Uncle Sam still wants W.W. Grainger Inc. The supplier of maintenance, repair and operating products said last week it received a follow-on Schedule 51V contract by the U.S. General Services Administration. The contract, which could be worth up to $2.15 billion by the GSA, enables Grainger to continue doing business with federal government customers.
Schedule 51V refers to the GSA’s “Hardware SuperStore,” an online buying portal where government agencies can purchase and rent hardware products and equipment.
The new contract is effective Nov. 10 with an initial five-year term and can be renewed for three additional five-year terms upon mutual agreement. Grainger first entered its current Schedule 51V contract in 1999 and says it has booked more than $2 billion in sales under the contract. The new agreement will run parallel to Grainger’s current contract, which expires in February 2019. Such government contracts do not contain any minimum purchase requirements or volume guarantees.
Grainger says it offers federal customers access to roughly 800,000 Trade Agreements Act-compliant products, such as safety supplies, material handling, tools, electrical, lighting, plumbing and HVAC supplies through its GSA Schedule. It also can provide AbilityOne products used by the National Industries for the Blind and the National Industries for the Severely Handicapped. Grainger products also are available to military base supply stores in the U.S., Guam and Japan.
The agreement comes on the heels of Grainger’s Q3 earnings, which showed online sales grew in double digits, but overall sales were up only 2%. Online sales were up 17% for the quarter and helped lift overall sales in the company’s “Other” Business” segment by 11.4%, to $536.9 million from $481.9 million in the same quarter last year. Grainger, No. 32 in the new 2018 B2B E-Commerce 300, did not break out online sales in dollars.
But Q3 net earnings of $170.8 million were down 11.7% from $193.4 million and Grainger had to cut its revenue outlook for the year. It now expects sales growth of 1.5% to 2.5%, down from a previous projection of as much as 4%. Its online businesses include Canada-based AcklandsGrainger.com, off-price U.S.-based Zoro.com and Japan-based MonotaRO.com.
Earlier this year Amazon Business (No. 91) landed a similar arrangement with government agencies and nonprofit organizations. U.S. Communities, a buying cooperative for more than 55,000 public-sector agencies, announced in February that buyers at member organizations could purchase a range of products on Amazon Business, including items ranging from books and art supplies to scientific equipment and animal supplies.
The contract calls for Amazon Business to provide an “online marketplace for the purchase of products and services” under procurement terms providing participating agencies with such benefits as discounted pricing for combined order volumes, and low administrative costs resulting from the use of state-of-the-art order management and delivery systems. U.S. Communities member agency Prince William County (Va.) Public Schools, acting as the lead agency, awarded Amazon Business the contract in January after issuing a request for proposals in September 2016 and considering eight other proposals in addition to Amazon’s.
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