Impact of GSA’s Information Technology Cooperative

Purchasing Program on Small Businesses

Eagle Eye Publishers, Fairfax, VA 22030

2006. [35] pages. Under contract SBAHQ-03-Q-0014

This report was developed under a contract with the Small Business Administration, Office of Advocacy, and contains information

and analysis that was reviewed and edited by officials of the Office of Advocacy. However, the final conclusions of the report do not 

necessarily reflect the views of the Office of Advocacy.

Cooperative purchasing is a buying method that 

pools buyers in order to procure products or services 

in larger volumes, thereby leveraging lower prices, a 

wider selection of services, and other favorable terms 

from suppliers. To allow local jurisdictions to take 

advantage of cooperative purchasing arrangements 

available to federal government agencies, Section 

211 of the E-Government Act of 2002 directed the 

General Services Administration (GSA) to open up 

the federal supply schedule to state, local, regional, 

or tribal governments (including local educational 

agencies or institutions of higher education).

 In 2003, GSA opened up the federal supply 

schedule for information technology (IT), or federal 

supply classification code group 70. This group is 

defined as automated data processing equipment 

(including firmware), software, supplies, support 

equipment, and services. The primary motivation 

for this rule, according to the agency, was to “make 

‘government’ (considering all levels) more efficient 

by reducing duplication of effort and utilizing volume purchasing techniques for the acquisition of IT 

products and services.”*

Some individual state and local governments have 

laws giving preference in procurement decisions to 

small businesses based in their jurisdictions. Many 

states also have unique IT cooperative buying programs. Has the federal IT cooperative purchasing 

program affected state programs and the businesses 

that participate in them? This paper reviews GSA’s 

IT cooperative purchasing program, and it evaluates 

other cooperative purchasing programs that are available to state and local officials. In particular, this 

analysis focuses on the impact of such programs on 

small business owners, who may or may not benefit 

from this arrangement.

Overall Findings

Currently, 30 states have authorized their agencies to 

use the GSA cooperative purchasing vehicle. Several 

others, most notably California and Texas, have 

integrated the GSA IT schedule into their own statesponsored multiple-award schedule program.

In the first two years since the GSA IT cooperative purchasing program was implemented, usage of 

the program has increased, and the majority of the 

vendors who have been added to the schedules are 

small businesses. With that said, current estimates of 

the size of the state and local IT market suggest that 

GSA’s cooperative purchasing program represents 

a small fraction of total non-federal IT government 

spending.

Highlights

• Since the start of FY 2004, total GSA cooperative purchases have grown 87 percent, from $75 million in FY 2004 to $140 million in FY 2005.

• The cooperative purchasing program now 

includes a combined 5,160 unique vendors holding 

5,198 group 70 IT schedule and 113 corporate schedule contracts. Of these vendors, 4,469, or 87 percent, 

are self-declared small businesses.

• The small participating firms that were active 

during FY 2004 to FY 2005 accounted for $105 

million, or 49 percent, of total GSA cooperative purchases over the first two years of the program’s existence. In FY 2004 and FY 2005, the small business 

cooperative purchasing dollar share was 67 percent 

and 39 percent, respectively.

• Non-federal government participation in cooperative and IT purchasing programs is widespread, 

making GSA’s cooperative purchasing program one 

July 2006 No. 278

*68 Federal Register 24372-24382 (May 7, 2003)
of numerous IT purchasing options available to state 

and local governments.

• Many states have implemented a simple registration procedure that permits state agencies and 

local governments to incorporate GSA schedule 

terms and conditions into state contracts. (This process is known as “piggybacking.”) In this manner, 

states can incorporate the most beneficial contract 

terms, negotiate their own prices as well as additional terms, and still maintain control over the contracting prices.

• In interviews with state procurement officials, 

many were open to using the GSA IT cooperative 

purchasing program and weigh purchases from it 

with other options. Others cited reasons that they 

might not use it, including the high cost of the 0.75 

percent industrial funding fee and existing state procurement laws such as small business purchasing 

requirements.

Scope and Methodology

The information about federal cooperative purchasing was obtained from GSA’s Operations Support 

Division.This paper also reviews a number of nonfederal IT and cooperative purchasing programs. 

These programs are the following:

• U.S. Communities Government Purchasing 

Alliance; 

• Western States Contracting Alliance (WSCA I 

and WSCA II);

• WSCA and National Association of State 

Procurement Officials Personal Computer 

Cooperative Contract;

• California Multiple Award Schedule Program;

• Texas Multiple Award Schedule Program;

• Texas Catalog Information Systems Vendor 

Program; and

• Missouri “Smart Buy” Program.

Finally, these findings were supplemented with a 

series of eight informal phone and in-person interviews with state procurement administrators. The 

in-person interviews were conducted with officials 

from Arizona, California, Minnesota, New York, 

Maryland, Texas, Virginia, and Wyoming. Some 

information was also obtained through a formal written survey or by phone interviews.

This report was peer reviewed consistent with 

Advocacy’s data quality guidelines. More information on this process can be obtained by contacting 

the director of economic research at advocacy@sba.

gov or (202) 205-6533.

Ordering Information

The full text of this report and summaries of other 

studies performed under contract with the U.S. Small 

Business Administration’s Office of Advocacy are 

available on the Internet at www.sba.gov/advo/research. 

Copies are available for purchase from:

National Technical Information Service

5285 Port Royal Road

Springfield, VA 22161

(800) 553-6847 or (703) 605-6000

TDD: (703) 487-4639

www.ntis.gov

Order number: PB2006-108496

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