The General Services Administration is taking direct aim at valued-added resellers through its OneGov Strategy, which aims for government buyers to engage more directly with original equipment manufacturers.
The Trump administration’s belief is that “direct relationships” will deliver better outcomes.
Many of the reactions we are getting from industry range from the extreme of “this will be the end of resellers,” which we highly doubt, to “Do OEMs even want to sell directly to the government?” That question is a good point.
Several executives at resellers we spoke to said it will be a challenge for GSA to pull this off on a larger scale. We might see more one-off deals like the one GSA has done with Google, but some are skeptical about how broader this initiative could be.
“GSA does not have a friendly and ease of use history and reputation,” one person told us.
I have been around long enough to remember when OEMs were the subject of large False Claims Act settlements, which often were with companies actually trying to be compliant.
Many OEMs do not even have their own GSA Schedule contract and rely on resellers to maintain the compliance requirements, one person said.
“It is a contentious relationship at best,” a second executive said about how OEMs and GSA have worked together in the past.
“While I understand and respect the agency’s intent to simplify procurement and strengthen direct OEM relationships, there’s a risk of overlooking the critical value resellers bring to the table,” another said.
Resellers do more than just process orders. The government market is compliance heavy with cybersecurity mandates, the FedRAMP authorization program, small business goals and all the complexities of individual contract vehicles.
“We bring flexibility and speed, tailoring OEM offerings into integrated solutions that align with specific mission needs,” an executive said. “In many ways, we help translate commercial capabilities into government-ready solutions.”
One source believes that while going direct might look good on the surface, it also shows a lack of understanding about the value chain that VARs and distributors are a part of.
“Our value may not be “sexy”, but it is important,” another executive said.
OEMs also will likely not want to make the investments needed to adopt a direct-to-government sales model.
“None of them want to hire hundreds or even thousands of sales reps and engineers,” a source said. “Their shareholders will not be pleased.”
One executive hopes there will be pushback from the OEMs, particularly because many of them sell through the channel in the commercial world as well.
“They don’t want to switch their business model just for federal,” that executive said.
Many resellers are holding onto one sign of encouragement in GSA’s announcement of OneGov, which said GSA will engage with “agency and industry stakeholders” on developing more specifics of the plan.
“Hopefully, they’ll continue engaging across the ecosystem — not just with OEMs — to ensure the final approach reflects the complexity of federal IT procurement,” a reseller executive said.
