The finding supports/confirms FAS needs an evaluation approach that distinguishes between the reseller’s and the VAR’s value/price to the customer.
On June 2, the General Services Administration’s Federal Acquisition Service shared a “Summary of Results of Request for Information (RFI) about IT Hardware procured through Value Added Resellers (VAR)” on its Interact Multiple Award Schedule (MAS) Community site. This summary highlighted key takeaways from the 136 responses received following FAS’s January RFI. The RFI aimed to gather commercial market insights from stakeholders “to deepen the Government’s understanding of the Value-Added Reseller marketplace under SIN 33411” of the MAS solicitation.
The summary presents nine insights drawn from the 136 responses. These insights are organized into four main areas: (1) Widely Accepted Commercial Definitions for Resellers and VARs; (2) Value is in the service, not product markup; (3) Recommended Pricing and Evaluation Framework; and (4) Government Work is more costly. Let’s explore these insights further.
First, FAS’s discovery, based on RFI responses, that there are widely accepted commercial definitions for resellers and VARs is noteworthy. This finding reinforces the need for FAS to adopt an evaluation method that clearly differentiates between the value and pricing offered by resellers versus VARs to the customer. Second, FAS’s conclusion that value lies in the service rather than in product markup paves the way for an evaluation method that identifies and measures the value of functions and/or services provided by a reseller or VAR as part of the total cost. However, it remains unclear whether FAS acknowledges that resellers, VARs, and distributors also deliver value-added services on behalf of original equipment manufacturers (OEMs). These services for OEMs are reflected in commercial pricing and support agreements with their resellers, VARs and distributors. It’s a complex and ever-changing market.
Third, and most thought-provoking, are the insights under the “Recommended Pricing and Evaluation Framework.” FAS clearly states it will pursue an evaluation methodology that evaluates the value of services provided by a VAR as part of the overall contract cost and performance. FAS also notes that “evaluation frameworks should encourage line-item pricing for complex requirements to clearly separate product resale from value-added services.” This statement raises several questions for stakeholders across the procurement community. How does breaking out individual line-item pricing and cost elements support firm-fixed pricing at the order level? How does it facilitate firm-fixed price, outcome-based solutions at the order level? Does this approach introduce additional complexity that limits access to the commercial market? Is GSA focusing only on the internal, commercial processes of OEMs, VARs, and resellers while overlooking how commercial customers structure their purchases? What benefit is there in dissecting price and cost elements of commercial items and services when government and commercial customers do not purchase in this manner?
Fourth, as FAS points out, government work is more costly. If FAS adopts a price evaluation method that assesses value-added services, how will it account for these higher costs to determine what is fair and reasonable?
Finally, the summary outlines the next steps, stating:
Based on this industry feedback, FAS has identified opportunities to strengthen its pricing practices through solicitation enhancements, workforce training, and additional resources for agency buyers. These actions will allow VARs to clearly communicate the value of their offerings while aligning with commercial practices and minimizing administrative burden.
Transparency and the chance for stakeholders to comment on any draft solicitation provisions and training materials will be crucial. FAS deserves praise for making the original RFI public in January. If significant new terms or evaluation criteria are planned, those affected by these changes should have the opportunity to provide input on the proposed language. Transparency will only enhance the process and, ultimately, the final solicitation language, enabling GSA to provide the federal government with access to the full range of existing commercial products and services for agencies to fulfill their missions.
Roger Waldron is president of The Coalition for Common Sense in Government Procurement.
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