GSA Schedule IT Spending Sees First Decline in Decade
Annual spending through the General Services Administration’s (GSA) multiple award schedule contracts for information technology (IT) products and services declined for the first time in ten years during fiscal year 2005 (FY05), according to a report released today by INPUT, a provider of information on government business. After having achieved $16.8 billion in sales during FY04, FY05 sales slipped to $16.5 billion, a 2 percent decline after annual increases averaging more than 15 percent for the previous five years.
“The decrease in IT spending is not dramatic in terms of overall GSA Schedule 70 sales which still account for more than one-third of addressable federal IT spending,” stated James Krouse, acting director, public sector market analysis at INPUT. “However, it comes during a year in which total federal IT spending is still increasing, so this represents a shift specifically away from the schedules as a procurement channel and not a general decline in the market.”
The spending slowdown is entirely contained within equipment sales. INPUT is still compiling data to identify the root cause for the decrease in equipment spending through the GSA IT Schedule; however, two possibilities present themselves immediately. First, the decrease in equipment spending through Schedule 70 may have been caused by a shift in purchasing to other federal contract vehicles. Another possibility is that the demand for IT equipment in federal agencies may be decreasing due to capacity issues or infrastructure consolidation.
“Despite the decrease in equipment spending, INPUT believes that more significant growth may ultimately come from inclusion of state and local government agencies as potential buyers through an agreement known as cooperative purchasing,” said Krouse. State and local purchasing through GSA Schedule 70 is already increasing at a significant pace. The $192 million reported for FY05 is roughly double the spending reported for FY04.
“If state and local spending follows a trend similar to that of federal agencies over the past ten years, GSA Schedule 70 could become a significant centralizing force for the public sector IT market,” added Krouse.
