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GSA's Long Reach

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By Jill R. Aitoro November 12, 2007

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The General Services Administration’s stepped-up pricing checks has schedule contract holders second guessing whether they want to do business with the federal government. But GSA has extended pricing checks to those information technology vendors that do not hold a GSA Schedule. Ingram Micro, which neither has a GSA contract nor sells directly to the federal government, recently had GSA come knocking.

Ingram Micro is an IT distributor with corporate offices in Santa Ana, Calif., and Williamsville, N.Y. The way the company’s federal business works goes something like this: Ingram partners with IT hardware and software vendors; IT resellers (typically small to medium sized) sign on as Ingram customers; those solution providers bid federal IT contracts based on product pricing provided by Ingram and, when they win, place orders for the required products through Ingram, which sources the products from vendor partners. Ingram doesn’t hold federal contracts. Solution providers sell to federal agencies using their own contracts or those held by the IT vendor. In essence, Ingram acts as a middle man.

Until recently, that business model has kept Ingram off GSA’s radar. No longer, said Bob Laclede, vice president and general manager of government and education at Ingram. GSA recently requested the distributor’s pricing data, including discounts. That’s information that Laclede did not think GSA had the authority to ask for. Not true, said GSA spokesperson Brian Filpot. “If an offeror or current contract holder proposal states that [pricing] is based upon [commercial sales of a company] other than its own, then commercial sales practices data must be provided for the manufacturer or distributor or both so that the contracting officer can determine price reasonableness,” he said.

That fact was reinforced Nov. 7 â€" the same day we asked GSA about the inquiries with Ingram â€" in a Defense Department memo sent to Defense agency directors by Shay Assad, director of Defense procurement and acquisition policy (DPAP). The purpose of the memo was to “ensure that contracting officers are successful in obtaining the necessary information and data for determining fair and reasonable prices for purchases made from exclusive distributors/dealers” and require notification to the DPAP office when a distributor or dealer refuses to provide required cost data. Chances are Ingram got targeted first because it’s the largest among the IT distributors.

Fair enough, Laclede said, which is why Ingram has been working to provide the data. But when contracting officers start badmouthing his business â€" that’s another story. Apparently, GSA contracting officers have told resellers that “Ingram is not an authorized GSA distributor and that they [resellers] should take their business elsewhere,” Laclede said. The company’s legal counsel has been alerted of the claims. Explanations for why GSA needs the pricing information make sense, Laclede said, but “what a few of the COs are telling our customers does not.”

Let’s hope GSA finds common ground with distributors, for agencies’ sake. A total of 2,454 Ingram resellers sold into the federal space in 2007, driving $690 million in revenue for Ingram. Take away Ingram and other distributors’ right to supply, you take away many of their contractors’ ability to sell products and services.

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