Several federal agencies have spent as much as 76 percent more than necessary for computer products purchased from a Rockville computer retailer and have violated federal purchasing regulations, according to a report recently released by the General Accounting Office.
The report, requested by Rep. Parren J. Mitchell (D-Md.), chairman of the House Committee on Small Business, says the government could have saved an average of 12.8 percent on identical computer purchases from other government suppliers. The equipment was bought under special arrangements with The Math Box Inc., which had set up three computer stores called Office Technology Plus (OTP) for the General Services Administration.
"Evidence suggests that agencies are routinely purchasing items from the [OTP] store that are available at less expense from [other government] contractors, many of whom are small businesses," Mitchell said.
Agencies responding to the GAO report said they used the OTP stores because they could make the purchases more quickly and without the red tape involved in ordering from other sources.
Rockville-based Math Box, which operates as MBI Business Centers, sells personal computers and related products to the business community and the federal government. MBI's three government centers in Philadelphia, Washington and Philadelphia generated 42 percent of the company's sales, or $21.4 million, for fiscal year 1985, ending Jan. 31.
The GSA awarded a contract to Math Box Inc. two years ago to run one or more computer stores. The stores are centers where federal agencies can buy, learn about or be trained on the latest computer equipment and related products.
"I don't think this report will affect my business," said Armen Manoogian, president and chief operations officer of The Math Box Inc. "The report has nothing to do with MBI or OTP. It is nothing more than an audit of how government [agencies] use the store."
In May and June alone, the government spent $379,000 more on computer products from OTP stores than it would have from other suppliers, the 24-page GAO report said. "If that was annualized, the figure would be $2 million," said Tom Trimboli, senior legislative analyst for the House Committee on Small Business.
Several suppliers feel that OTP holds a "favored" position because agencies may purchase up to $100,000 at the OTP stores without advertising the purchase in the Commerce Business Daily, a publication that allows companies to compete for government purchases, the GAO report said. When agencies buy from other suppliers, they must list all purchases over $50,000.
"The agencies used the OTP store because it was easier to buy from," said Trimboli. "You go to the store, write the order and walk away with the goods. If you buy from [other contractors] and the contract is over $50,000, there is some time delay because you have to advertise in Commerce Business Daily to see if anyone can provide it at a cheaper price."
In addition to paying higher prices, the GAO found that a number of agencies are buying products from OTP in violation of the GSA's rules limiting single purchases at OTP stores to $100,000.
MBI officials said that the company's prices are higher because they offer more service and instruction on how to use their products.
When agencies buy from other government contractors, they are "basically buying boxes without any support," said Manoogian. "MBI is a center for customers to go to for integrated products, and for that we charge a price. The government has known that all along."