Another View: Hill makes welcome changes to MAS

Stephen M. Ryan

Strange and occasionally wondrous things happen in Washington just before Congress adjourns.

One was the recent dead-of-night passage of the E-Government Act of 2002, led by Rep. Tom Davis (R-Va.) and Sen. Joseph Lieberman (D-Conn.) and signed last month by President Bush.

The bill shows a troublesome tendency. It assumes the government aggrandizing itself on the Web by providing more and more services is a good thing'a premise my growing libertarianism rejects. Still, I applaud Section 211, which lets state and local governments purchase IT from General Services Administration Multiple-Award Schedule contracts.

This provision neatly sidesteps opposition from the pharmaceutical industry, which killed, with prejudice, the last attempt at so-called cooperative purchasing a decade ago because prescription drug prices to states would have been required to conform to federal MAS pricing.

The opening up of IT Schedule 70 to state and local governments should be a bonanza for schedule contractors, whether broad-line resellers or single-product niche vendors. States and local governments, feeling the bite of recession, can use the schedules to reduce their procurement costs.

The Section 211 policy also is the reverse of the unfunded mandate fights of the 1990s. In this case, the feds are taking on expenditures that will benefit these other government units, not impose costs on them. For example, it is conceivable that Federal Supply Service staff may get additional work, for example, adding new, state-focused contractors without any corresponding federal sales.

A second big policy change for the Schedules program is the reduction to 0.75 percent of the 1 percent industrial funding fee schedule holders pay GSA. This reduction is an important and appropriate policy decision. A 1 percent fee on a $22 billion program adds up to real money. As a result, other governmental flies have found the FSS honeypot.

At least five e-government pilots that have no particular relationship to the FSS program are getting lots of FSS money. Take this as warning: No government fund can be permitted to exceed its intended need. It makes sense to limit the user fee revenues to what is necessary to defray the activity. So boaters' fees should support the Coast Guard but not the Health and Human Services Department's Head Start program, even though we all like Head Start. GSA's FSS income should go solely to defray GSA contracting costs and not become an off-the-books slush fund for needy programs.

The new broom running FSS is former Air Force Col. Neal Fox. GSA took an appropriate and refreshing step in asking a former government customer to lead such an important function.

Fox has had several months to immerse himself in his new responsibilities and is now ready to launch a series of refinements to FSS processes. These may include permitting more-automatic refreshment of technology and other streamlining changes.

The only threat to the future of the schedules program is the continued concern to a few lawmakers that agencies using the schedule contracts are not evaluating enough price quotes. Such concerns were embodied in Section 811 of last year's Defense Authorization Act.

Fairness to small business is another concern. To keep the system running, GSA must keep these criticisms in mind.

Stephen M. Ryan is a partner at the law firm Manatt, Phelps and Phillips LLP of Washington. Contact him at sryan@manatt.com.

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