Current Small Business GSA Schedule Environment
There are approximately 19,000 firms currently holding a GSA Schedule with 80% or 15,000 firms Small Businesses on Schedule. These 15,000 small businesses average $1MM per in federal sales. They reach these sales numbers in most cases not buy selling a commodity butby carving out a niche. I believe carving out these niches will become easier over the next 12-18-24 months as the GSA rolls out its Four New Initiatives.
Why Small Businesses Should Only Focus on Niches
GSA does a fantastic job of obtaining low prices on commodity items. In price comparisons between online shopping portholes Amazon Business and GSA Advantage according to the GAO, GSA Advantage Ability One had the lower price 72% of the time. In a similar study conducted by the Airforce with the Airforce’s 60 most ordered items GSA Advantage had the lower price 80% of the time.
Note: If you want to sell commodity items to the federal government first ask yourself can you can beat the best price on Amazon. If not I would move on.
GSA Four New Initiatives - The Creation of New Small Business Niches
The primary focus of the New Initiatives is for the GSA to do a better job of addressing what is becoming a solution driven federal marketplace. The reality is the way federal buyers utilize the GSA Schedule System has changed. Federal Buyers know they can find low priced commodities on schedule but much of what they are looking for is similar to Public Sector Clients, they are looking for solutions. Therefore the GSA is remaking itself to provide flexibility which should give small businesses more tools to create working federal niches. This is the growth for the GSA in the future, and the leaders of the GSA are measured by the sales growth of the Overall GSA Schedule System. Therefore they are providing better tools to meet those ends.
The GSA Four New Initiatives
1.The entire GSA Schedule system will be transferred to One Schedule. It seems unimaginable that this is possible, but this is coming in the near future. This will give schedule holders the ability to have all their products and services (tool basket) needed to solve a problem in one place. An example could be a smart system that controls all aspects of a building from security to temperature control. In the past this procurementwould require the vendor to have three schedules. Now only one schedule would beneeded and in the future as technology changes, new items could be added without the need to go through a process of obtaining a new schedule.
2.The GSA is working to create smart Contract Writing Systems in order to help government users to obtain acceptable bids from competent contractors. The Contract Writing System will give the end user the tools necessary to drag and drop pieces together to create a unique contract/proposal tailored to fit their agency needs which in turn massively lowers the administrative burden for the procurement officer. The sales advantage this provides a Small Business Niche Contract holder is this: For a multi-million dollar proposal this type of system does not work as closing all loopholes with major contractors must be completed or change orders will become a financial burden. For small business niche players who have a GSA Schedule the federal buyer then knows their administrative burden will be minimal compared to that of a non-GSA Schedule vendor, plus using the tool insures FAR compliance. This tips the order winner to the GSA Schedule holder.
3.Catalog Comparator feature which will be built into the GSA Schedule System. This will give the federal buyer the ability to look at two to five GSA Schedules and make an apples to apples comparison as to what each firm is offering. This sounds like commoditizing services however this system should provide even greater opportunities for niche players to highlight the differences in the offerings between themselves and their peers. Remember, small businesses make money in the federal marketplace not buy winning all the bids, but by winning a few profitable bids and this system should aid small businesses in this regard.
4.GSA Advantage will become more like Amazon as a website providing government users with a search and buying experience they are accustom to using in their everyday lives. This better search feature should help smaller niche products with more exacting purposes, such as specialized firefighting tool, to be found when in the past they might have been overlooked.
The reality is that the leaders of the GSA want to increase market share for the Schedule System. GSA Schedules are very effective at procuring low cost commodities but the federal low cost commodity market for the most part is tapped out as shown by the competitiveness of that marketplace. The leaders of the GSA know that fostering an environment that allows for more niche solutions is the key element to the growth of the Schedule Program.