GSA suspends new IT leases pending accord with industry

GSA suspends new IT leases pending accord with industry

Who's the leader of the FSS leasing pack? (in millions, Fiscal 2001)

Dell Computer Corp.$17.2
IBM Corp.$13.8
Northrop Grumman Corp.$10.1
PlanetGov Inc.$7.9
EMC Corp.$7.3
Government Micro Resources Inc.$7.2
Xerox Corp.$3.7
Comdisco Inc.$3.6
Unisys Corp.$3.3
DLT Solutions Inc.$3.2
MicronPC LLC$3.0

Source: Input of Chantilly, Va.

After months of unsuccessful negotiations with vendors and industry groups, the General Services Administration has suspended new lease orders through IT Schedule contracts until June 4.

Agencies must look to other governmentwide contracts to fulfill immediate system leasing needs until GSA and industry reach an agreement. The government spends about $100 million a year on IT leasing, according to the Information Technology Association of America of Arlington, Va.

'We are clarifying government procurement requirements so there is more specific language for our customers and industry,' said a GSA official who asked not to be named. The official said an agreement will be reached soon and GSA is working with agencies so as 'not to leave them in the lurch.'

The suspension does not affect existing orders, and GSA is willing to work with agencies that have leases under blanket purchasing agreements, the official said.

Larry Allen, executive director for the Coalition for Government Procurement, an industry association in Washington, said the issue is whether the leasing terms in place violate funding rules.

Allen, who earlier this month met with GSA for two hours to discuss the situation, said federal law prohibits agencies from making multiyear funding obligations if they are subject to yearly appropriations.

Allen said he anticipates a quick resolution of the situation because both sides already agree on many points. 'There is a sense of urgency with this issue,' he said.

Among the topics being discussed are assignment of risk and insurance coverage, Allen said.

He questioned GSA's decision to invoke a moratorium instead of extending existing terms.

'We are very troubled by this precedent,' he said. 'You cannot suspend a part of the program every time a problem comes up. You undercut consumer confidence.'

Allen said the coalition had asked GSA to extend the current terms for 60 days instead.

The GSA official said the agency had to suspend new leasing so there weren't 'different leasing terms and conditions' for every contract.

Pounding approach

ITAA president Harris Miller also questioned the timing of the decision.

'This seems like a sledgehammer approach when there is a lot of pressure on agencies to get various technologies in place on tight timetables,' Miller said. 'It slows down the ability of government to procure certain products and services.'

The GSA official downplayed the situation, noting that leasing accounts for only about 1 percent of the $10 billion agencies spend annually on the schedule program.

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