Cart blanche

NIH's ECS III gives agencies lots of latitude in making hardware buys

For decades, the federal government has sought to economize on the billions of dollars it spends on goods, services and property. It is the main reason the General Services Administration was created in 1949'and over time, GSA schedules have become popular vehicles for federal agencies buying IT products.

It has long been recognized, however, that IT is an especially complex, specialized field that can benefit from shared, centralized expertise and purchasing. The Clinger-Cohen Act of 1996, which sought to align IT investments with agency business objectives, addressed the unique needs of IT by enabling the Office of Management and Budget to authorize select agencies to provide governmentwide acquisition contracts to other agencies.

One of the four authorized executive agents, the National Institutes of Health's Information Technology Acquisition and Assessment Center (NITAAC), runs three GWACs. Two'the Chief Information Officer Solutions and Partners 2 Innovations, and Image World 2'are mostly service-oriented, while the third, called the Electronic Commodities Store (ECS), emphasizes hardware and software. The third and current incarnation, ECS III, has handled $1.1 billion worth of IT orders from 74 agencies since its inception in 2002.

Buying with confidence

Besides promoting his staff's IT know-how, program manager Victor Powers says ECS III can help buyers through the minefield of federal contracting rules, especially the Federal Acquisition Regulation, which establishes uniform procurement policies for executive agencies and seeks to maximize value and competition, while minimizing administrative costs.

'The customer can buy with confidence, because we comply with FAR,' Powers said, having earlier cautioned, in a presentation to ECS III vendors, that compliance is actually a joint responsibility of NITAAC, vendors and customers. To improve compliance, the agency trains vendors on following Fair Opportunity to be Considered requirements when using the electronic request-for-quotes system, he said.

Powers said customers can call a toll-free number to get prompt answers to their questions from ECS III's contracting officers. Quotes often come back within three to five days.

NITAAC has been training customers to use the electronic RFQ system and plans soon to move everyone off the old manual system. It is also designing an electronic ordering system called e-GOS to meet e-government directives to improve internal processes. It will add online processing of delivery and task orders to the current RFQ capabilities, and serve all three GWACs. E-GOS is slated for completion next year. 'We're trying to consolidate all of our processes where we can,' Powers said.

Vendor Viewpoint

ECS III apparently gets few complaints from the IT hardware and software vendors who are on the contract. 'I haven't heard anything, so from my point of view, ECS III is doing a good job,' said Larry Allen, executive vice president of the Coalition for Government Procurement, an industry association in Washington.

Among the 64 prequalified vendors on the ECS III contract, 54 are small businesses, Powers said. That number is significant because OMB has lately been turning its magnifying glass on compliance with requirements to buy from small businesses, as some businesses grow too large to qualify, while large businesses do not always meet their mandate to subcontract to small businesses.

'We are required by OMB to go out to our vendors and certify ... on an annual basis that they are still small businesses,' Powers said.

'It's an important contract to us because it improves your credibility as a small business,' says Joe Abbate, president of Native Technologies Inc., a minority-owned systems integrator. 'It's a strategic contract for specific strategic business. It's not meant to catch everything.'

While Abbate admits getting little business through ECS III'far more comes through GSA'he approves of the GWAC. 'They have some of the most talented project and program people,' he said.

Managing vendors is an ongoing challenge for IT contracts. 'For a GWAC to work properly and well, one of the factors that needs to be considered is having a small number of highly qualified vendors,' said Neal Fox, a former assistant commissioner for acquisition at GSA's Federal Supply Service, now a consultant and GCN columnist.

Fox said that, in general, GWACs have too many vendors, but he admits the fair-opportunity rules require giving each vendor in a contract the opportunity to bid on every RFQ. This runs counter to agencies' instinct to assert greater control.

'Customers don't like the necessity of throwing their requirements out to a sea of vendors,' Fox said. 'They want to see a stamp of approval. Customers look at it and say, 'Why don't I just use the GSA schedule?' '

Contracting confusion

GWACs face increasing competition from multiple-award contracts, which are agencywide, not multiagency'at least in theory. But when the MAC is the upcoming Eagle program from the largest civilian agency, the Homeland Security Department, the effect on federal procurement could be significant, especially since other agencies can reportedly use it for homeland security-related purchases.

'Eagle is, technically speaking, a MAC, but clearly one that DHS expects other agencies to buy from as well,' Allen says.

