Objectives, Scope, and Methodology

The objectives of this report were to assess: the potential effects of cooperative purchasing on state and local governments, the government of the Commonwealth of Puerto Rico, Indian tribal governments, and federal agencies; the potential effects of cooperative purchasing on industry, including small businesses and local dealers; and
GSA’s plans to implement the cooperative purchasing program. Extent of Administrative Savings Unclear

The extent to which state and local governments could reduce administrative costs through a cooperative purchasing program is unclear. Of these 28 industries, only 14 supplied goods or services that are available through the schedules program. Of these 10 contractors, 7 said they were small businesses. GSA has not, however, made any final decisions on excluding other schedules. Our work indicates that a successful plan would require, at a minimum, several components: guidance on the data that should be sought and analysis conducted in determining the (1) expected effects on federal agencies; (2) expected effects on nonfederal governments; and (3) expected effects on businesses, including non-GSA vendors; identification of potentially affected parties and the various means to be used to notify them when schedules will be considered for opening to nonfederal governments; designation of an official at an appropriate level of responsibility to make final determinations on whether individual schedules should be made available to nonfederal governments, particularly when businesses express concerns about significant adverse effects; provisions for evaluating the actual effects of opening schedules; and provisions for opening part of a schedule. Evaluating Decisions to Open Schedules and Dealing With Unexpected Effects

Neither GSA’s Federal Register notice nor changes GSA officials told us they were considering included a provision for evaluating GSA’s implementation of the cooperative purchasing program, including the effects of opening schedules to state and local governments, even though GSA officials said that at one time it had considered implementing the program in a series of “pilots.” Because the effects of cooperative purchasing are likely to vary by industry or even product or service, the uncertainties over the extent to which state and local governments and business will actually exercise their options to participate in the program and purchase items from vendors listed on the schedules, and because it will likely be very difficult to get sufficient data before implementation to predict effects, we believe evaluations would be helpful to GSA. These evaluations could also provide objective information on whether the program may be lowering prices or administrative costs. The potential effects of the cooperative purchasing program are likely to vary among state, local, and the Puerto Rican governments. Since participation is voluntary, these governments would use the schedules only if they perceived benefits from doing so. Several factors are likely to affect the extent to which these expected benefits would materialize. It appears reasonable to us that at least some of the benefits perceived by some businesses, including small businesses and dealers, may occur. On the other hand, it is doubtful that the federal government would experience adverse effects since GSA plans to exclude schedules when such effects are anticipated and would be able to act if unexpected negative effects arise. GSA’s plan for implementing the cooperative purchasing program is evolving and has not yet been put into a final written document. We believe that certain elements in the approach GSA has been considering should particularly be incorporated into its final written plan.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO assessed the potential effects of a cooperative purchasing program administered by the General Services Administration (GSA) on nonfederal governments and federal agencies, and on industry, including small businesses and dealers.

What GAO Found

GAO found that: (1) the potential effects of the cooperative purchasing program are likely to vary among state, local, and the Puerto Rican governments; (2) since participation is voluntary, these governments would use the schedules only if they perceived benefits from doing so; (3) most of the nonfederal entities GAO surveyed anticipated that they would participate; (4) although some of these governments may experience benefits, several factors may limit the extent of these benefits; (5) the program is likely to have little if any effect on Indian tribal governments because the schedules program is already available to them under separate authority; (6) if the GSA effectively implements its plan to exclude schedules from the program when adverse effects on federal agencies are indicated, there is little risk that the program will negatively affect the federal government, but whether it will have positive effects depends largely on whether increased use of the schedules by state and local governments would lead to lower prices and reduced administrative charges by GSA; (7) it is unclear at this time whether either of these would occur; (8) the potential effects of the cooperative purchasing program on industry, including small businesses and dealers, are also likely to vary, although sufficient data are not available to conclusively predict these effects; (9) some businesses, particularly GSA vendors, expect to benefit from increased sales or reduced administrative costs, while other businesses expect to lose sales or have lower profits; (10) still other businesses do not believe they will be affected by the program; (11) most of the concerns that businesses have expressed about significant adverse effects involve only a few GSA schedules; (12) GSA's plan to implement the cooperative purchasing program is still evolving; (13) in 1995, GSA published its initial approach and has been considering changes while implementation has been suspended; (14) GSA has not yet completed a more current, detailed plan, but such a plan would better enable Congress to weigh the merits of cooperative purchasing since so much depends on implementation decisions; (15) although the approach GSA has been considering appears reasonable in key respects, GAO believes a number of improvements would better position GSA to make decisions on making particular schedules available to nonfederal users; and (16) these improvements include the preparation of a written implementation plan and guidance to staff on factors to consider when making decisions.