CHAPTER 4 GSA SCHEDULE CONTRACTS
Putting together an acquisition for a government agency to procure goods and services is an expensive proposition. There are costs associated with developing the requirements, obtaining approval, conducting market research, developing the solicitations, evaluating proposals, conducting after-submission activities, and making a contract award. Upon award, the government agency must maintain the contract, negotiate modifications, and expend effort to close down the contract.
Even after going through this process, a government agency cannot be sure that it has obtained a competitive price similar to that obtained by another government agency for the same product or service. One agency could be spending more taxpayers’ dollars for the same product than another agency just because multiple contracts have been established and negotiations were more fruitful in one but not the other.
The General Services Administration (GSA) Schedule is an efficient procurement option for the entire government that allows a government agency to minimize its acquisition costs. The GSA Schedule contract minimizes agency procurement and management costs by offering the same pricing structure, terms, and conditions across the entire government. It allows an agency access to all participating contractors rather than just the few that might participate in a specific procurement. It uses streamlined acquisition tools that expedite getting goods and services to the agency faster.
What is the GSA Schedule?
The GSA Schedule comprises multiple schedule contracts covering a wide variety of products and services. Each schedule has a multitude of contractor products and services available for purchase. Rather than developing its own acquisition, a government agency can procure goods and services through existing contracts that vendors have previously entered into with GSA.
As GSA’s website notes, the GSA Schedule “serves as a change-agent to help create a procurement system which
• Supports and promotes the achievement of federal business goals and strategies;
• Reduces federal overhead buying products and services at lower cost;
• Facilitates improved taxpayer service delivery by placing better quality, higher performing supplies, technology, and support service in the hands of federal managers;
• Is more efficient, timely, and customer focused;
• Produces better information to support planning and execution of the procurement function;
• Encourages the participation of all the nation’s diverse human and business resources in a revitalized economy;
• Serves and protects the public interest; and
• Demands that the government’s business be conducted under the highest ethical standards” (GSA, Acquisition Overview: www.gsa.gov/portal/content/104579).
How does a GSA Schedule contract streamline acquisition?
GSA establishes contract vehicles, each of which encompasses related products and services. For example, one of the GSA Schedule contracts is the Advertising and Integrated Market Solutions (AIMS) contract, which includes products and services such public relations services, market research, and conference support (see Table 4-1). Each category of product or service is associated with a particular Special Item Number (SIN).
Table 4-1. Advertising Services (by SIN)
Source: GSA AIMS List of SINs (from www.gsa.gov/portal/content/104613).
The government procuring official for an agency can use the SIN to identify all vendors that have a current contract in place with GSA to provide a particular product or service. Each vendor listed has previously responded to a GSA request for proposals (RFP); prepared a proposal according to stringent GSA standards; negotiated prices, terms, and conditions; and been successfully added to the list of GSA Schedule contract holders. A government procurement official for an agency can quickly view any contractor’s schedule contract to see the prices, terms, and conditions. All the contract formation work has already been accomplished.
A government procurement official can then select the prequalified schedule holders that have offerings most closely related to the agency’s needs. The government can procure directly with these schedule holders through GSA.
What products and services does GSA offer?
The GSA Advantage! system is an electronic mall where government procurement officials can purchase more than one million products and services from hundreds of thousands of companies. Currently, GSA offers the following main categories of products and services (from www.gsaadvantage.gov):
Building Materials and Structures
Electronics and Appliances
Facilities Maintenance Products
Furniture and Furnishings
Hospitality, Food Service and Cleaning
Industrial Supplies and Equipment
Laboratory, Scientific and Medical
Law Enforcement, Fire and Security
Office Equipment
Office Supplies
Recreational, Apparel and Awards
Technology Products
Tools, Paint and Hardware
Vehicles, Machinery, and Equipment
• Services
Advertising and Marketing Services
Building Material and Industrial Services
Energy Services
Engineering Services
Environmental Services
Facility Management Services
Financial Services
Furniture Services
HR, EEO, and Counseling Services
Office Services
Publication Services
Scientific and Medical Services
• Security and Law Enforcement Services
Technology Services
Temporary Staffing Services
Training
Transportation Services
Travel Services
Vehicles.
Why should a company get on a GSA Schedule contract?
A company may choose to get on a GSA Schedule contract for several reasons:
• It wants to begin selling in the federal market and GSA offers an easy path of entry for a company to prime a contract, subcontract to another schedule holder, or team with another schedule holder.
• It wants to expand its footprint in the federal government marketplace by exposing its products and services to a wider government audience.
• It wants to move into the state and local government marketplaces and can do so because the federal GSA Advantage! system is now available to use for state and local purchases.
