The Coalition for Government Procurement

 

For this week’s comment I wanted to share with you a blog post first published on the Federal Times’ Acquisition Blog (www.federaltimes.com). The post highlights GSA’s current cloud RFI. The Coalition appreciates GSA’s decision to extend the comment period to next Thursday, August 21 and will be submitting a response.

Price Reduction Clause could slow cloud on Schedule 70

Last week GSA’s Federal Acquisition Service (FAS) Office of Schedule Programs issued a Request for Information (RFI) seeking feedback on the “GSA Proposed Change to Add a Cloud Computing Special Item Number (SIN) on IT Schedule 70.”

The RFI indicates that the purpose of the new Cloud Computing SIN “would be to improve the way GSA offers cloud computing services through IT Schedule 70, increase visibility and access of cloud computing services to customer agencies, and to provide industry partners the opportunity to differentiate their cloud computing services from other IT related products and services. “ The RFI notes that the proposed change “would support OMB’s ‘Cloud First’ policy by enabling agencies to take advantage of cloud computing benefits to maximize capacity utilization, improve IT flexibility and responsiveness and minimize cost.”

The goals of the RFI are to:

(1)   Gain feedback from industry and any other relevant stakeholders on a proposed new Cloud Computing Services SIN; and

(2)   Better understand how industry partners are selling cloud computing services today on IT Schedule 70, to support a decision on creating a Cloud Computing Services SIN.

The RFI seeks feedback from both customer agencies and industry partners. The due date for submission of comments is August 6th. The RFI can be found here.

The RFI is a positive step on the part of FAS in seeking innovative solutions to customer agency requirements. However, in order to seed the cloud via IT Schedule 70, FAS should address the applicability of the Price Reduction Clause to the proposed Cloud Computing SIN. The PRC is an outdated (from the 1980s) pricing compliance scheme that increases contract administrative costs while restricting the ability of contractors to maximize service solutions with their latest technologies at best value—including best price for agency requirements. Simply put, the PRC is an anti-competitive, anti-innovation contract term.

The origins of the PRC date from a 1982 Multiple Award Schedule policy statement addressing the pricing negotiation and terms of schedule contracts. Under the PRC, a customer or category of customers is identified as the tracking customer for purposes of price reductions. Generally, under the terms of the PRC, if a MAS contractor offers the tracking customer(s) a price reduction during the life of the MAS contract, a corresponding reduction must be provided to the government. Failure to do so results in a breach of contract, and potentially severe consequences, including possible Civil False Claims Act liability. The PRC reflects a time when the MAS program was product-based. It also reflects a time when the MAS program was a mandatory program and when competition was not required at the order level. At the time, given the structure of the program, the PRC was intended to provide price protection for the government. Times have changed!!

Today, services account for approximately two-thirds of annual purchases under the MAS program. The MAS is open to all commercial sources (with the exception of Schedule 75, Office Supplies, which is closed to new offers) and the statutory and regulatory framework governing the MAS program require competition for all orders exceeding the simplified acquisition threshold. Simply put, unlike the MAS program of the ‘80s, task and delivery order competitions for agency specific requirements are driving pricing under the program.

Moreover, task and delivery order competition for agency specific requirements is sound procurement practice when acquiring IT/professional service solutions like cloud computing. With the cloud, each service requirement is unique, reflecting the customer agency’s IT infrastructure, security requirements, mission, workforce, and organizational structure.

The PRC ignores the unique quality of service solutions in the market. Variations in service solutions for each customer mean that an apples-to-apples comparison for purposes of the PRC is problematic at best, if not impossible. Each time an MAS contractor provides a commercial customer with a solution, the contractor must address whether that solution impacts the PRC. The result is an unhealthy restriction on the contractor’s ability to compete in the commercial marketplace. Due to the competitive and administrative challenges in tracking commercial transactions for PRC compliance many contractors will not offer their newest products, services and technologies via IT Schedule 70. As a result, access to the latest commercial innovations is restricted under the MAS program.

Cloud computing solutions are typically tailored to meet customer needs. As with many other complex services, each requirement stands on its own. Applying a costly administrative pricing oversight mechanism like the PRC in such a dynamic, innovative environment makes no business or procurement sense. Waiving the applicability of the PRC to the Cloud Computing SIN is the best way to accelerate best value “cloud computing” solutions and increase access to commercial innovation via IT Schedule 70. Eliminating the PRC and relying on task order competitions for agency specific requirements will drive competition, innovation, value and pricing for cloud services across the MAS program.

Interestingly, there is precedent for such an approach, a little over a year ago FAS waived applicability of the PRC for MAS furniture contractors in order to allow the MAS contractors to fully compete for a series of furniture procurements. Alternatively, FAS could issue a class deviation eliminating the PRC for the Cloud Computing SIN.

