy and the role of a GSA schedule contract within that strategy.

The generic business case for getting a schedule contract is that schedules are the only purchasing program accessible by all federal agencies. Schedules also let contracting officers narrow the field of potential sellers, permitting them to review and evaluate a handful of quotes rather than dozens, thus speeding the procurement process -- and government buying decisions tend toward the path of least resistance.

A schedule means you can sell to federal agencies without contracting officers having to spend time figuring out if you're responsible or capable for each procurement -- GSA has done that already. You can participate in schedule-restricted competitions, and because competition requirements are relatively lower for schedule purchases, also be in a position to sell directly to agencies. And although agencies can further negotiate schedule prices down prior to placing an order, and sellers often discount below the GSA catalog price during order-level competition, schedule prices have gained an official GSA stamp of approval as “fair and reasonable.” As a result, GSA-approved schedule prices can be the basis for a transaction, even if the buyer ultimately uses another contracting method or type.

The GSA stamp of approval can mean a lot to companies of a certain size, especially ones that don't have a lot of name recognition within their niches. A schedule contract demonstrates that you have a good past performance record, that you have financial capability, and that you have processes in place to ensure delivery and post-sale support. A schedule says you're a serious business, and serious about getting government business as government contractor.

But there are some circumstances under which a company might not need tacit endorsement from GSA.

For example, some companies know from the start which federal agencies are likely to be their customers, and that those agencies prefer their own agency-specific vehicles. (Although over time, as they expand from their initial customer base, these companies will frequently be asked if they have a GSA schedule.)

Some product companies are big enough in the private sector that they don't need GSA's validation and decide they don't want the hassle of government regulations or GSA-specific annoyances, and so opt to sell to the government through resellers. Or they might be too small to easily handle the costs of compliance with schedule requirements, which are not insignificant.

Going through resellers doesn't entirely erase the burden of compliance with federal rules, but it does lighten it. Companies dominated by finance and legal departments tend to go the indirect route, while companies dominated by their sales force tend to want their own schedule.

Service companies that don't perform manufacture-related services don't have the option of going through a schedule reseller. GSA takes a dim view of people reselling other people's professional services on schedule.

Getting a schedule contract is not for the faint-hearted. It'll require price rationalization, ongoing monitoring of commercial sales, and a dedicated team to keep GSA satisfied that you're disclosing your sales practices as they change to keep your contract in compliance. Government contracting, and GSA schedule contracts in particular, requires a dedication to internal controls not paralleled in the private sector. Schedules aren't for the sloppy, as one well-respected government contracts attorney told us.

That said, schedules have proven to be profitable vehicles for companies committed enough to playing by GSA's rules. Unfortunately, companies newly in possession of a schedule actually haven't done anything yet. They must still find government customers and weather the competition that occurs at the ordering stage. Possession of a schedule is no guarantee of actual orders.

The preceding information was adapted and digested from the book “The Inside Guide to the Federal IT Market,” published by Management Concepts Press. For more information, visit www.insideguidetofederalit.com/.

Steve Charles is co-founder and executive vice president of immixGroup, which helps technology companies do business with the government. He is a frequent speaker and lecturer on technology and the federal procurement process. He can be reached at Steve_Charles@immixgroup.com.

PUBLISHED MAY 8, 2014