What is the overall process a company goes through to get on a GSA Schedule contract?
After a company decides it wants to sell through GSA, it determines which of the 40+ schedules is the appropriate one for its particular products and services (www.gsaelibrary.gsa.gov/ElibMain/scheduleList.do). The company then downloads the solicitation for that particular schedule from the GSA eLibrary (www.gsaelibrary.gsa.gov/ElibMain/home.do). The solicitation will contain all the requirements a contractor must meet to submit a proposal to GSA. Unlike typical agency solicitations, there is no required start or end date for submissions. A company can get on a GSA Schedule contract at any time.
If a company has never done business with the government before, it will need to obtain a Data Universal Numbering System (DUNS) number through Dunn and Bradstreet (http://fedgov.dnb.com/webform). The DUNS number is a unique nine-digit site identifier for a specific company location. The DUNS number is also required when a company enrolls in the System for Award Management (SAM) (www.sam.gov/portal/public/SAM). Officially launched in July 2012, SAM will be implemented in phases and is designed to house all acquisition systems under one system.
One part of SAM is the Central Contractor Register (CCR). A company must be registered in CCR if it is to receive any contract award from the government. SAM also allows a company to submit its representations and certifications electronically (formerly done through the Online Representations and Certifications Application, or ORCA). The Excluded Parties List System (EPLS), also a part of SAM, allows a government official to determine sources that are excluded from acquiring federal government contracts at the present time.
Another preparatory step in getting on a GSA Schedule contract is to take the required GSA training. The training program, Pathways to Success, is mandatory for all potential schedule holders (https://vsc.gsa.gov/RA/research.cfm). GSA offers a Vendor Toolbox site (https://vsc.gsa.gov/RA) that provides tools, events, and training to help a company research, analyze, and decide on government opportunities. It offers ongoing support for vendors to comply with GSA regulations, grow their businesses, and better meet the government’s needs.
A final step is to request a digital certificate. A digital certificate is a security measure required by the government to submit proposals through the GSA’s eOffer and eMod systems. According to the GSA website, “a digital certificate is an electronic credential that
a. Asserts the identity of an individual
b. Enables eOffer/eMod to verify the identity of the individual entering the system and signing documents
c. Encrypts or decrypts data to ensure that it is securely transmitted
d. Is a packet of information that is stored on a web browser or on a token
e. Creates digital signatures which are verifiable (http://eoffer.gsa.gov/eoffer_docs/DigitalCert.html).
Two approved vendors provide this service for a fee: IndenTrust and Operational Research Consultants. Notarized authorizations signed by company officials must be provided to be eligible for a digital certificate. Once approved, software is loaded onto a particular computer, from which all GSA business must be conducted.
Next, the contractor must complete each document required by the solicitation. Once the documents are complete, the company can upload them into the eOffer system. Each required document is uploaded into a designated spot. Any additional information provided by the offeror for consideration may also be uploaded.
The government reviews the submission to make sure none of the required pieces are missing. The contracting officer (CO) for the program may also submit queries to the company for clarification on various parts of the proposal. Once all outstanding issues have been resolved, the CO negotiates the final contract with the company. If agreement can be reached, the contractor makes the modifications and uploads the final contract into eOffer. The CO responds with a signed, awarded contract.
What are the typical parts of a GSA proposal?
The government requests different types of data about the company and the products or services it intends to sell. GSA typically requires the following data, grouped into four “factor” categories.
Factor 1: Corporate Experience
The government requires a company to have a minimum of two years of experience before submitting a GSA proposal. Once that requirement has been met, the government requires the potential contractor to state the following:
1. Years of Corporate Experience Providing Services Relevant to the Solicitation. The government uses this as a criterion to help determine if the company has relevant experience in the subject matter required for the contract. For example, if your company began providing marketing services five years ago and it just began selling training services three years ago, and this is an RFP for marketing services, you would be required to state that you have three years of corporate experience in providing marketing services.
2. Organization’s Size, Experience in the Field, and Resources Available. The government wants to make sure that the company has the resources and experience available to be successful on a GSA Schedule contract. The company doesn’t have to be big; in fact, single-person entrepreneur companies have received GSA Schedule contracts. However, the company has to demonstrate that it can bring in the necessary subcontractors to support the effort, if needed. Typically a subcontractor has to provide a letter of commitment that it will support the prime contract schedule holder throughout the duration of the GSA Schedule contract.
3. Company Background and History. The government wants to understand a little bit about how the company was formed and the highlights of the company’s past.
4. Personnel and Controls. The government wants information that demonstrates that the company either has or can acquire enough resources to complete the contract. It also wants the contractor to describe the controls in place to manage those resources.