Over the longer term, given the growing convergence of IT and services, the time is right for GSA to reform the MAS pricing policies (and eliminate the PRC) to reflect the 21st century marketplace. Such an approach will be a win for customer agencies, the American people, and contractors.

The next step in accelerating cloud computing solutions via IT Schedule 70 is the activation of “Other Direct Costs” through the current FAR Clause that is already in the IT Schedule 70 contracts. But more on that in my next blog.

The Coalition notes that this week GSA recently extended the Cloud RFI Proposal for IT 70 deadline to 4:00pm on August 21, 2014. The Coalition and its memberhsip applaud GSA for allowing more time for companies to respond on this important issue.  Members interested in contributing to the Coalition’s response, please contact Roy Dicharry at rdicharry@thecgp.org.  For more details, see GSA’s RFI posted on FedBizOpps.

Roger Waldron

President

This week’s topic is the “Unintended Consequences of the FAR 8.4 Rewrite.”  Simply put, the rewrite removed a strategic acquisition tool, single award Blanket Purchase Agreements (BPAs), from customer agency procurement tool boxes when using the GSA schedule program.    Here is more on the background, result and unintended consequences of the rule.

In 2011 Federal Acquisition Regulation (FAR) subpart 8.4 was rewritten to implement Section 863 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 (Section 863).   As you recall, Section 863 mandated new competitive ordering procedures for the GSA schedule program.  Specifically, for orders exceeding the simplified acquisition threshold ($150,000), Section 863 requires agencies to provide notice and an opportunity to compete to all schedule contractors capable of meeting the requirements.  If notice is not provided to all, then the ordering agency must provide notice and an opportunity to compete to as many schedule contractors as practicable to reasonably ensure receipt of at least three quotes.  Ordering activities must also document their files as to the efforts to achieve competition for an order where notice was not provided to all.

Not only did the 2011 rewrite address task order competitions, it also addressed the documentation, planning and competition requirements for BPAs established under the GSA schedule program.   In an effort to promote competition the new rule created significant procedural barriers to the establishment of single award BPAs.  FAR 8.405-3 establishes a strong policy, procedural and documentary preference for multiple award BPAs in lieu of single award BPAs.  As a result, competitively established single award BPAs containing clear, consistent and firm commitments have been largely taken out of the schedule landscape.

The current procedures for establishing BPAs are counterproductive.  They increase complexity, costs and acquisition lead time for agencies seeking to establish single award BPAs for specific requirements.  As a result, agencies look for alternative acquisition strategies that often lead to contract duplication (a problem that, to date has not been effectively addressed).  Indeed, when a major ordering activity cites the administrative and procedural difficulties in establishing a single award BPA as a prime consideration for creating a duplicative contract for items already on the GSA schedule—something is amiss.  We predicted this would happen.

As the Coalition noted in its comments on the rule back in 2011, the ordering procedures should provide parity for single award and multiple BPAs.  It makes sound business and procurement sense to allow flexibility in acquisition strategies (use of schedule BPAs) to meet agency mission requirements.  Competitively established single award BPAs allow agencies to leverage known, firm requirements increasing value and return when using the GSA schedule program.

GSA schedule single award BPAs for agency specific requirements should be returned to the procurement toolbox—it is the strategic thing to do for the American people.

Roger Waldron

President

Last week’s blog focused on the Federal Acquisition Service’s (FAS’s) notice seeking UPC codes and Manufacturer Part Numbers (MPNs) from all Multiple Award Schedule contractors.  This initiative raises several questions:

  1. Has FAS complied with the Paperwork Reduction Act with regard to this new data reporting requirement?
  2. Can GSA Advantage handle the tsunami of data that will have to be uploaded to the site?
  3. Will there be a schedule by schedule dialogue with industry partners regarding the new requirement?
  4. Does FAS understand commercial practice regarding UPCs and MPNs?
  5. Will there be any corresponding reform to legacy reporting requirements currently in MAS contracts?

As I noted last week, FAS Commissioner Tom Sharpe reached out to the Coalition regarding this initiative seeking a dialogue.  On August 12th we will be hosting Commissioner Sharpe for a discussion focusing on the UPC/MPN requirement.  The meeting will be from 10 to 11 am—the location is to be determined.  The Coalition will update our members as to the location as soon as it is finalized.   This is a great opportunity for our members to share their thoughts, concerns and comments regarding yet another new data reporting requirement!

Now let’s turn to the Coalition Calendar for the Fall!!

Joseph P Caggiano Memorial Golf Tournament | 35th Anniversary Black Tie Gala | 15th Annual Excellence in Partnership Awards | 2014 Fall Training Conference

Mark your calendars and get ready to hit the links at Whiskey Creek on August 27th at our 2nd Annual Joseph P. Caggiano Memorial Golf Tournament.  This charity tournament is to honor our good friend and colleague, Joe Caggiano, who was not only a 23-year veteran of the federal contracting marketplace but a naval veteran as well.  We believe Joe would be proud of the fact that 100% of this year’s tournament proceeds are going to a brand new cause that will continue to support our nation’s veterans by way of our Coalition for Government Procurement Endowed Government Procurement Scholarship/Fellowship Fund.  

