On the December 10, 2013 OS3 Industry Day, GSA disclosed its plans to implement the 3rd Generation of Federal Strategic Sourcing Initiative (FSSI) for Office Supplies (OS3) to replace the FSSI Schedule 75 Office Supplies (OS2) which expires in May 2014.

The OS3 will allow open competition for the procurement of office supplies. In OS2, these procurements were limited to only the Schedule 75 holders.  OS3 will thereby eliminate the advantage previously held by Schedule 75 holders.

The OS3 may be the harbinger of the future of federal government spending and the end of the MAS program. The OS3 model should cause concern among the current MAS vendors, because as OS3 is being applied to eliminate Schedule 75, it can be inferred that the future may see the elimination of other MAS.

Bornstein & Song Research has previously expressed concern about the OS2 and the affected Schedule 75 small business federal vendors.  Their research included a Bornstein & Song FSSI National Survey to assess the impact on these small businesses since the inception of the OS2 in June 2010.

The survey results were shocking and indicated that small businesses have suffered significant financial distress, business failure, and the resulting job losses for their long standing and devoted employees. There were a few winners, but a far greater number of losers.  Bornstein & Song’s concern is magnified as the Economic Cost of the OS2 has not yet been evaluated by the GSA.  But, nevertheless, the GSA is moving forward aggressively with the OS3.

GSA has viewed the OS2 as a great success, as they proudly proclaimed that small businesses have generated 76 percent of all OS2 sales with savings of nearly $50 Million.

During the OS3 Industry Day, a GSA representative stated that the GSA was not concerned about the number of small businesses participating in the FSSI program, but only the aggregate sales dollars going to small businesses.

This statement ignores the fact that while there were only 15 winners generating a significant increase in their GSA sales of Office Supplies, this increase was on the backs of the more than 550 non-winners who encountered a significant decrease in their GSA sales. The resulting impact is being studied by Bornstein & Song Research, and the results are not encouraging as small business and jobs are critical to economic recovery.

In October 28, 2013, Bornstein & Song Research issued their findings that while more than 550 non-winners have seen an average 60 percent decrease in their GSA sales, the 15 winners reaped an average increase of almost 145 percent.  Regarding the GSA claim of $50 Million, it should be noted that the GAO Report (Dec. 2011) on the FSSI for OS2, questioned GSA's strategic sourcing savings figures, so these savings may be in question.

It can be expected that OMB will mandate that all purchases of Office Supplies be made only from the 21 FSSI OS3 awardees. This further raises the issue of the fate of those small businesses who were not among the expected winners in the OS3 competition.

For more information on FSSI, see our Bornstein & Song Research website at http://www.bornsteinsongfssi.com