5. Marketing Services to the Government. The government wants to understand how the contractor will market its services to the government. It cares about this business aspect because a company is required to sell $25,000 under the GSA Schedules program within the first two years after obtaining the contract or it will be removed from the schedules program.
6. Subcontractors. The government wants to know how the company will acquire, use, and manage subcontractors on this contract.
Factor 2: Relevant Project Experience
The government wants the company to provide specific data about each project being submitted for review for relevant project experience. Typically four citations are required. Each citation must include
1. The SIN(s) demonstrated by the specific project
2. The specific services being proposed under the SIN
3. Statement declaring that the project work was completed within the last two years or that the project is ongoing
4. Client name, project name, contract number, POC information
5. Period of performance
6. Project total dollar value; dollar value of work performed related to the SIN
7. Summary of project
8. Statement of work for the project
9. Detailed description of SIN work performed
10. Methodology, tools, and/or processes used to perform the contract
11. Demonstration of compliance with any law, regulation, or standard
12. Project schedule
13. Description of how the work performed is similar to the statement of work.
Factor 3: Past Performance
The government requires a potential contractor to contact Open Ratings, Inc. (ORI), to conduct a survey of past customers to determine their level of satisfaction with the company’s previous work. The company must provide the point of contact information for up to 20 customer references and pay ORI a fee. ORI will then contact each of the customers listed and ask them to complete a short survey about the company’s work. These survey results are compiled and sent to the company. At the time of proposal submission, the contractor must submit the ORI order form showing the customer references and the ORI past performance to the government for review. The references selected should be from projects that represent the type of work that will be performed under the contract.
Factor 4: Quality Control
The government wants to know how the prime contractor intends to ensure quality deliverables under this contract. Specifically, the government wants to understand
• The internal review procedures the company will employ to achieve high quality standards
• The individuals who will supervise or review projects as part of the quality review process
• How the subcontractors will meet the quality standards and what measures the prime contractor will take to ensure acceptable subcontractor performance
• How the company handles potential problem areas and solutions
• How the company will implement and manage multiple projects for multiple agencies simultaneously.
In addition to these factor essays, the government requires the contractor to submit additional information as part of the proposal package. These documents include
• Past performance summary report from ORI.
• Agent Authorization letter. If the company chooses to hire an outside agent to negotiate the GSA Schedule contract, the company must authorize the specific actions it allows the agent to conduct (e.g., negotiating the contract, negotiating modifications).
• Central Contract Registration (CCR). Screen print of the company’s CCR page. (As of this writing, the CCR is still called CCR as it is being moved under the SAM system. The name may be changed in the future.)
• Commercial Price List. The commercial price list for all the proposed labor categories and products being offered under the contract.
• Cover Letter. A letter referencing the GSA Schedule contract number and stating that the proposal will be valid for a period of nine months. The prices offered in the contract are for the duration of the contract, usually three to five years. As discussions begin and additional data is supplied, this cover letter should be modified with the latest date and revisions that are made to the proposal for ease of contracting officer evaluation.
• Commercial Sales Practices Format. This form requires the contractor to provide
Dollar value of sales for the last 12-month period
Total projected annual sales to the government throughout the contract by SIN
Verification of the company’s written discounting policies to show that the government price offered is the cheapest price the company offers commercial companies
Chart showing each type of customer that receives a discount, the amount of discount received, quantity/volume, and whether the discounts were based on any concessions, terms, or conditions
Chart identifying the prices offered to GSA under this solicitation, including labor category, percent discount, unit of issue (per hour or per day), quantity/volume, and whether the discounts are based on any concessions, terms, or conditions
Statement specifying whether the chart on commercial pricing deviates from the company’s standard commercial sales policies or written policies.
• Letters of Commitment. Any vendors working with the prime contractor on the GSA Schedule contract must submit a letter of commitment stating that they intend to work with the company through the conclusion of the contract and signed by an officer of the company.
• Financial Statements. The offeror must provide a balance sheet summary depicting assets, liabilities, and equity for the current year. It must also provide profit and loss statements for the last three years.
• Final Proposal Revision. The government will use the offeror’s initial submission to develop its negotiation position. The offeror then submits its final proposal revision detailing the exact terms, conditions, and prices available under the contract. This document is signed by the president of the company.
• Employee Handbook. The government wants to see how certain items, such as uncompensated overtime, are covered in the company. The government will ask for the offeror’s employee handbook with certain sections highlighted for review.
• Invoices. The government needs justification for the prices the company is offering. Therefore, it requires the company to submit invoices to actual clients delineating the prices actually charged for each labor category proposed.
