Cooperative Purchasing

The National Performance Review reported in 1993 that consolidating government purchasing would benefit the taxpayer through greater volume discounts and simplified administration. The following year, Congress established a cooperative purchasing program to allow state and local governments, as well as Indian tribes and Puerto Rico, to purchase from federal supply schedules. However, Congress suspended the program in 1996 until its impact could be assessed. This report assesses the effects of the cooperative purchasing program on these nonfederal governments and federal agencies and on industry, including small businesses and dealers. GAO also assesses the preliminary implementation plan prepared by GSA. GAO concludes that although there is little risk to federal interests, the benefits for nonfederal governments and the consequences for industry will likely vary.

GAO found that: (1) the potential effects of the cooperative purchasing program are likely to vary among state, local, and the Puerto Rican governments; (2) since participation is voluntary, these governments would use the schedules only if they perceived benefits from doing so; (3) most of the nonfederal entities GAO surveyed anticipated that they would participate; (4) although some of these governments may experience benefits, several factors may limit the extent of these benefits; (5) the program is likely to have little if any effect on Indian tribal governments because the schedules program is already available to them under separate authority; (6) if the GSA effectively implements its plan to exclude schedules from the program when adverse effects on federal agencies are indicated, there is little risk that the program will negatively affect the federal government, but whether it will have positive effects depends largely on whether increased use of the schedules by state and local governments would lead to lower prices and reduced administrative charges by GSA; (7) it is unclear at this time whether either of these would occur; (8) the potential effects of the cooperative purchasing program on industry, including small businesses and dealers, are also likely to vary, although sufficient data are not available to conclusively predict these effects; (9) some businesses, particularly GSA vendors, expect to benefit from increased sales or reduced administrative costs, while other businesses expect to lose sales or have lower profits; (10) still other businesses do not believe they will be affected by the program; (11) most of the concerns that businesses have expressed about significant adverse effects involve only a few GSA schedules; (12) GSA's plan to implement the cooperative purchasing program is still evolving; (13) in 1995, GSA published its initial approach and has been considering changes while implementation has been suspended; (14) GSA has not yet completed a more current, detailed plan, but such a plan would better enable Congress to weigh the merits of cooperative purchasing since so much depends on implementation decisions; (15) although the approach GSA has been considering appears reasonable in key respects, GAO believes a number of improvements would better position GSA to make decisions on making particular schedules available to nonfederal users; and (16) these improvements include the preparation of a written implementation plan and guidance to staff on factors to consider when making decisions.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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