FSSI JanSan Could Devastate Small Suppliers

Though the GSA is calling FSSI a “win-win for taxpayers,” some aren’t sure if it’s a win for small businesses. The GSA touts its small business spending — $1.3 billion in fiscal year 2012, nearly 40 percent of eligible contract dollars — as an underlying achievement of the FSSI programs. And the GSA maintains that it’s meeting and exceeding that goal.

Seventy-six percent of the dollars spent through the schedule 75 office supplies FSSI (OS2) vehicle since 2010 have been with small businesses, according to the GSA website. While the outlook may be rosy for the few companies that were granted BPAs, the hundreds of small businesses that no longer sell to the federal sector are telling a different story.

“We’ve been in touch with the vendors who were affected and they’ve described a litany of pain and suffering and damage to the business community,” says professor Samuel D. Bornstein, a lead researcher with Bornstein and Song Research, who has been studying small business issues since year 2000.

Bornstein and Song has created a website specifically researching FSSI’s impact on small businesses. It includes more than 100 testimonials from office supply vendors who were shut out of government sales three years ago. The devastating effect of schedule 75 office supplies FSSI has had on that industry, particularly on small businesses, is an ominous indicator for the cleaning industry, Bornstein says.

“The GSA claims they have saved millions of dollars, and our contention is, that’s only one side of the story,” Bornstein says. “What was the economic cost of the job loss to these businesses, jobs and the U.S. economy? It’s not all savings. Those ‘savings’ came with a significant price.”

Saving taxpayer money while also spending on small businesses seems like a great thing, but questions linger about the small businesses that will be shut out of the federal procurement equation this fall.

“What is getting overlooked is the impact of displacing a vast majority of small businesses that have been doing business with the federal government,” Bornstein says.

“The government has to be concerned about the resulting unemployment, the social safety net costs, lost state and federal revenues from individuals and businesses, loss of consumer consumption and and the other costs related to the displacement of workers.”

There is certainly incentive to respond to the RFQ and compete to become one of the 21 suppliers granted blanket purchasing agreements — but some experts stress distributors should proceed with caution.