• Chart Mapping Labor Category to Invoice. For each labor category proposed, the offeror must state which customer received an invoice for that amount and provide the specific file that contains that invoice.
• Job Descriptions. For each labor category proposed under the contract, the government wants to see a description including level of experience, education, and responsibilities.
• Other Direct Costs. This is a chart that states the type of other direct charge (ODC); description; unit of measure; dollar amount per unit; price offered to GSA (excluding industrial funding fee (IFF)); IFF; and GSA prices with IFF.
• Optional Template. This form requires the access to provide the following four sections:
Section I: Administrative Proposal
a. Pathway to Success Certificate. Every schedule offeror must complete a GSA course titled Pathway to Success, which is found on the GSA website.
b. Agent authorization letter. This letter must state the exact permissions that are being given to an agent acting on behalf of the company.
c. Central Contractor Registration (CCR) statement.
d. Online Representations and Certifications registration statement.
e. Statement declaring whether the offeror has ever had an MAS contract canceled or an MAS offer rejected.
f. Statement declaring whether the offeror has a current MAS contract.
g. Statement declaring whether the offeror has any pending MAS offers.
h. Statement declaring that the offeror provided financial statements or that the offeror has experienced net losses for one of the last two years and has provided an explanation of the situation.
i. Statement declaring whether the offeror represented that it is a small business and does not require a subcontracting plan or that it is an other than small business and has provided a subcontracting plan.
Section II: Technical Requirements (described above)
a. Factor 1: Corporate Experience
b. Factor 2: Relevant Project Experience
c. Factor 3: Past Performance
d. Factor 4: Quality Control
Section III: Price Proposal
a. Statement that the offeror understands the GSA pricing goal and has provided prices that are fully burdened and inclusive of all cost factors (direct labor, indirect labor, G&A, profit, and IFF).
b. Statement regarding whether the pricing structure used by the offeror is based on the offeror’s current commercial practices and that the offeror maintains a commercial price list or that the offered pricing is based on the offeror’s current commercial practices and commercial market pricing.
c. Pricing Proposal Template. The government provides a standard form that denotes products, services, applicable discounts, most favored customers, and proposed prices under this contract.
d. Domestic and Overseas Rates. The offeror must provide a statement regarding whether it intends to perform work overseas; and if so, whether it will charge the same or different rates as those for domestic work.
e. Statement regarding whether the contractor will use the same or different rates for rates for work done in a customer or contractor facility.
f. Industrial Funding Fee (IFF). Statement that the contractor has included a 0.75 percent IFF in the prices. The IFF is required to be paid by the contractor to GSA for running the schedules program. It is reported to the GSA as part of the sales report and is paid quarterly.
g. Statement regarding whether the economic price adjustment is based on commercial list price or commercial market pricing.
h. Statement declaring that each of the labor categories that will be used on this contract has position descriptions included or that the offeror is not offering any labor categories.
i. Statement that the offeror will conform to federal travel regulations.
j. Statement that the offeror has completed a Commercial Sales Practices Form.
k. Statement about the prices offered to GSA vis-à-vis most favored customer prices.
l. Statement regarding whether pricing documentation has been provided for each proposed product/service category.
m. Statement regarding the offeror’s professional compensation plan that is highlighted in the employee handbook.
n. Statement regarding compliance on repair and alternations task orders.
o. Statement regarding compliance with the Service Contract Act.
• Revenue by SINs summary. How much revenue the offeror expects to receive in each SIN category
• Summary of Offer. The offeror must complete a standard form summary of offer as part of its submission.
What happens after all the proposal pieces are completed?
Using the computer that houses your company’s digital certificate, log into the GSA’s e-Offer system. The system will ask if you want to submit a new offer. Once you answer yes, it will ask you specific questions to begin the process. Then it will allow you to upload your proposal files by providing the correct file name and a short description of what the file contains. There are assigned posts for each of the required files. At the end, the system will allow you to upload any additional files that you feel are important for submission review. You will receive a response stating that your files have been successfully uploaded.
Depending on the current GSA workload, you will receive a note within a few days or weeks letting you know that your submission is currently under review. You will be assigned a specific contract administrator, who will review your submission and contact you with any questions or missing data requirements. Revised files or additional information is provided within the time designated by the contract administrator in the email. Usually a contract administrator works directly with you to get the submission complete. Then you will conduct your price negotiations with a contracting officer, who is the only person who can actually commit the government.
Once your negotiations are amicably concluded, you are able to market directly to government agencies. These agencies can then buy your products and services from the GSA Advantage! system. Agency buyers can also search GSA Advantage! and contact you with a direct requirement.
