GSA wants answers from resellers about markups and equipment maker relationships

The Trump administration is increasing its scrutiny of markup prices that value-added resellers charge on IT hardware sales to the federal government.

A new request for information released Thursday morning asks VARs to share information about pricing practices, markup percentages and whether the services they provide justify their costs.

In the RFI, the General Services Administration cites an analysis that found “significant variance in the valued added services offered and the corresponding markup percentages applied to original equipment manufacturer prices.”

GSA wants answers to a set of questions that get at the relationships between VARs and original equipment manufacturers, and the range of markups applied to hardware. GSA also wants information on factors that drive the range of markups such as volume, product category, support levels and business size.

The questions also wants to know if sourcing hardware through a distributor versus directly with the OEM drives variations in the markups.

GSA wants to identify ways to reduce the cost on items that are not purchased directly from OEMs.

“The RFI seeks to gain a clearer understanding of the value added by resellers, and the resulting impact of these services on pricing and the ability to meet the government’s requirements,” GSA said in its statement.

GSA's OneGov initiative has focused on more direct relationships with OEMs, but nearly all the agreements have been signed through resellers because most OEMs do not have their own GSA schedule.

“Industry partners are indispensable allies in our mission,” GSA Administrator Ed Forst said in a release. “By working collaboratively with GSA on this request they’ll directly contribute to achieving our goals: enhancing the procurement process, maximizing efficiency, and ultimately, saving taxpayer dollars.”

GSA's Federal Acquisition Services Commissioner Josh Gruenbaum said the goal is to find ways to streamline the procurement process, eliminate duplication, and achieve cost efficiencies.

“We want to learn directly from value-added resellers about the value they add to the government within the supply chain,” he said.

In addition to its focus on markups, GSA wants to learn how the procurement process can align with commercial practices. GSA also wants to equip contracting officers with information and tools they need to more accurately evaluate pricing and secure fair and reasonable pricing.

“This RFI is intended to increase transparency in markups by VARs, which helps to dispel any notion of unfair pricing practices,” GSA said in its announcement.

Responses are due Feb. 9.

GSA said it could use the information being gathered to amend the schedule and add new controls to “ensure the government receives fair and reasonable pricing when markups exceed a certain percentage threshold.”