The Multiple Award Double-Standard, Part II

For this week’s comment I wanted to share with you my latest blog post that was first published on the Federal Times’ Acquisition Blog (www.federaltimes.com) on May 16, 2014.

The Multiple Award Double-Standard, Part II

April’s blog focused on the Defense Procurement and Acquisition Policy’s (DPAP’s) double standard regarding the treatment of orders under the GSA Schedules program versus other multiple award contracts. This month’s blog answers the question, why the double standard? Simply put, there is no reasonable basis for the disparate treatment of orders under the GSA Schedules program as compared to orders under other multiple award contracts.

First, as explained in my April blog, the regulations governing orders under the GSA Schedules program (FAR 8.404) and orders under multiple award contracts (FAR 16.505(b)(3) contain the same fundamental guidance regard the determination of fair and reasonable pricing. Moreover, there is guidance throughout FAR 8.4 requiring price analysis or determination of fair and reasonable pricing when competing and placing an order that includes a statement of work.

Second, by statute and regulation, the competition requirements (i.e. the government’s obligation to provide contractors with notice and an opportunity to compete) for task and delivery orders are essentially the same. As a threshold matter under both GSA Schedules and other multiple award contracts, statute and regulation require the ordering activity to provide notice (including description of supplies and services to be acquired and the evaluation criteria) and an opportunity to compete to all contractors capable of meeting the requirement. Further, the ordering procedures for both GSA Schedules (FAR 8.4) and other multiple award contracts (FAR 16.505) require written determinations or justification when a contracting officer does not provide the required notice. The competition requirements for multiple award contracts, including GSA Schedules, were recommended by the Acquisition Advisory Panel (AAP), established by the Services Acquisition Reform Act of 2003 to make recommendations on improving the procurement system. The AAP’s recommendations regarding task order competition under multiple award contracts were enacted into law as Section 863 of the 2009 National Defense Authorization Act.

Third, GSA’s continuous open seasons ensure ongoing access to the commercial marketplace. Commercial firms can submit an offer for a schedule contract every business day of the year. Continuous open seasons are the answer to those critics of multiple award contracts that argue they are uncompetitive because they close federal markets to new offers. In the GSA Schedules world, the market is always open to new offers. Moreover, other multiple award contracts are increasingly adopting “on-ramps.” On-ramps are a form of continuous open season as they allow firms that are not on a multiple award contract to submit offers to join the contractor pool. Imitation is the sincerest form of flattery!

Finally, GSA Advantage!, the electronic catalog for the GSA Schedules program, and e-Buy, GSA’s electronic quote tool, support transparency of pricing, market research, and task order competition. In fact, e-Buy is identified in FAR 8.4 as the method of providing notice and an opportunity to compete to all schedule contractors consistent with the statutory competition requirements.

Given the competitive features of the GSA Schedules program, that DPAP’s guidance is targeted solely at the GSA Schedules program is perplexing. More recently, in explaining the rationale behind the deviation, DPAP focused on pricing of orders below the micro-purchase threshold ($3,000). Perhaps the focus on micro-purchases reflects a realization that the GSA Schedules ordering process is as competitive, if not more competitive, than other multiple award contracts. After all, competition is not required for purchases at or below the micro-purchase threshold; the government can go directly to a single source whether it is buying open market or ordering from a pre-existing contract like the GSA Schedules.

If DPAP’s real concern is the pricing for orders below the micro-purchase threshold, than invocation of FAR 15.404-1 is a case of over regulation. The deviation creates confusion and uncertainty in the GSA Schedules marketplace. As such, the deviation will foster increased contract duplication. Unfortunately, the costs associated with increased contract duplication will far outweigh any savings achieved for GSA orders resulting from the deviation.

The facts and circumstances surrounding DPAP’s deviation raise several questions.

■ Did DPAP conduct a cost/benefit analysis before issuing the deviation?

■ Did DPAP consider the potential for increased contract duplication resulting from the deviation?

■ Did DPAP review the entirety of FAR 8.4 before issuing the deviation?

■ Did DPAP review FAR 16.505 and compare it to FAR 8.4 before issuing the deviation?

■ Will DPAP issue a deviation regarding FAR 16.505?

■ Finally, again, why the multiple award double standard?

Roger Waldron

President