Some small companies do a majority of their business through the GSA Schedule contracts program. If you want to grow your federal, state, and local business base, using GSA Schedule contracts is definitely worth considering.
What are the types of GSA multiple award schedule contracts?
GSA acts as a buyer for the entire government on a worldwide basis. GSA provides three basic services:
• Federal Supply Service—helps federal agencies procure supplies, equipment, vehicles, etc.
• Public Buildings Service—develops, builds, and manages federally owned and leased buildings
• Federal Technology Service—procures information technology products and services.
GSA works with companies to put products and services on a GSA Schedule contract. Each of these schedule contracts is either deadline-based (meaning all proposals in response to an RFP are due by a certain date and time) or open-ended (meaning that a company can submit a proposal and work with GSA to negotiate it at any point). Schedules are typically for one to five years; however, the Evergreen program, sponsored by GSA, allows companies to hold schedules for an initial period of five years, and then to have three five-year option periods. This could potentially make for an unprecedented contract length of 20 years.
GSA Schedule contracts, coupled with the broader governmentwide access contracts (GWACs), represent a shift in federal buying and contracting patterns. Prior to these contract vehicles, an agency, division, or command would buy only the products or services needed for its organization. This “agency-centric” view of procurement was expensive to maintain since many agencies were going off to procure similar items, causing redundant efforts. Moreover, the government was not able to leverage the vast buying power in the industry to allow it steep company discounts. Finally, each organization negotiated its own contract with each company, which meant that one organization could get a significant discount and favorable terms and conditions from a company that another organization might not be able to obtain.
The “new” procurement approach is a “governmentcentric” or enterprisewide view. In GSA Schedule contracts and GWACs, one procurement agency negotiates the contract with the company and the prices, terms, and conditions are available for use anywhere in the government. This means that a customer working for the Veterans Administration in Hines, Illinois, can get the same products and services as a customer working for the U.S. Army in Fort Meade, Maryland. In addition, GSA used to buy more products from companies through schedule contracts; now it is buying more services through those contracts. So a company can have instant access to all government buyers for any product or service that it sells on the schedule contract.
In addition to the already-discounted prices available on the schedule, a government buyer may request, and sometimes be granted, a further price reduction when placing the actual order. The contractor has to explain why a discount was granted in the particular situation (for example, large-quantity buy); otherwise, the government will expect similar discounts on all future orders.
Procurement becomes a matter of the CO’s reviewing the various GSA MAS contracts to locate the products and services required, determine the companies providing those products and services, and run a “mini” competition among three or more of those companies to determine the winner. Contracting becomes a simple matter of issuing a delivery order against a pre-existing contract vehicle by shopping, comparing prices, and contracting—all accomplished online.
What are some of the tools GSA has available for contractors on multiple award schedule contracts?
The GSA MAS contracts have continued to become many contracting officers’ “vehicle of choice” for procuring products and services. To help facilitate government purchases through the schedule contracts, GSA has provided the following services.
GSA Advantage! System
The GSA Advantage! system is an electronic tool used by contractors and government buyers. Contractors put their products, services, prices, terms, and conditions in the system and government buyers from around the world can “shop online.” The buyer can then select three or four vendors that it is most interested in, send them the requirements, and receive proposals back. After evaluation, the buyer can make an award decision and the winning contractor provides the products and services.
E-Buy
Currently, GSA requires its schedule holder contractors to put their products, services, and prices on the GSA Advantage! system. This system paves the way for the e-Buy program, which will allow government procurement officials to solicit price quotes instantaneously from competing product and service providers.
In today’s procurement environment, the government buyer may solicit quotes from three to four providers. In the e-Buy arena, companies will be categorized according to Dunn and Bradstreet’s Universal Standard Products and Services Classification (UNSPSC). When a buyer needs something, it will select the appropriate UNSPSC category and all companies within that category will be sent notification about the request for quote. Once the request for quote time is closed, the buyer may select the company that represents the best overall value to the government and issue an order to that company. This ensures that all companies holding schedules and listed in the GSA Advantage! system will be able to bid on a request for quote.
Corporate Contracts
Companies are able to bid on and win multiple GSA Schedule contracts. GSA is encouraging companies with multiple schedules to develop corporate contracts that would consolidate all their schedule products and services into one contract. The benefit to the company is that rather than managing multiple schedule contracts with varying prices, terms, conditions, durations, etc., the corporate contract would allow the company to manage one unified contract. Of course, whether migrating to a corporate contract is a good business decision for the company depends on the prices, terms, and conditions currently negotiated on the various schedule contracts.
When can a simplified acquisition use multiple awards?
