In a major change in procurement practices, the General Services Administration soon will begin requiring agency managers to base most of their purchasing decisions almost entirely on the price of a product.
The new policy is designed to make it easy for officials to buy the cheapest models and harder to buy the more expensive ones.
The changes, which will be put in place over the next 18 months, will affect the way the GSA runs the so-called multiple award schedule--a system that allows procurement officers to choose from about 3 million items in 100 catalogs.
Of the $12 billion worth of paper, pencils, typewriters and other products that all federal agencies have to buy each year, about $3.8 billion worth is purchased through the multiple award system, according to the GSA.
Under the system, suppliers agree to sell products to the government at a price that generally is at least equal to their best retail price.
Under the new system, the GSA will classify most products according to their price.
The cheapest products will be listed on green pages in the catalogs and will be the easiest to obtain.
More expensive products listed on yellow pages must be approved by the head of the agency's contracting office before they can be purchased.
Items listed on red pages will be the most expensive and will require the approval of an official who supervises the contracting office. Many of these products have special features.
To test the program, the GSA converted the catalog for calculating devices, which includes 87 types of adding and calculating machines, 16 timing devices, nine cash registers and three "postage stamp applying machines."
Only some of the products were divided into the color codes.
For instance, eight brands of 10-digit calculators were listed on green pages, along with nine 12-digit models and two 14-digit models.
Another 32 models were placed in the yellow category and 66 models in the red group.
Some suppliers are concerned, however, that products will be judged only on the basis of price, while differences involving quality, delivery time and warranties will be ignored.
Roger Daniero, deputy assistant administrator of the GSA's Office of Federal Supply and Services, acknowledged that price will be the only factor used by the GSA but agency officials will still be charged with determining "what quality they want in the products they buy . . .and then justifying it."
"Federal taxpayers will end up saving millions of dollars because we'll have increased competition among the suppliers" to get on the green band, Daniero said.
Industry representatives like the new system better than the GSA's plan last year to abolish the lists and negotiate contracts with the firm that had the lowest competitive bid for a product.
But many of the suppliers are still skeptical.
Kenton Pattie, senior staff vice president of the International Communications Industries Association, said GSA Administrator Gerald P. Carmen "has had some very bad advice in this field . . . .
"Do we really want the government to buy the cheapest thing and not the best thing to do the job? From the government's standpoint, it will be harder and harder to find companies willing to compete to offer products with the better features if they have to fear being relegated to the yellow or red bands," Pattie said.
Jack Perlow, vice president of government marketing for Docutel Olivetti Corp., a manufacturer of word-processing equipment, said:
"The system will work very nicely with something like calculators, but not with copying machines because there are no two contracts alike."
Richard T. O'Neill, manager of government marketing for Sharp Copier Products, agreed.
O'Neill added: "If the government could define the quality issue while including the features of the product that it is getting, it'll be okay. If not, the government will end up with junk."
Herman Director, chief economist for the National Small Business Association, also contended that the plan will favor larger firms that can meet the federal government's nationwide distribution needs.
Carmen has said that he hopes the new schedules will favor businesses with the resources to provide the federal government with the best prices.
Small businesses, he said, usually can't do that except on a regional basis.