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Feds Wasting Millions On Non-Competitive IT Contracts

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Ethan Barton Managing Editor
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Federal officials can pay as much as four times the regular costs for common information technology products like telephones, televisions and computer keyboards because the government’s house-keeping agency isn’t buying them competitively, according to the General Services Administration Inspector General.

Government agencies buy nearly $15 billion worth of IT equipment annually through GSA, which constructs, maintains and leases most federal buildings, as well as office supply items like furniture, computers, file cabinets and paper clips.

Most of the purchases are via GSA schedules, which are contracts with suppliers who agree to sell at specified prices. The Competition in Contracting Act signed into law by former President Ronald Reagan in 1984 requires GSA to buy most items through competitive bidding.

“GSA offers many identical items on its IT schedule at widely varying prices, and lower commercial prices are available for many of the schedule items,” the IG said. “The wide price variances for identical items raise the question of how the prices were determined to be fair and reasonable.”

Contractors’ prices for a Sharp TV model, for example, ranged from nearly $1,600 to just over $3,000.

“In addition, we found lower commercial prices for the majority of the schedule items we evaluated,” the report said. “This indicates that GSA pricing for some IT schedule resellers is not competitive. Lower commercial prices also suggest that the prices awarded under such reseller contracts may not represent the lowest overall cost or the best possible price.”

Commercial prices were 13 percent lower on average for three-quarters of the 75 top-selling items the IG reviewed, while the largest price difference was more than four-fold.

The government rarely purchases such products from around three-quarters of its 1,600 IT contracts, while administering those agreements has still cost the General Services Administration (GSA) $25 million since 2007, the agency’s inspector general (IG) reported Monday. (RELATED: $50 Billion Government IT Contract Could Get Even Bigger)

GSA officials previously agreed with the IG recommendations in 2007 and again in 2009 to emphasize price evaluation, but they have yet to follow through.

Additionally, GSA has about 1,200 contracts with little to no sales, which has cost the agency about $25 million in administration fees since 2007 when the IG last recommended terminating such contracts.

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