Congress made one procurement streamlining change in the 1990s that made it easier for the government to use simplified acquisitions. Another change was to let the government make multiple awards of contracts when it made sense to do so. Although the FAR gives a contracting officer help in deciding when to make multiple awards in sealed bids or negotiated procurements, the FAR does not give any guidance on when the government should use simplified acquisitions. GAO gave some helpful guidance. It looked at the FAR’s guidance in sealed bids and negotiated procurements and said that
[the] FAR advises that IFBs are to provide for multiple awards where the contracting officer determines that multiple awards “might be made if doing so is economically advantageous to the Government.” Section 14.201-8(c) of the FAR adds that after the receipt of bids, “[t]he contracting officer shall assume, for the purpose of making multiple awards, that $500 would be the administrative cost to the Government for issuing and administering each contract awarded under a solicitation,” and that “[i]ndividual awards shall be for the items or combinations of items that result in the lowest aggregate cost to the Government, including the assumed administrative costs” (Para Scientific Company, B-299046.2, February 13, 2007).
Are there any significant terms and conditions in the GSA MAS process that a contractor should be aware of?
Contractors, too, welcome the GSA MAS contracts because they can go through the contracting process a fewer number of times and, once awarded, can sell to anyone within the government procurement community. Their products and services are publicized through many of the GSA marketing tools, thus providing wider access and exposure for the MAS contract. Presumably, this access and exposure can lead to more sales for the contractor. However, the GSA MAS contracts are not without problems.
For starters, GSA is not the only agency that can issue GWACs. Deidre Lee, then-Administrator of OFPP, in her address to the 2000 National Contract Management Association’s World Congress, talked about her initiative to get information about all the GWACs available to all COs on their desktop computers. It seems that in the current environment, the company is making recommendations about which GWAC the government should use to secure the company’s products or services, rather than the CO’s determining which GWAC offers the government the best value for its money. By receiving information about all the schedules, products, services, terms, conditions, and prices, the CO can make an informed decision regarding which contract vehicle is best to use from the government’s perspective, not the contractor’s perspective.
In addition, the GWACs, and in particular the GSA MAS contracts, are still indefinite delivery/indefinite quantity type contracts, which means that a contractor could go through all the effort to get awarded the contract and never see any business resulting from it. In addition, most contracts under the GSA Schedule contracts are competed among three or more companies. This means that the contractor is always in the competition mode, even after it has been awarded the schedule contract. These efforts to secure delivery orders can range from quick responses to full proposal efforts. Closely tied to this issue is that the government is encouraged to seek further price reductions from contractors even lower than the published GSA Schedule contract prices. And of course, if one government agency is successful in negotiating a lower price, all subsequent procuring agencies expect the same lower price.
A third area of concern for the parties stems from several of the clauses used to manage the GSA MAS contracts. These clauses and their GSA Regulations (GSAR) citations are Price Reduction (GSAR 552.238-76), Examination of Records (GSAR 552.205-71), and Price Adjustment (GSAR 552.215-72).
In the price reduction clause, the government is granted the right to most favored customer pricing wherever and whenever it occurs. So if a company has a long-standing commercial customer that buys a lot of its products and services in return for discounted prices, the contractor must provide that same level of discount to its government customers, regardless of the quantity purchased. This means that the contractor must maintain constant vigilance over the prices being used anywhere throughout its company to ensure that the government receives prices at or below them.
In the examination of records clause, the government retains the right to audit preaward and postaward data. In fact, the GSAR allows preaward data to be audited postaward if approved by the senior procurement executive.
In the price adjustment clause, the CO can lower the price of a contract if he or she determines after award that the price negotiated was increased by a significant amount because the contractor failed to provide necessary information; to submit current, accurate, and complete information; or to disclose changes in its prices and pricing policies that occurred after the original submission and prior to the negotiations.
Several of these clauses were addressed by the Government Electronics Industry Association (GEIA). GEIA commented on the FAR’s treatment of commercial items that require the government to include only the contract clauses that are required to implement provisions of a law or executive order or be consistent with standard commercial practice. GEIA also commented on the government’s ability to examine records as being inconsistent with the Clinger-Cohen Act of 1996 because the act removed certain government audit rights with respect to purchasing commercial items.
OFPP upheld the validity of the postaward audit clause and the price adjustment clause by stating that GSA (and the Veterans Administration) seek to maximize company choice and allow contractors onto the schedules without requiring the contractors to engage in competition to receive the contracts. Basically, since the government allows for numerous contractors to supply products and services to its buyers, the government needs the protection that these clauses provide. This buying situation is different from commercial practice because typically a commercial company would deal with only a few companies that may or may not have competed for the contract.
