Mark Pestronk
Q: In last week's column on government contracts for travel agencies, you noted that years of bad procurement decisions have resulted in little or no opportunity for agencies to enter the market. In addition to putting the contract winners on a "schedule" of providers without giving them any business, how else did the government limit opportunities?
A: The goal of streamlining procurement eliminated more than half of the agencies that had been awarded contracts. Then in the middle of the 2000s, the government came up with an idea that all but foreclosed the business to new entrants.
We can see the results of the new idea by comparing government travel with corporate travel. In the private sector, corporate travel management has provided business opportunities for thousands of agencies.
Most mid-to-large corporations' travel management needs are handled by agencies, and if the corporation wants an online booking tool (OBT) such as Concur, the agency usually arranges for it. Thus, the agency is the prime contractor, and the online booking system provider is a subcontractor.
In contrast, starting a decade or so ago, the government did the opposite. It awarded its main travel management contracts to OBT vendors, leaving them to choose agencies to subcontract for full-service needs.
The Department of Defense awarded its online booking business to a vendor who designed a customized system (the Defense Travel System, or DTS) for the department. On the civilian side, the General Services Administration (GSA) awarded the government's travel business to three OBT vendors, including government contracting giant Northrop Grumman.
In the second round of procurement, the GSA reduced its OBT vendors to just Concur, which is owned by software giant SAP. Following litigation, the GSA added CW Government Travel, a unit of Carlson Wagonlit, which has its own OBT. Both vendors have tailored their systems to try to handle all the government's travel-related needs.
The GSA now requires every civilian government agency to do business with one of the chosen OBT vendors. Most agencies with government experience have been finding it difficult to do business with those vendors, especially SAP. Those with government experience cannot expand their participation in the market, and those without experience cannot get their calls returned.
There are some exceptions on both the military and civilian sides. For example, all Marine Corps and some Air Force units contract directly with small and minority-owned travel agencies, as do some civilian government agencies that kept their travel agencies in place while requiring them to work with DTS, Concur or CW.
However, the bulk of full-service travel is now handled by agencies holding subcontracts with vendors that have little or no incentive to give business to them and that would probably just as soon not have to bother doing so. This odd structure ought to be reversed, as it is in the private sector, so that there would be more opportunities for travel agencies to contract directly with the federal government.
Another recent government decision has not only made it more difficult for travel agencies to enter the business but squeezed out some that have held contracts for decades, which I will cover in my next column.