GSA Schedules Are Losing Customers, Report Says Information technology sales through GSA Schedule 70 fell by 2% in fiscal 2005 after years of double-digit growth, according to the market research firm Input. A drop in equipment sales accounted for the decrease, but spending on IT services grew by less than 3% over the previous year. This follows five years in which Schedule 70 sales increased by at least 15% annually. IT has been the fastest-growing category on the GSA schedules. “The decrease is not dramatic…but it comes during a year in which total federal IT spending is still increasing, so this represents a shift specifically away from the schedules as a procurement channel and not just a general decline in the market,” Input said. Some industry officials believe that shift is a result of findings of irregularities in the use of schedules and criticism of the Defense Department’s reliance on schedules and other fee-for-service contract vehicles. Defense is by far the largest schedule customer, accounting for more than half of sales. Industry officials said GSA’s “Get It Right” campaign, instituted as a result of findings of abuse, had complicated schedule sales. (SAA, 11/18/05) “There is a stigma attached to interagency contracting,” declared Stan Soloway, president of the Professional Services Council, a contractor group. Meeting with reporters Feb. 8, Soloway said he sees “a major change in customer behavior.” More and more agencies are creating their own multiple-award contracts, such as the Navy’s Seaport-e and the Homeland Security Department’s EAGLE and First Source IT vehicles. He said there are at least 20 of these single-agency multiple-award contracts, reducing those agencies’ reliance on GSA schedules. “The customer base is being chopped up,” he warned. Input said: “Even with the slight decline in spending during FY05, the GSA Schedule 70 has become, and will continue to be, a critical component of procurement activity in the federal IT market. Accounting for more than one-third of addressable federal IT spending, the schedules are a procurement channel that contractors simply cannot afford to ignore.” Sales on Schedule 70 fell to $16.5 billion, from $16.8 billion in 2004. Sales growth on non-IT schedules is slowing, too. GSA reported total sales on all its Federal Supply Schedules increased by 11.5% in 2005, down from 16% growth the 2004 and 35% growth in 2003.