The bottom line is that for the short term, these clauses are not going away. It is the company’s responsibility to stay abreast of further modifications to the GSA MAS program and make a business decision about whether the benefits outweigh the work involved in complying with the requirements.
How does a contractor secure a GSA Schedule contract?
GSA has two types of RFPs: dated RFPs and open RFPs. In a dated RFP, GSA puts out the requirements and all interested companies must submit a proposal by the specified date and time. These RFPs are like the typical competitive environment in which all competitors are vying for one or several contract schedule openings. In an open RFP, the requirements are available to industry and a company can decide to submit a proposal at any time. These RFPs allow a company to submit a list of its products and services, demonstrate the commercial availability of those products and services, and submit competitive prices. Either type of RFP can result in a contract that allows for additional products to be added later.
To submit a proposal to GSA, a contractor should review the contracting opportunities available on the GSA web page as well as the FedBizOpps website. Instructions for proposal submission are found in the RFP. Upon careful review and evaluation by GSA, the company may be awarded a contract. If it is, it must put all of its products, services, and prices on the GSA Advantage! system. A customer, if it so chooses, may order products and services directly off the GSA Schedule contract prices listed in Advantage!
In today’s competitive task order environment, the company works with various government agencies to learn of upcoming program opportunities. Since the government agency selects the three or four companies it wishes to receive proposals from, the company’s goal is to be included as one of the soliciting companies. If the company receives the RFP, it will then have a minimum amount of time to submit a proposal to the procuring agency. This proposal will include a solution developed from the products, services, and prices contained on the company’s GSA Schedule contract. In addition, the government may request, and the company may offer, a discount off the GSA prices to secure the business. However, the company should be aware that these discounts may be required on future business opportunities.
Now that e-Buy is fully implemented, a procuring government official (located anywhere in the world) can put requirements on e-Buy and the companies with the required products and services on their schedule contracts will be sent electronic notification of the solicitation. In this way, all contractors who have the required products and services on their schedule contracts will be sent notification of future pending requirements. This is in contrast to the way things are done today, when the company must seek out future requirements that have been generated anywhere in the world.
Are agencies required to use the Federal Supply Schedule?
No. Even though the FAR refers to the Federal Supply Schedule (FSS) as a “mandatory source,” agencies are not required to use it. FAR 8.002 states that agencies “shall” get the supplies and services they need from a list of sources. The list includes what the FAR calls “mandatory” federal supply schedules and “optional use” federal supply schedules. But “mandatory” does not really mean mandatory, according to GAO. “Under a mandatory FSS contract, an agency generally must order its requirements under that FSS if its minimum needs will be met by the products or services listed in the schedule. However, as conceded by the protester, its FSS contract is not mandatory; thus an agency’s use of that contract is voluntary. There is nothing else in the FAR or elsewhere that compels the agency here to meet its requirements under the protester’s FSS contract.” GSA, which administers the FSS, agreed with GAO’s “voluntary” interpretation of mandatory schedules: Unless a statute or regulation explicitly makes a particular FSS contract mandatory, using the schedule is voluntary (Murray-Benjamin Electric Company, L.P., B-298,481, September 7, 2006).
If a contractor is not getting a fair share of task orders, what can the contractor do?
While Congress likes competition, enough is enough. Once an umbrella contract has been competed among a number of companies, and the winner (or winners under a multiple award contract) determined, the need for full and open competition for the task orders for specific work under the contract is reduced. Any winning company of a contract using task orders is entitled simply to “a fair share” of the task orders issued under that contract.
So when Congress considered how much competition there should be prior to issuing task orders, Congress not only demanded a lower level of competition, but also limited the ability of disappointed companies to file protests over any task order the company was not awarded.
In fact, Congress prohibited protests of FAR Part 16 task orders except in limited circumstances. Task orders could be protested to the U.S. Court of Federal Claims or GAO only on the grounds that the order increased the scope, period, or maximum value of the contract under which the order was issued. Also, GAO will consider protests of FAR Part 16 task orders over $10,000,000. In addition, GAO has jurisdiction over Federal Supply Schedule task order protests. GAO also handles protests involving task orders under a Blanket Purchase Agreement because BPAs are not task order contracts. The U.S. Court of Federal Claims (COFC) also will resolve protests over Federal Supply Schedule task orders.
How can task orders be protested?
GAO has found some other ways task orders can be protested. Some protests have succeeded.
