"Federal Supply Schedule"

The General Services Administration estimates the size of the federal market for commercial products to be about $50 billion a year. Manufacturers and distributors of commercial products have seen GSA’s multiple award schedule contracts as a good way to way to access federal customers. But a GSA schedule contract does not guarantee sales and the process of obtaining and adhering to such a contract presents its own headaches.

Soon there will be a better way.

Section 846 of the National Defense Authorization Act for FY 2018 establishes a program that will allow federal agencies to purchase commercially available off-the-shelf (COTS) items through commercial e-commerce portals that are currently available only to the private sector. As long as the procurement is under the new $250,000 Simplified Acquisition Threshold, COTS products (not services) will be available for purchase Government-wide, presumably without additional competition and without a lengthy list of FAR clauses incorporated by reference.

Under the program, GSA will enter into “multiple contracts” with “multiple e-commerce portal providers.” To the maximum extent possible, the Government will adopt and adhere to standard terms and conditions established by the e-commerce portals themselves.

Continue Reading Will e-commerce portals replace the Federal Supply Schedules?

Contractors supplying goods or services to the government through Federal Supply Schedules should expect increased scrutiny of their pricing in the coming months. In a July 2015 report [pdf], GAO released the results of a year-long performance audit analyzing government competition and pricing practices for FSS orders. The report highlights inconsistencies across FSS procurements, including purchasers’ frequent failure to ask FSS contractors for discounts to list prices (required by FAR 8.405-4 for orders exceeding the simplified acquisition threshold).

The main issues identified in the GAO report are nothing new. GSA is already taking steps to address the inconsistent usage of the FSS system among buyers. Calculator stock photo In March 2015, GSA proposed a rule that would impose a new transactional data reporting requirement upon FSS vendors. (For an explanation of current Price Reduction Clause requirements, take a look at our discussion here.) The proposed rule is aimed at increasing transparency in pricing across government procurements, with the end goal of an overall reduction in prices paid for FSS supplies and services. While the rule is still pending, a number of the nearly three dozen comments submitted during the comment period reveal considerable opposition to the proposed changes. Regardless of whether the proposed rule is enacted, contractors can prepare to effectively contract through supply schedules in a few simple ways. Continue Reading Increased government attention to Federal Supply Schedule pricing may soon have contractors sharpening their pencils

You read the agency’s solicitation and realize the specifications are written around a competitor’s product and your product does not qualify. You alert the government to the issue to no avail. Where do you turn?  This can be the ideal situation to lodge a pre-award protest of the specifications.

What is a pre-award protest?

Image 2012 by Thangaraj KumaravelA pre-award specification protest challenges the agency’s description of the requirements contained in a solicitation or the ground rules under which the agency intends to conduct the procurement. Under the Competition in Contracting Act, a contracting agency is generally required to specify its needs and solicit offers in a manner that will achieve full and open competition, so that all responsible sources are permitted to compete. An agency generally may include restrictive provisions or conditions in its solicitations only to the extent necessary to satisfy the agency’s needs. 10 U.S.C. § 2305(a)(1)(A); 41 U.S.C. § 3306(a)(2)(B). When an agency’s solicitation contains restrictions that prevent a potential bidder from competing, potential bidders can protest that the solicitation improperly restricts competition.

Prevailing on this type of protest can be difficult because it requires the protestor to demonstrate that an agency acted unreasonably in describing its requirements, which is an area over which agencies are granted broad discretion. But the equities of such a challenge can be in the favor of the protestor because the protest seeks to expand competition, which ultimately should benefit the agency. The GAO recently sustained a pre-award protest of a Department of Veterans Affairs procurement for sterile foam dressings because the agency was unable to provide a reasonable explanation for a restrictive absorbency specification in its solicitation. Continue Reading A primer on pre-award protests of federal procurements

Contractors receive about $50 billion a year through GSA multiple award schedule contracts. With that level of spending, it is easy to see why GSA has adopted policies and procedures that allow it to secure the best possible pricing for each one of its schedule contracts.

General Services Administration Building, March 2009Initially, GSA uses discounts, terms, and conditions that contractors offer to other customers to negotiate “most favored customer” pricing.

But negotiated prices stated in a schedule contract are not necessarily fixed for the entire term of the contract. The contractor remains subject to the Price Reductions Clause (GSAR 552.238-75), which imposes a duty to report certain changes in its commercial pricing terms. Under some circumstances, the PRC allows a downward adjustment in the contractor’s fixed prices.

Two triggers for adjustments under the PRC

Two types of events will trigger the Price Reduction Clause. The first is relatively straightforward: GSA and the contractor base the federal supply schedule pricing on a commercial price list, catalog, schedule, or similar document. The contractor later reduces the list price or otherwise revises the price list or offers more favorable pricing, discounts, or terms to another customer.  When that occurs, the contractor must offer the same reduced price, discount, or better terms to the government.

The second situation is a bit trickier. The PRC is triggered when the contractor makes a pricing change that disturbs the relationship between the government’s pricing and the pricing offered to the customer or customers whose pricing terms are established as the “basis of award.”

Continue Reading Applying the Price Reduction Clause in GSA Schedule Contracts

The Veterans Administration can freely acquire goods and services from GSA’s Federal Supply Schedule, and it is not required to set-aside such procurements for veteran-owned small businesses (VOSBs) or service-disabled veteran-owned small businesses (SDVOSBs). Under the Veterans Benefits, Health Care, and Information Technology Act of 2006, the VA is required to set aside procurements for VOSBs or SDVOSBs (if it is possible to do so) before opting to use another procurement method. VA applies the so-called “Rule of Two” by conducting market research to determine whether there are at least two VOSBs or SDVOSBs capable of meeting its requirement at a fair price before selecting a different procurement method.

In Kingdomware Technologies, Inc. v. United States, No. 12-173C (Fed. Cl. Nov. 27, 2012), the Court of Federal Claims found that the 2006 Act does not apply to FSS purchases. Despite multiple GAO decisions holding the opposite, Judge Firestone found that the 2006 Act does not specifically address the relationship between the set-aside requirements and the VA’s use of FSS. Because of this ambiguity, the court looked to the agency’s interpretation and found that the VA has consistently interpreted the 2006 Act as “having no effect on its ability to use the FSS without limitation.” Ultimately, the Court found the VA’s interpretation reasonable, and it granted judgment in favor of the agency.

It is clear that the VA will continue to look to the FSS where practicable, especially for smaller purchases where it will save administrative costs by doing so. While the Kingdomware decision may be seen as further reducing opportunities available to small businesses, especially VOSBs and SDVOSBs, it highlights the advantages of participating in the FSS. Small businesses seeking to remain competitive as a VA contractor especially should consider getting on the FSS as an additional marketing and sales tool.