GSA’s OneGov deals hype billions in savings, but should we buy into it?

Hardly a week goes by that the General Services Administration is not announcing a new agreement with a commercial tech company under the OneGov initiative.

GSA's press releases ooze with enthusiasm about how these agreements will save money and help agencies modernize quickly and become more efficient. More recently, the deals have focused on artificial intelligence in support of the administration’s AI initiatives.

OneGov has 13 agreements so far and GSA is advertising them as groundbreaking contracts that will revolutionize how the government buys.

Pardon my skepticism though.

First, given the track record for overstatement and inaccuracies in the savings that the Department of Government Efficiency has claimed from canceled contracts, I just don’t trust the numbers GSA is touting.

Washington Technology’s Insider Membership gives you unmatched access to breaking news, in-depth analysis, and insights that federal contractors can’t afford to miss. Join today for 50% off.

In its announcements, GSA says agencies will save multiple billions of dollars across these deals.

GSA talks about two types of savings, one in dollars and the other in steep discounts.

The Microsoft agreement says agencies will collectively save up to $3.1 billion. The discounts are as high as 90% for the Salesforce/Slack agreement, but most of the others are in the 50%-to-75% range.

But there are also little caveats sprinkled throughout GSA’s announcements that lead me to believe the actual results will come nothing close to the numbers quoted in the announcements. GSA often says “up to” whatever the discount is.

Also, there are indications that discounts will be offered to a limited number of customers. In the Microsoft agreement for example, only existing G5 customers can access the discounts.

Customers also need a requirement for advanced security environments. The term “eligible workloads” is also used.

The numbers GSA is quoting remind me of the ceilings on indefinite-delivery/indefinite-quantity contracts, which are now in the tens and sometimes hundreds of billions of dollars. Rarely are these ceilings met and everyone knows it.

It is unheard of for a publicly-traded government contractor to count the ceiling for an IDIQ contract in their pipeline. They know better.

Reason number two for my skepticism around the numbers is that it is hard to imagine a company giving up billions in revenue

I don't think Microsoft is sacrificing all of the revenue in its agreement with GSA, which again talks about $3.1 billion in savings.

Each company that has signed agreements have most likely figured out how to translate these discounts into growth and more revenue. They should at least.

I have asked for contract numbers for these OneGov agreements to track the spending that comes through them, but GSA has not responded.

I have also made a Freedom of Information Act request for copies of some of the agreements. Again, crickets from GSA.

We also have to point out that none of the OneGov agreements are long term. Most are for a single year and none extend in calendar 2027.

So, what happens when they expire? No one seems to know.

I’ve heard concerns that these deals will lead to more vendor lock-in and less competition. Maybe these companies give away their product, just to get the customer hooked on it or to get a foot in the door for more sales of other products and services.

At our family restaurant, suppliers often offered deep discounts on certain products even if they knew they were losing money on that one item. It was called a loss leader because it led to purchases of other products that would more than make up for the loss.

GSA has also touted its OneGov strategy as way of contracting directly with manufacturers and developers instead of through value-added resellers. There are few signs of this happening, which knaws at me.

GSA is signing the agreements via the Schedules but only two of the 13 hold their own – Amazon Web Services and Microsoft. Even these two cloud giants have reseller agreements with multiple VARs.

The full list of 13 OneGov agreements includes these tech companies:

• Adobe
• Amazon Web Services
• Anthropic
• Box
• DocuSign
• Elastic
• Google
• Microsoft
• OpenAI
• Oracle
• Salesforce
• ServiceNow
• Uber

GSA may be negotiating certain costs with them, but the contracts and the business will still likely flow through the VARs.

The implied promise of signing contracts directly with the so-called original equipment manufacturers simply is not yet happening.

As we watch these agreements move forward over the next year, it’s important not to get caught up in the size of the discounts and savings that GSA is hyping.

Yes they sound great, but remember there is no such thing as a free lunch.