The long-festering battle between Sun Microsystems and the government about allegations that the company overcharged agencies needs to end. The way both parties have handled the dispute sends a terrible message to businesses that might be considering entering the government market.
The government has accused Sun of overcharging on its General Services Administration schedule contracts. Sen. Charles Grassley (R-Iowa) has recommended that GSA officials remove Sun from the schedule. The specifics of this battle are detailed, but there are larger principles that come out of it.
Competition. We continue to believe that the government market needs more competition, not less. If agencies have options, they can assess the overall value of what they are buying. Under the GSA schedule contracts, vendors must offer agencies the best prices that they offer their most favored commercial customers. The GSA inspector general’s office conducts audits before and after awards to ensure that vendors are complying with those provisions. That process, though valuable, is an artificial mechanism. The best way of ensuring value is having a robust, competitive marketplace.
The role of the schedule contracts. GSA’s schedule contracts have proven to be a valuable way for agencies to access goods and services and for vendors to participate in the government market. However, nobody wins business simply by having a schedule contract. In general, agencies view the prices on schedule contracts as a place to start negotiations. And in a healthy, competitive market, there should be multiple vehicles that agencies can use. If schedule prices are out of whack, there are — and should be — other buying options.
GSA’s role. GSA officials should not be in the position of canceling contracts. There must be a process for dealing with issues in a fair and equitable way.
With all due respect to Grassley, he is a lawmaker with little constructive advice to offer on government procurement issues. He, for example, has been one of the main opponents of agency purchase cards, which have saved the government vast sums of money.
We applaud GSA for suggesting that a neutral third party mediate the dispute. It is important to find a way to resolve the problem in an amicable way. It is important for Sun and government agencies, but it is also necessary because of the message the dispute sends to other vendors seeking to enter the government market. Right now, the Sun dispute tells vendors that they should stay away, and that’s the wrong message.
— Christopher J. Dorobek, cdorobek@1105govinfo.com
