The E-Government Act of 2002 was signed into law on December 17, 2002. One of the provisions of this Act allows for the possibility of “cooperative purchasing” by state and local governments, enabling them to use the General Services Administration (GSA) Group 70 Federal Supply Schedules to purchase supplies and services when GSA implements this program. Participation will be voluntary on the part of the contractor, as well as the state and/or local purchasing agencies. Some Motorola two-way radio products and services are included on a GSA Group 70 Schedule Contract.

The actual “cooperative purchasing” program has not yet been implemented, and as such, purchasing under Group 70 Schedules cannot yet occur. In January, GSA published proposed regulations to implement this Act and requested public comments on this proposal. GSA will receive comments and questions until March 24, 2003, after which they will formulate a final rule. This process is expected to be complete by April 17, 2003, but could take longer depending on the comments received.

GSA conducted a public hearing on February 4, which Motorola attended. Based on our assessment of the proposed regulations and comments made at the hearing, GSA needs to address a number of fundamental issues. One key question is how to accommodate state and local purchasing terms and conditions that differ from the terms and conditions on the GSA schedule.

Based on the information currently available, Motorola believes it will be unlikely that “cooperative purchasing” will work effectively for our customers. This is due to the extensive revision of the proposed regulations and resolution of many questions regarding contract terms and conditions.

Until the final ruling is released, it is difficult to answer many questions surrounding this proposal. We are actively involved in discussions in order to fully understand the impact of this option on our customers and our distribution channel. We appreciate your patience and will keep you informed.