What is FSSI and why was it launched?

FSSI: Federal Strategic Sourcing Initiative
The Federal Strategic Sourcing Initiative - was launched by the White House Office of Management and Budget in 2005 to reduce costs and streamline procurement. While launched by the OMB, FSSI is co-chaired by the U.S. Department of the Treasury and GSA, and counts more than 20 federal agencies, both military and civilian, as active participants.

The GSA made their first FSSI Award in 2006
when they awarded a Blanket Purchase Agreement for express and ground domestic delivery service to FedEx Corporation. Current FSSI commodity teams include Express and Ground Domestic Delivery Services, Wireless Handheld Devices and Services, Information Technology (Printers), Copiers and Office Supplies.

It’s that last one that threatens small business in America today. You see overnight delivery, cell phones, computer printers and copiers... you’re talking big business, a handful of corporations that dominate all sectors. But Office Supplies? It’s the last bastion of the small business. One that has already suffered greatly at the hands of the “big box” suppliers like Staples and Office Depot. But the strong ones survived and a large part of their business was the US Government that they served well. Now the US Government has turned on them seemingly trying to finish the job the big boxes couldn’t. And doing this while calling small businesses the backbone of our country.

Putting Small Business Out of Business

The GSA Attacks Office Supplies
The GSA initiated a FSSI BPA bid for Office Supplies in 2010. There were 512 companies with a GSA Office Supplies contract. In June of 2010 they chose 12 companies to do the business that over 500 companies were doing before. They later added 3 more for 15. Fewer than 3% of the total. Already 16 agencies from the Departments of Defense to Veterans Affairs to Treasury have committed to making these 15 companies mandatory for its employees when buying these products.Agency employees - at all levels - fear losing jobs if they don’t comply.

Adding Insult to Injury
The GSA then announced that, effective October 1, 2010 there would be a 2-year moratorium on any new companies being added to the Schedule 75 Office Supplies contract. This is how the government supports new business growth?

Agencies Betray Their Own...

VA has Mandated All Purchases to be from FSSI Suppliers
Only one FSSI firm has SDVOB status for Office Supplies and is too small to serve all of VADOI has mandated all purchases to be from FSSI Suppliers Bureau of Indian Affairs, part of DOI, cannot buy from Indian firms. HUBZone suppliers are being passed over despite recent court rulings rearming the requirement to buy from them Existing agency BPAs have been overruled and years-long supplier relationships are being forcibly terminated with agency employees fearing job loss reprisal.

And the Big Get Bigger...Thanks to GSA

How the Business Gets Divided
The GSA structured three “pools”...

• Pool One: Comprised of nine "small" firms with full office supply catalogs
• Pool Two: Three large companies with full office supply catalogs and international shipping
• Pool Three: Three companies that offer Toner Cartridges only

1st Quarter Fiscal Year 2011 Sales
Total sales of the FSSI BPA Holders for the 1st Quarter Fiscal Year total $41,444,804 divided as shown above. What this doesn’t show... nearly 50% of sales is held by two large companies...Staples and Office Depot

Office Depot $12,530,505
Staples $ 8,153,821

Total: $20,684,326

It seems the government is intent on finishing off the small businesses that these two haven’t already killed.

FSSI - Does it Really Spell Savings?

Pricing Analysis: FSSI vs. GSA Advantage
1st Quarter Fiscal Year 2011 Sales Total $41,444,804
A pricing analysis looking at all 9,177 products (not just the items selected for FSSI) was recently conducted. The analysis compared the lowest FSSI price to the lowest non-FSSI price found on GSA Advantage.

The Results?

• 7,084 prices or 77.2% of the items were lower on GSA Advantage
• 2,043 prices or 22.3% of the items were lower on the FSSI BPA
• 50 prices or 0.5% of the items were the same on GSA Advantage and FSSI
• This price comparison does not include Delivery Charges and Convenience Fees that many FSSI Suppliers add

Average difference between FSSI and GSA Advantage prices: 5.98% lower on GSA Advantage

• GSA Advantage wasn’t broken but FSSI tried to fix it anyway.
• The Office Supplies area is too diverse with too many variables for an FSSI exercise to be effective.
• Agencies using FSSI Suppliers exclusively are paying a higher price overall dependent upon their mix and usage.

The “O” Conflict... Obama vs. OMB

President Obama January 18, 2011 Presidential Memoranda - Regulatory Flexibility and Small Business, The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, establishes a deep national commitment to achieving statutory goals without imposing unnecessary burdens while considering "alternative regulatory approaches which minimize the significant economic impact on small businesses."

January 25, 2011 State of the Union address promised to "remove any roadblocks that stand in the way of small business growth."

Office of Management and Budget (OMB)
Maybe the OMB didn’t get the Memoranda...
Maybe they missed the speech...
Office Supplies are small business and are closing doors and laying off employees due to government actions.

FSSI - A way forward for Office Supplies

Givens:

• The OMB and GSA have invested a significant amount of time and energy in the FSSI project for Office Supplies
• As a result they have achieved a lower cost on only 2,043 items or 22.3% of the items
• FSSI awardees have already increased prices
• It is the intent of the GSA to push as many agencies as possible to mandate FSSI only suppliers
• A large number of small businesses have had severe negative impact from the choice of only 15 companies
• Legislative intervention is building

The compromise

• Allow all companies who match the FSSI prices to be designated as FSSI suppliers in lieu of a severely limited pool of 15 companies
• GSA achieves the desired cost reduction without destroying small businesses
• Small businesses have the opportunity to step up as partners in FSSI cost reduction
• Federal agencies get the best of both worlds... lower prices on over 70% of items with additional savings on FSSI negotiated cost reduction on 22%