One of the benefits of having a diverse Multiple Award Schedule program is being able to see the impact of Schedule policy changes in some places before outcomes are identifiable elsewhere. A wealth of anecdotal evidence from GSA’s office furniture schedules, for example, shows what happens when the agency insists not only on the cheapest prices in town, but installation rates that, were a contractor to offer them on their own, would likely bring enforcement action from the Department of Labor. Some may not consider furniture as exciting as IT, but consider these numbers.
GSA sales for all office furniture were nearly $1.7B in 2010. Last year that number was under $900M, a loss of about 45%. While some of this can be attributed to reduced market demand, contractors openly agree that they’ve sought other avenues because their Schedule contracts no longer represent a good business deal, save for a few limited circumstances. One area of resurgence is sales made via Alaska Native Corporations. This channel offers streamlined competition and margins that a company, especially a small business installer, can actually live on. Another channel is sales made through General Contractors. While these sales offer their own challenges, they are manifestly relationship driven with a high amount of customer input.
Other furniture companies have developed open market programs tied to purchases up to the Simplified Acquisition Threshold. Some, of course, have greatly reduced their federal presence, impacting competition.
We’ve long said that GSA’s leaders must understand that the MAS program only works if it is a good deal for customers, GSA, and contractors. If companies can’t get a decent ROI on their Schedule business they will develop other methods of reaching their customer. The changed sales patterns in office furniture prove that. Companies go out of their way to incur extra expense to develop better alternative business channels. Should the agency continue its “race to the bottom (price)” mentality, expect to see this scenario played out over and over again. We could, for example, have written this same story using office supplies as an example. Don’t get us started on IT, where countless alternative programs already exist.