MILLER ON PROCUREMENT.

**IBM**

They are truly remarkable. No other firm has been so successful in federal IT business despite the rules. One friend told me that IBM doesn't have to break the rules, the Colonel will do it for them.

But IBM knew the rules back in the early 70's when no one else did and they were properly organized for federal when few understood the concept. Gerstener has worked marvels and they are at about $85 billion a year including $33 billion in services and $12.6 billion in software.

I recently got their annual report and it was most clever in design. You really have to hand it to IBM. And I do. They were the first firm to teach me about unbalanced bids. Send me an e-mail if you want that story. Most firms today would miss that trick.

**GRADING YOUR FAVORITE AGENCY**

The Federal Performance Project has graded 27 federal agencies in the areas of: financial management, information technology, capital management, human resources and managing for results. See how your favorite agency did at: http://www.govexec.com/

**THE INDUSTRIAL FUNDING FEE**

GSA is to be commended for creating a way to enrich themselves out of the budgets of other agencies. The question is "is it proper?".

Schedule business has now grown to some $17 billion per year and that 1% IFF is getting bigger and bigger.

Following is a question from a vendor and the GSA response which is most revealing. GSA is now going to trade shows and getting vendors interested in getting on GSA. GSA is creating new GSA schedule areas weekly. Soon we will have nuclear reactors and submarine overhaul services on the GSA. GSA has avowed to become the dominant procurement agent of the government and they may well succeed.

QUESTION: Would GSA be willing to negotiate less than the one percent industrial funding fee for MAS/BPAs?

ANSWER: GSA recovers a one percent industrial funding fee for all orders placed under multiple award schedule contracts, including blanket purchase agreements. GSA must recover this fee on orders placed with FSS schedules, because, in 1995 Congress started phasing out appropriations so the agency can be self supporting. The one percent fee covers the spectrum of administrative costs to manage the program from market research, procurement planning, solicitation issuance, evaluation of proposals, negotiations and award, contract administration, marketing, publications, etc.

But the downside is unspoken. Other agencies could end up with greatly diminished procurement skills and we know of no agency with an abundance let alone surplus of procurement skills.

On the vendor side, historically, about one-third of the firms actually get zero schedule business for an entire fiscal year. And it is not uncommon for the top ten to get 60% or more. Last year in Group 70 almost 1000 firms got no business.

Schedule negotiations and management is a complex business and even more complex is selling with your GSA against my GSA if I am ten times larger or ten times sexier.

You might want to attend our August class on the 15th & 16th and learn more from people who have done more than 1000 and who have founded firms quite successful in this arena.

**GAO ON REFORM**

GAO takes issue with simplified procedures and raises the question that price may not have been fair and reasonable. See this report on www.govcon.com/read/n1220010426/422971.

My biggest concern with reform has always been a rush to implement by people who had no clue with almost no research as to the likely results. As bright as Dr. Kelman is his book was full of errors and he did not want to discuss anything that deviated from his world view.

The Impac card has been horribly abused. No corporation in American would give 25% of their employees a card and allow them to charge $100,000 in $2500 increments.

**LAWYERS**

They are not all created equal. Ever hear of Edward B. Williams or Gerry Spence? I had an Army GS-14 so called lawyer one day ask me, "Terry, what is this Freedom of Information Act you are citing?"

I took a client one day down to a blue chip DC firm to sue Social Security. We launched into a complex discussion with one of the rain makers for the firm. He asked me what the FOIA was. We eventually won that case but I never took any more legal business to his firm.

I was in LA with a client with a GSA mess. He had invited his outside lawyers. Two young men about 26, well dressed and coiffed. LA lawyers who had never been to GSA, never read the rules until yesterday, never knew anyone in GSA, had never even held a schedule in their hands and had never worked for any agency including GSA. My client is paying these turkies $250 an hour for advice from ignorant amateurs.

Another client had to get an environment impact done. They did not tell me. They went down town and hired a blue chip firm and they assigned a new puppie on the staff and he proceeded to learn how to perform this function on the client's tab and the tab came to almost $300,000.

If they had called me I have a friend whose specialty is EPA and he routinely does these for about $50,000 and will guarantee it for a fixed price.

You might not want to get federal contracts advice from a Tampa law firm. Now I know a few lawyers around the US who know federal. But can you find one of them or will you get a Colorado water rights lawyer or a Tucson immigration green card expert?

I have had firms like Texas Instrument and Xerox send lawyers from Texas to argue with me about federal business. I have learned over the years that ignorance often does nothing to slow up a lawyer. In both of these cases the lawyer are ignorant, did not believe me, went home and injured the client. In both instances, the client later told me they made a mistake in believing their own lawyer.

I am not a lawyer and seldom need one. When I do I know who to call. The law is composed of hundreds of specialties. One of them is obtaining pardons it seems.

Editor's Note: The preceding opinion article was written by Terry Miller, associate editor and regular columnist for FCMR. He is also president of Government Sales Consultants Inc. of Sterling, Va., and a 35-year federal government procurement system veteran. Miller served with the General Services Administration as a computer equipment and procurement analyst for four years; eight years at the Federal Communications Commission as a computer and systems analyst and chief of computer operations; and as an Army systems specialist.