Let government marketplace dictate MAS use

Several years ago, at the behest of the Clinton administration and in bipartisan
fashion, the Republican-led Congress passed a procurement reform bill.


In the bill was a provision permitting, but not requiring, state and local governments
to buy goods and services through the General Service Administration's Multiple-Award
Schedule.


For those who keep score, the process began with Section 1555 of the Federal
Acquisition Streamlining Act. It was a generous and appropriate act, letting states and
localities shop the schedule for obscure items when they had no local contract or when a
local dealer or national manufacturer had failed to give them as good a price as it gave
the feds.


It is astounding and simply wrong that Congress has twice gone back and suspended
implementation of this program based on a series of special pleadings. It would be triply
wrong to repeal the provision.


This could be partially solved only by carving out the information technology program
and ensuring that this industry's portion of MAS remains available for state and local
purchasing.


The stated reason for Congress' concern is the impact on small businesses, such as
distributors serving a small and geographically remote state capital.


This is the same argument small towns used to keep out Woolworth's five-and-dimes in
the 1920s and 1930s.


It is an argument unworthy of any true economic analysis. In an age when companies such
as Gateway 2000 Inc. can leap to the top of the national sales heap by direct orders, the
marketplace has already decided the issue.


IT is sold in an international marketplace. If, for example U.S. computer makers raise
their prices above what the market will sustain, they will get croaked by Japanese or
Third World manufacturers. U.S. companies know this.


Therefore, MAS prices promise savings for state and local governments.


States and localities that wish to protect their small businesses can do so simply by
directing their buying officials not to patronize the schedule. If they value services
they are receiving locally, with products made nationally, they acan put their money where
their taxpayers' mouths are.


It is that simple. State and local governments can save money by reducing the number of
purchasing officials and other administrative costs. Vendors may benefit by not having to
duplicate contract negotiations in every burg and state capital.


But Congress is making a political, not economic, judgment. So who is behind the
repeal?


Fundamentally, it is the international pharmaceutical giants, who are the antithesis of
the alleged small business concern. Pharmaceutical companies have funded a massive and
effective grassroots and Washington Gucci Gulf effort for repeal.


Like the wolf in Red Riding Hood garb, they have tried to hide their bulky
multi-national, financial presence behind much more modest players, such as heavy
equipment makers and fire truck manufacturers, that are also significant economic or
political forces in their own right. The Chamber of Commerce unfortunately has lent
support to this effort.


There may also be some sticks-in-the-mud in the information technology industry who are
earning far more profitable margins at the state and local level than they are on their
federal MAS business.


This coalition deserves respect for its lobbying skill, even if it results in terrible
public policy for the IT industry.


So where does the game now stand? It appears that this provision--once within the
control of the House Committee on Government Reform and Oversight and the Senate
Governmental Affairs Committee--will be revisited in the House Appropriations Subcommittee
on Treasury, Postal Service and General Government.


The subcommittee's chairman, Rep. Jim Kolbe (R-Ariz.), and Rep. Steny Hoyer (D-Md.),
two of the most thoughtful, skillful and gracious members on the Hill, and their Senate
counterparts can bring a welcome rationality to the crossruff of competing public and
private interests.


MAS has become an extraordinarily successful program, which itself has many
small-business participants--both as direct schedule holders and as suppliers to larger
businesses. If it is permitted to serve the state and local community, it will represent a
win for taxpayers at all levels.


Stephen M. Ryan is a partner in the Washington law firm of Brand, Lowell & Ryan. He
has long experience in federal information technology issues. E-mail him at smr@blrlaw.com.


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