8:38 am, May 27, 2015

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  • Strategic sourcing bad for small business
    Proceeding with any more FSSI without doing a full economic impact study is a big mistake. Research I have seen (exec briefings, not entire studies) indicates that hundreds of small businesses currently on GSA Schedule will lose the ability to sell to the government resulting in both layoffs, and in extreme cases, companies going out of business. For what seems to be, thus far, minimal savings, the impact on small business is extreme, especially in the current economy. After all the lip service from both the president and Congress about helping small business, this move is a slap in the face.
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  • A Cost Benefit Analysis is Necessary to avoid Unintended Consequences
    Prof Samuel D Bornstein
    A Cost Benefit Analysis is critical to evaluate the net impact of Strategic Sourcing considering the havoc that the pilot Strategic Sourcing program on Schedule 75 Office Supplies has had on small business contractors and their unfortunate employees who were laid-off due to FSSI. My suggestion is consistent with a Report prepared by the Office of Management and Budget (OMB) entitled the 2012 Draft Report to Congress on the Benefits and Costs of Federal Regulations. This Report urges that "agencies should attempt to quantify the adverse employment effects (if any) of regulations and turn those effects into monetary equivalents for purposes of Cost Benefit Analysis" (P.81). The OMB Report continues, "OMB does agree that in a challenging economic period with significant unemployment, it is important for regulatory agencies to attempt, to the extent feasible, to include with their analysis of the costs and benefits of economically significant regulations an assessment of the employment effects (whether negative or positive) of those regulations, particularly in view of the potential long-term adverse consequences of reduced employment for affected workers and their families." Recent economic research has been able to quantify the economic cost of job loss. In the Report, there is frequent mention of the concern expressed that when evaluating Federal initiatives there is a concern for the impact on employment and the research which recognizes that the replacement wages for those who suffered job loss will cause economic loss far beyond the period of unemployment. In fact, when the unemployment rate exceeds 8 percent , workers lose in excess of 2.8 years of pre-displacement earnings which will have an impact for 15 to 20 years. At an unemployment rate of 6 percent the loss is 1.4 years of pre-displacement earnings. The economic cost of job loss may be in excess of $100,000 per job. At this time when jobs are critical for our economy, it should be recognized that job retention is as important as job creation.
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  • FSSI is doomed to failure
    GSA never introduced an alternative to FSSI (Federal Strategic Sourcing Initiative). This procurement theory actually denies 17,000 companies from selling to the federal government., hence leaving only 10 or 15 companies per schedule selling items to Uncle Sam. Via Economics 101 past experiences, a handful of companies vs 10,000s of vendors wiil create one of these 2 scenarios : a) price fixing and oligopolies & monopolies. b) The government will strong arm these companies to offer such low prices forcing these vendors to leak non-trade compliant items. GSA need to make a decision - do they want low prices or trade compliant items. I would like to present a 21st Century Competitive Solution vs FSSI I strongly believe GSA should modify existing software to control buyers rather than eliminating competition via the FSSI procurement program. If buyer breaks protocol hence buyer would be disciplined. This software project can be done without additional funding. GSA, DoD & NASA can prioritize this software project via existing employed Software Engineers. It takes the will and priority to make this happen. From what I can see there are some really big holes in the procurement process. 1) Via this GAO report http://www.gao.gov/products/GAO-12-705T most purchases were made outside of GSA procurement web site www.gsaadvantage.gov. A solution to this problem would be take away the buyers PHYSICAL credit card and store the credit card information online via www.gsaadvantage.gov This also protects the credit card # and information from possibly being compromised. Again this software project can be done with no additional funding. Amazon.com is a perfect example. I know the government is not a company but I am certain GSA has great software engineers to accomplish this task via a top priority and no additional funding software project. For open market purchases buyer currently utilize fbo.gov and/or other existing procurement sites. The same projects can be accomplished via these sites. 2) An independent software company should be allowed to screen scrape information from gsaadvantage.gov to prove selected FSSI Vendors "DO NOT" offer the lowest prices/ best quality. 3) Via Vendor uploads develop back end software to monitor and reject outrageously priced items. Example a $25,000 toilet seat or $5,000 hammer. Statistical databases exist via the free market to determine low / high prices per item hence halting outrageously priced item(s) uploaded to gsaadvantage.gov. GSA software engineers would need to create software to utilize this database. 4) I believe various government buyers have different volume purchase requirements. FSSI is not a one size fits all solution. Example many government buyers have less than a $3,000 requirement. Internet purchasing may be more advantageous for this type of purchase. Example open competition via gsaadvantage.gov 5) GSA claims its employees are overworked and can no longer handle additional and/or existing vendors. All existing employee manual operations should be analyzed via GSA’s Software Engineers to automate current manual human labor. It may be possible to handle unlimited vendors and buyers once this project is completed. Each new additional GSA Human assignment should be analyzed by software engineers for possible automation. 6) I strongly believe an independent software company should be allowed to give alternative 21st Century solutions versus FSSI. 7) Reduce the number of schedule solicitations. Currently GSA claims it costs $3,000 per year, per contract to maintain each contract and numerous GSA employees. There are 40 solicitations (GSA and VA). The solicitations should be consolidated down to a handful—with a goal of a single solicitation (contractors could then choose to consolidate their contracts or maintain separate contracts depending on their business models). The current structure of the schedules often forces companies to submit multiple offers for multiple contracts when a single contract would be more efficient. Consolidating solicitations allows companies to efficiently and effectively consolidate contracts rather than having multiple contracts across schedules and business lines. This approach would provide the opportunity for contractors and GSA to reduce costs associated with seeking, obtaining and managing multiple schedule contracts. It is an opportunity to leverage contractor and GSA resources through a more efficient structure. Consolidating schedules would lead to a more efficient and effective platform for market research by customer agencies. Also all human manual work should be analyzed via GSA software engineers for automation and efficiency. 8) I am certain GSA will claim it does not have available software engineers to complete this non-funded task. GSA can simply lay-off several employees in various departments in order to fund this task. This assignment should not take more than several million dollars. Hiring competent small business software companies would be the logical choice. 9) It is this writer's belief FSSI is nothing similar to Corporate volume purchasing. Example lets take Walmart. They currently have 66,000 vendors and counting each day. FSSI eliminates virtually all competition with possible oligopoly price fixing. Keep in mind all vendor prices are available via gsaadvantage.gov Giving very few companies exclusive selling rights via a long term contract and eliminating competition is not the answer. Why have 1,000s of existing GSA software programs go to waste monitoring a few vendors. GSA needs to enhance existing software to truly and easily maintain a vigorous open competitive market via existing web sites (gsaadvantage.gov and other existing procurement sites). Programmatically controlling the buyer via software is the 21st solution.
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