The multiple-award double standard

For this week’s comment I wanted to share with you another blog post that was first published on the Federal Times’ Acquisition Blog (www.federaltimes.com):

The multiple-award double standard

On March 13,2014, Defense Procurement and Acquisition Policy (DPAP) issued a class deviation “clarifying” (i.e. establishing) that DoD ordering activities are responsible for determining prices fair and reasonable for Blanket Purchase Agreements (BPAs), task orders and delivery orders issued under GSA’s multiple award schedule program. This deviation has generated significant discussion, analysis and debate in the procurement community regarding the balance between procedures and outcomes when using the GSA’s Schedules streamlined ordering processes. The language of the deviation is as follows:

Supplies offered on the schedule are listed at fixed prices. Services offered on the schedule are priced either at hourly rates, or at a fixed price for the performance of a specific task (e.g. installation, maintenance, and repair). GSA has determined the prices of supplies and fixed-price services, and rates for services offered at hourly rates, to be fair and reasonable for the purpose of establishing the schedule contract. GSA’s determination does not relieve the ordering activity contracting officer from the responsibility of making a determination of fair and reasonable pricing for individual orders, BPAs, and orders under BPAs, using the proposal analysis techniques at 15.404-1. The complexity and circumstances of each acquisition should determine the level of detail of the analysis required.

The impetus behind the DPAP deviation is a growing concern that when using the GSA Schedules program, DoD contracting officers are not doing any analysis of proposed prices at the BPA and task order level. Specifically, DPAP is concerned that rather than doing any analysis DoD contracting officers are merely relying on the language in FAR 8.4 (the regulations governing the GSA Schedules program) that states GSA has already determined Schedule prices fair and reasonable and, therefore, ordering activities are not required to make a separate determination of fair and reasonable pricing. See FAR 8.404(d). In essence, the concern is that the FAR 8.4 language promotes a lack of due diligence on the part of DoD contacting officers in evaluating task order and BPA pricing under the GSA schedules program. (For the record, it should be noted that FAR 8.4 actually includes additional price analysis requirements for orders and BPAs requiring a statement of work, but I digress.)

DPAP’s concern is understandable. Some due diligence by the contracting officer is appropriate to ensure that the government is getting a fair deal at the task order level under multiple award contracts, including the GSA Schedules. At the same time, a balance should be struck recognizing that one of the important benefits of multiple award contracts is the streamlined task order competition process—a process mandated by statute and regulation. Perhaps some compromise, simplified language addressing evaluation of orders could be coordinated between DoD, GSA, OMB and NASA; a compromise that strikes the right balance and addresses multiple award contracts across the spectrum.

More importantly, such an approach would address the inconsistency in the treatment of orders under multiple award contracts that results from the deviation. A review and comparison of FAR 16.505(b)(3) and FAR 8.404(d) reveals guidance that is essentially the same regarding the determination of fair and reasonable pricing at the order level. In both cases, the regulatory guidance informs contracting officers that if the prices are established at the contract level, the pricing policies and procedures of FAR 15.4 do not apply. FAR 8.404(d) states that since GSA has determined contract prices for supplies and service fair and reasonable; the ordering activity does not have to do a separate determination of fair and reasonable pricing at the order level. FAR 16.505(b)(3) states that “[i]f the contract
did not establish the price for the supply or service, the contracting officer must establish prices for each order using the policies and methods in subpart 15.4.” [Emphasis added.] As such, FAR 16.505(b)(3) also makes clear that if the prices have been established at the contract level under a multiple award contract, then the contracting officer does not have to make a fair and reasonable price determination pursuant to FAR 15.4.

So one must ask, why the double standard for GSA schedules versus other multiple award contracts?

Roger Waldron

President