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AWR Articles
Recent Developments In GSA Schedules
The federal government will buy goods and services in excess of $26 billion off of GSA Schedules this fiscal year. General Services Administration (GSA) Schedules, also known as Federal Supply Schedules (FSS), are the preferred method of buying by procuring officials. Once GSA has negotiated prices and terms with the contractor, ordering officials can easily place an order without issuing lengthy solicitations. This streamlined contracting makes it easy for the government to buy everything from senior scientists to printers. In addition, the charges that federal agencies must pay GSA for its efforts in establishing and maintaining the vast schedule program are quite modest in comparison to other multiple award contract vehicles. Schedules are also the preferred method of selling by vendors for the same reason. The last 2 years, however, have brought significant regulatory changes in the FSS contracting arena.
IFF Reduction
Of all the recent developments, the best news for contractors is the reduction in Industrial Funding Fee (IFF). IFF is the amount contractor’s rebate to GSA on all schedule sales. It represents the cost that GSA passes on to federal agencies for administering the schedule program.
Effective January 1, 2004, the IFF will drop to .75%. But the really great news is that during the period October 1 to December 31, 2003, FSS vendors can continue to include the current 1% IFF in their contract prices until December 31, 2003, but only pay IFF to GSA at the 0.75 rate.
The January 2004 change will be implanted through bilateral electronic contract modifications. The bad news is that all contractors will have to change their price lists to reflect the new pricing. Blanket purchase agreements will also have to be revisited for revised pricing.
New Rules On Competition
Competition among schedule holders for contract awards continues to be a priority on Capitol Hill. Last fall, Congress passed Section 803 of the National Defense Authorization Act of 2002 to mandate competition in certain Department of Defense (DoD) procurements under GSA schedules. This was followed by a proposed Federal Acquisition Regulation (FAR) change to “significantly improve” acquisition procedures in buying services off schedules. Both rules address the documentation necessary to support sole source buys.
Section 803 requires government officials procuring services over $100,000, on task orders issued under multiple award contracts, including GSA schedules, to notify all contractors under a multiple award contract or as many contractors as practicable, in order to receive three bids. If the DoD ordering official fails to receive three proposals, he or she can only make award after determining that “no additional qualified contractors could be identified despite reasonable efforts to do so.” This new rule comes on the heels of a study performed by the DoD Office of Inspector General, which found that 72% of task orders studied were issued on a solesource basis.
The new FAR rule, added to FAR Part 8, however, does not go as far as Section 803 in requiring competition. FAR 8.404 requires ordering officers to send the request for quotes to “at least three (3) contractors if the proposed order is estimated to exceed the micro-purchase threshold, but not exceed the maximum order threshold.” On orders exceeding the maximum order threshold, “the request shall be provided to an appropriate number of additional contractors that offer services that will meet the agency’s needs.”
Small Business Recertification Rules
Agencies have been concerned about the lack of follow-up on size on companies winning small business set aside contracts. The issue is whether a business continues to be small for the life of the contract including option exercises. Currently, small businesses only have to certify that they are small at the time of initial contract award. During the term of the contract, the small business may turn into a large business but its classification for that particular contract is unchanged. This will change now that GSA and the Small Business Administration (SBA) are requiring small businesses to recertify size. GSA is requiring this at each one-year option period on their schedule contract after the first
5 years.
In addition, the SBA is in the process of finalizing its draft rule on recertification of size. SBA’s proposed rule would require multiple award schedule contractors and government wide agency contract (GWAC) holders to annually recertify to the contracting officer on the contract award anniversary date that it continues to qualify as a small business. While the rule is directed to GWAC and FSS contracts, it covers all multiple award contracts.
Comments were due on June 24, 2003. It is this author’s opinion that the SBA rule may inhibit large business teaming partners from bidding with small businesses going through rapid growth since the small business may not be able to certify as to its size on the option years.
The General Accounting Office (GAO) also issued a recent bid protest decision on the recertification issue. In the protest of CMS Information Services, the GAO held that contracting officers have the discretion to ask for size certifications on individual orders.
E-Buy
In response to the increased scrutiny of the ordering process under multiple award schedules, GSA has implemented an online order processing system known as “e-Buy.” E-Buy is a component of “GSA Advantage!,” GSA’s online catalog of FSS schedule items.
Through e-Buy, ordering agencies may post a request for quotation and attach statements of work for transmission to all or some of the many schedule contractors in place under GSA Advantage! for the requisite Special Item Number (SIN) being ordered. By selecting an appropriate number of vendors to solicit for quotation through e-Buy, ordering agencies continue to enjoy a streamlined and flexible procurement process while simultaneously fulfilling Section 803 requirements. Schedule contractors who have their catalogs posted to GSA Advantage! are eligible to submit quotes through e-Buy. Contractors’ quotes are not visible to other Schedule contractors and can only be viewed by ordering agency personnel.
E-Buy is a particularly useful medium for fulfilling the requirements of Section 803. DoD FAR Supplement 208.404-70(c)(2) specifically recognizes that the posting of a request for quotation on e-Buy constitutes fair notice to all contractors as required by Section 803 requirements.
Note: This article was written for AWR by Barbara S. Kinosky. Barbara has 20 years of government contracting legal experience, and is the President of Centre Consulting, a full-service federal market and GSA Schedule consulting firm located in McLean, VA. For further questions, she can be reached by e-mail at bkinosky@centreconsult.com or by phone at (703) 288-2800.