GSA launched its OneGov initiative to consolidate government purchasing, especially of software. In addition, GSA intended to build more direct engagement with OEMs and begin reducing the need for resellers. GSA claims savings of more than $1.1 billion in OneGov’s first year.
Some of the initial contracts that contributed to those savings are now up for renegotiation. Those contracts had temporary discounts, sometime as much as 90%. GSA is attempting to negotiate new contracts that maintain those discounts and move the vendors over to the GSA Schedule. GSA is highlighting the potential reduction of users that price increases may drive. “[T]he vendors understand that if they jack up the price from forty cents for a year to a certain amount, they may have five users instead of 3.4 million users all of a sudden.”
One of the main focuses of OneGov has been AI adoption. Of course, AI companies are raising prices for all clients as they seek profitability, and the government probably won’t be the exception. Other software OEMs will likely struggle to maintain the reported 70-90% discounts, especially as the costs for cloud computing increase.
Where does the continued emphasis on OneGov leave resellers? Most likely won’t be able to compete on price. Some will be able to get along by leveraging set asides, assuming those continue to exist. Others will have to focus on adding value in ways they have not had to before, such as by bundling, consulting, and offering support. Finally, resellers will need to be diligent about compliance obligations and using protests to keep OEMs honest on compliance obligations.
The government has tried to cut out resellers in the past. This effort seems to have momentum, and resellers need to position themselves correctly in order to survive. If you are a reseller and would like to understand more about how to deal with the issues cause by the OneGov initiative, contact a Centre attorney today.
