The U.S. General Services Administration (GSA) recently requested information to explore “potential improvements” to the acquisition of Information Technology (IT) hardware and software through Value Added Resellers (VARs), commonly known as ITVARs. Federal Acquisition Service Commissioner Josh Gruenbaum wants to “learn directly from Value Added Resellers about the value they add to the government within the supply chain.” This request coincides with the first phase of the GSA’s OneGov Strategy, which seeks to provide agencies with standardized terms and pricing for easier access to IT tools, and likely expanding to other commercial items and services in the future. Thus, this may be a model for what is to come across various industries, not only ITVARs. In this client alert, PilieroMazza highlights why it is important for VARs to have their voice heard by responding to GSA’s request.
Last year, the Trump Administration issued two Executive Orders (EOs), 14240 and 14271, aimed at saving taxpayer dollars in federal contracting through consolidated procurements and commercial, cost-effective solutions, respectively. The early efforts of the GSA’s OneGov Strategy seek to shift IT acquisition away from prime contracts with VARs and toward contracts directly with Original Equipment Manufacturers (OEMs), as seen most recently with Broadcom and Tenable Public Sector LLC. The strategy’s early efforts are focused on IT, but it is set to expand into other areas such as hardware, platforms, infrastructure, cybersecurity services, and, likely, many other commercial products and services.
One of the significant concerns with the OneGov Strategy is that it seeks to invert the market, with VARs flipping from the prime contractor role to acting as subcontractors to OEMs. GSA believes VARs will still be able to provide valuable services to OEMs like license management, onboarding, training, and integration support. However, it is fair to question whether GSA’s expectation is realistic, considering it does not appear the OneGov Strategy is actively attempting to facilitate a continued role for VARs. Last summer, a GSA official stated during a webinar on the OneGov Strategy that the continued role of VARs would ultimately be up to the OEMs. GSA should not leave it entirely up to the OEMs to determine if VARs still have a role in these procurements. At a minimum, the government should enforce meaningful small business subcontracting plan requirements in the prime contracts with OEMs to ensure small business VARs are not left out in the cold.
One of the rationales behind the OneGov Strategy is the perception that the government pays more than it should when a VAR is the prime contractor, despite the fact that such reseller arrangements are used in nearly every enterprise software market in the commercial space. This myopic view overlooks the many value adds that most VARs provide, not to mention the policy considerations behind growing the industrial base and involving more small businesses in federal procurement. Yet, GSA’s view appears to be gaining steam, with more direct contracts with OEMs and rumors in recent months that both GSA and DOW are considering caps on markups charged by VARs.
Against this backdrop, GSA is now requesting responses to several questions here. GSA says they plan to use the information received to “substantiate proposed pricing of IT hardware acquired through VARs under SIN 33411 and confirm that markups applied to OEM pricing result in fair and reasonable pricing.” GSA will then determine whether it needs to establish controls when VAR “markups exceed a certain percentage threshold.” GSA is also asking whether all VARs are “simply pass throughs.” Again, this ignores the key use cases of resellers by OEMs, who use them to allow for lower prices to consumers by forcing market risk of lower sales on the resellers, while resellers get volume discounts as well as discounts due to minimum purchase guarantees that the government is not willing to provide. Thus, resellers allow the government to gain reduced pricing without the risk borne by the resellers themselves. Further, the reseller insulates the OEM from the government contracting requirements and risks that they may otherwise not be willing to accept. As such, the removal of resellers may actually increase the costs to the government directly by OEMs charging more to offset that risk, or by reducing competition by having OEMs leave the federal market all together.
We know from experience what GSA may not: most VARs are not simply pass throughs. VARs provide many valuable services that benefit the government, such as program management, customer service, delivery coordination, setup, and implementation services, all while taking on the significant compliance obligations that come with being a federal contractor. And there’s more: many VARs are small businesses, including service-disabled veteran-owned small businesses (SDVOSBs).
Last summer, during the initial rollout of the OneGov Strategy, a GSA official stated that they had not heard much from VARs about this new initiative. As the old saying goes, “silence implies consent.” GSA is now giving VARs a formal opportunity to have their voices heard through this request. We encourage all VARs to respond and tell GSA about how you are not simply a pass through, what you bring to the table, and why your prices are fair and reasonable.
GSA provided a short window for industry to respond to this request. If you are interested in responding, you must do so here no later than 5:00 PM ET on February 9, 2026.
If you have any questions regarding how to navigate GSA’s OneGov Strategy or if you would like help in responding to GSA’s request for information, please contact the authors of this client alert, Jon Williams (jwilliams@pilieromazza.com), Cy Alba (ialba@pilieromazza.com), or Daniel Figuenick (dfiguenick@pilieromazza.com)—members of PilieroMazza’s Government Contracts Group.
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