Beyond-Scope Task Orders
An agency had an indefinite delivery/indefinite quantity (IDIQ) contract for “noncomplex systems integration services” involving integrating commercially available off-the-shelf hardware and software. Under this hardware-software contract, the agency ordered management services that involved activities such as assisting in publicity; identifying federal, state, and private opportunities for potential collaboration/partnership with the Army; and monitoring, tracking, and overseeing the execution of new initiatives. The task order was for a “warm body,” not for hardware or software.
In finding that the task order was beyond the scope of the contract, GAO laid down some guidelines for how to determine whether a task order is beyond the scope. “In determining whether a task order is beyond the scope of the original contract, this Office considers whether there is a material difference between the task order and that contract. Evidence of such a material difference is found by reviewing the circumstances attending the procurement that was conducted; examining any changes in the type of work, performance period, and costs between the contract as awarded and as modified by the task order; and considering whether the original contract solicitation adequately advised companies of the potential for the type of task order issued. The overall inquiry is whether the modification is of a nature which potential companies would reasonably have anticipated” (Floro and Asso., B-285451.3, B-285451.4, October 25, 2000).
This task order, according to GAO, was beyond the scope. While it involved computers, it did so only vaguely and certainly did not involve integration of hardware and software.
GAO-Fashioned Protestable Task Orders
GAO decisions have added protestable issues that do not directly involve the “scope, period, or maximum value” of an IDIQ contract, but still involve variations of them.
In one case, a protest of a task order was allowed because the protest really involved the underlying solicitation that led to the task order contract. After a task order for travel was not issued to a small business, the task order was protested on the basis that the task order and the solicitation for the underlying contract violated the small business set-aside requirements. GAO saw the protest as one addressed to the solicitation and not the task order issued under it and handled the protest. Its rationale was that GAO always has authority to handle protests involving violations of law or regulations, such as the small business set-aside requirements.
In a similar case, GAO heard a protest involving a task order for environmental remediation at a closing military base because the underlying solicitation and contract violated the laws and regulations giving local businesses preference in the award of such contracts and task orders.
GAO has found other exceptions involving the violation of laws and regulations. It has considered task orders when an agency was attempting to circumvent the law and regulations by, for example, using a nonappropriated fund instrumentality or using a cooperative agreement or grant instead of a contract.
Can the failure to get a task order be challenged as a claim?
If protests complaining about not getting enough task orders rarely work, then a claim may be a better approach for a vendor that is denied a fair opportunity to be considered for task orders. The only alternatives a vendor may have are filing a claim under the multiple award contract with the contracting officer and filing an appeal with the appropriate board of contract appeals. For example, the Armed Services Board of Contract Appeals (ASBCA) concluded that it would hear claims from a vendor arguing that the government was not giving it a fair opportunity to compete. The Board noted that vendors can file a claim for damages for breach of the awarding orders clause of the contract, distinguishing between protests and claims: “These are separate and distinct forms of relief with ‘protests’ governed by FAR 33.1 and ‘claims’ by FAR 33.2. The statute, regulation and contract clause prohibit only protests.” The Board also cited a decision that showed what a breach looks like: “In Community Consulting International, … we held that we had jurisdiction over a claim for breach of a fair opportunity to compete clause in a multiple award indefinite quantity contract where the contractor was given the opportunity to bid on only 26 of the 51 orders awarded” (L-3 Communications Corp., ASBCA 54920, July 27, 2006, 06-2 BCA ¶ 33374).
The Court of Federal Claims (CFC) has also allowed a multiple award contractor to file a claim based on the agency’s alleged denial of a fair opportunity to compete (Digital Technologies, Inc. v. United States, 89 Fed.Cl. 711, (2009)).
Can losing a blanket purchase agreement be protested?
Another contract vehicle that uses task orders is a blanket purchase agreement (BPA). When that is set up, no contract is established until an order is placed against it. If a firm loses a BPA, it can protest that loss to GAO. In Labat-Anderson Inc. v. United States, 50 Fed.Cl. 99 (2001), the government issued a solicitation for a fixed-price BPA to a contractor already holding an FSS contract. The government decided to use negotiation procedures more typical of a FAR Part 15 acquisition. After Labat lost, it protested to the U.S. Court of Federal Claims. The government asked the court to dismiss the case but the court refused because a BPA, not a task order, was involved. The BPA, according to a later court decision, “is not a task order itself, but rather a vehicle against which task orders will be placed.” Furthermore, the court agreed with the holding in Severn Cos., Inc., 97-1 Comp. Gen. ¶ 181, n. 1, 1997 WL 270342 (1997), which reasoned that the task order protest bar “… was not intended to preclude protests with respect to the placement of BPAs against GSA FSS contracts” (Group Seven Associates, LLC v. United States, 68 Fed. Cl. 28 (2005)).