The disadvantage for GWACs such as ECS III is that while they are closely regulated by the main OMB oversight group, the Office of Federal Procurement Policy, their agencywide competitors are not. That could soon change, however, as OFPP tries to bring MACs under its purview, said Fox, who recently wrote about OFPP's concerns over the Eagle loophole (GCN.com, GCN.com/573).

'The reason, of course, is because it dilutes their authority on running governmentwide contracts, but, secondarily, it allows agencies to get around the Clinger-Cohen Act,' Fox said.

An agency procurement official added that OFPP likely will require a business case for MACs.

'OFPP wants more discipline and greater scrutiny around MACs,' the official said. 'There will be changes to how MACS are managed and how accountable the sponsoring agency is.'

Meanwhile, OFPP is working to improve GWAC operations. Late last year, it instructed authorized agents, including NIH, to form a new Interagency Acquisition Working Group charged with improving management and use of interagency contracts. OFPP also has been gathering data from agency contracts to better understand how they're being used and identify opportunities for improvement.

'Our goal is to ensure these contracts are being used properly and in a strategic manner so agencies can consistently obtain best value,' says an OFPP official who requested anonymity.
Data was due March 31, but only 12 agencies submitted reports on time. OFPP acting administrator Robert Burton said the office extended the deadline to the end of April.

'By the fall, we should have a pretty good picture of what interagency contracting looks like,' Burton said.

Ideal World

Experts familiar with GWACs say the economies of scale of contracts don't inherently lead to price advantages. Their real added value centers on the mechanics of the contract, such as order placement.

Price breaks typically come when a contracting officer negotiates with vendors, and spot price reductions are sometimes available, Powers said (see Q&A).

'I've seen large contracts being discounted by as much as 60 percent,' said Ray Bjorklund, senior vice president and chief knowledge officer at Federal Sources Inc. of McLean, Va., a market-research firm.

Not everyone thinks GWACs are here for the long term. 'You have to ask yourself the question, 'Why are they in this business?' ' Fox said. 'OMB should be asking why ... agencies [are] competing with GSA for this, when it's GSA's core business. I think the product GWACs should die out. I don't see a future need for them. The service-based GWACs are fine.'

Bjorklund agreed and added that GWACs pose a few disadvantages to customer agencies.
'You have the risk of losing control over the requirement that you are placing,' he said, and rules that give customer agencies the ultimate responsibility for liquidating obligations can stick them with outstanding liabilities.

'GSA is, in principle, the central buying authority for the federal government,' Bjorklund said.

But he admitted the agency's credibility has been severely diminished by such missteps as the Abu Ghraib prison scandal and bungled contracts that cost some agencies money.

'One of GSA's current shortcomings as an organization is [that] they are not as helpful with assisted procurement as they probably could be,' although GSA's new Federal Acquisition Service, a merger of FSS and the Federal Technology Service, could improve GSA service delivery, he said.

Increasing control

But the agency procurement official said OFPP's actions indicate MACs will be transferred into GWACs so there can be more control, meaning governmentwide contracts are here for the long haul.

OMB is working on a rule for the Federal Acquisition Regulation that will lay out the requirements if your contract is used by other agencies, the official added.
'One of the things we will see is a more consistent fee structure,' the official said. 'Users will know what is included in the fee. Agencies want more transparency.'

ECS III, in contrast, prides itself on providing always-accessible, knowledgeable assistance for its 1 percent fee. 'You can call the people at NITAAC and say, 'Help me out,' and you've got staff who are motivated to help you,' Bjorklund said.

Allen pointed out that comparable service from GSA runs as high as 6 percent to 7 percent 'if you really want your hand held on your contract,' although the 0.75-percent GSA schedule fee provides access to more limited help from marketing specialists, he said.

Allen said the vendor community also thinks federal IT contracting could be better organized.

'The concern is that the proliferation of contract vehicles is needlessly duplicative,' he said. 'It's a cost to them, not only to manage this, but to maintain it. It's also a duplicative cost to the government.'

Yet no one wants total consolidation, because vendors know it is better to have more than one choice in serving customers, he said.

With leaders like the cheerful Powers, who comes across as equal parts gung-ho administrator and ardent salesman, GWACs nonetheless seem to have a promising future.

Powers said ECS III's superior controls can meet the challenge of proliferating MACs. Despite early talk of an ECS IV, he's squarely focused on the present contract, which runs through November 2012.

'We're very pleased with the work that we've done on ECS III,' he said. 'Our goal is to continue to evolve its processes and to better serve our vendors and customers.'

David Essex is a freelance technology writer based in Antrim, N.H.
GCN assistant managing editor for news Jason Miller contributed to this story.

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