In honor of our 35th Anniversary, and in conjunction with The George Washington University, we have made it a priority to fund and endow a scholarship or fellowship to provide financial support to a deserving veteran.  Qualified veterans concentrating their studies in the field of US Government procurement and pursuing the JD or LLM degree in Government Procurement Law or the interdisciplinary Masters of Science in Government Contracting degree (MSGC) at GWU will benefit from the fund.  We take our goal of common sense acquisition seriously and that starts with education – students enrolled in these programs will become the next generation of skilled professionals leading this critically important sector of the US economy.  There are player slots still available for foursomes and single golfers and we have a variety of sponsorship opportunities remaining, including hole sponsors.  Please consider getting a team together to support this worthy cause and enjoy a fun day golfing with your peers in Joe’s honor.  Registration and sponsorship information can be found on our website here.

Moving on from summer events, it is with great excitement that I share with you important details of our much talked about 35th Anniversary Black Tie Gala and Excellence in Partnership (EIP) Awards banquet in conjunction with our 2014 Fall Training Conference.  These events will be taking place on the evening of November 5th and all day on November 6th.

Our Anniversary Gala and EIP Awards will be held at the Ronald Reagan Building and International Trade Center at 1300 Pennsylvania Ave NW, Washington, DC.  This seemed to be a natural fit for us as the Reagan Building is of course owned by the U.S. General Services Administration.  It is the first and only federal building designated for public and private use and is mandated by Congress to bring together the country’s best public and private resources to create a national forum for the advancement of trade.   The evening’s events will include a reception, silent auction, keynote speaker, and our 15th Annual Excellence in Partnership (EIP) Awards.

The EIP Awards honor acquisition officials who have made significant strides in promoting and utilizing multiple award contracting vehicles.  Awards will be given to individuals, organizations and contractors involved in procurement with GSA, VA, DHS, DoD and other government agencies.  We urge you to take this opportunity to recognize an individual or organization that is deserving of an EIP Award.  Nominations are officially open for the following prestigious award categories:

1.  Lifetime Acquisition Excellence Award
2.  Contractor Savings Award
3.  Government Savings Award (Civilian)
4.  Government Savings Award (DoD)
5.  Myth-Busters Award
6.  Best Veteran Hiring Program
7.  Green Excellence in Partnership Award

Please see additional details and category descriptions, as well as make your nominations, on the EIP section of our website located at http://thecgp.org/eip-awards.

Our 2014 Fall Training Conference will take place the following day, November 6th, at the renowned JW Marriott.  The JW Marriott is conveniently located at 1331 Pennsylvania Ave NW, Washington, DC, directly across the street from the Ronald Reagan Building.  As a note, we will have a limited room block available on a first come first serve basis for the night of November 5th.  Our  conference agenda will consist of  Mythbuster’s discussions on current topics and opportunities in Federal acquisition, training and networking, a keynote speaker, a town hall with Q&A, panel discussions, and of course our very popular breakout sessions in the afternoon.

Thank you for your continued support of The Coalition.  We are thrilled to celebrate our 35th anniversary milestone with you in November and look forward to our biggest and best conference yet!

Roger Waldron

President

 

Yesterday GSA issued a notice to its Multiple Award Schedule (MAS) contractors entitled “Improving Product Number Data Quality on GSA Schedules.” The notice states the GSA is seeking “to improve product data quality on MAS through submission of all awarded base products and associated descriptive data on GSA Advantage.” According to the notice, GSA is asking MAS contractors “to improve the integrity of your schedule offerings by submitting Universal Product Codes (UPC) and Manufacturer Part Number (MPN) for each awarded contract item.”

The notice further directs MAS contractors to upload all base product contract line items with UPCs and MPNs to GSA Advantage via SIP within 90 days.  The notice also includes a set of frequently asked questions (FAQs).  The FAQs confirm the requirement to upload to GSA Advantage all base products with the corresponding UPC or MPN.

Interestingly, the notice cites compliance with clause I-FSS-600 Contract Price Lists (Oct 2013) and clause 552.238-71 Submission and Distribution of Authorized FSS Schedule Price Lists as one of the goals of this initiative.  However, neither of the clauses requires submission of a UPC or MPN.  For example, subparagraph (b)(3) of Clause I-FSS-600 lists over  26 data elements that MAS contractors must include in their price lists.  UPC and MPN are not among those specific data elements.  Clause 552.238-71 sets forth the requirement for submission and distribution of the price list but does not specifically identify/list the data elements to be included in the price list.  That these clauses are silent regarding the submission of the UPC and MPN raises questions whether the notice is consistent with the requirements of the Paperwork Reduction Act.

Generally, the Paperwork Reduction Act requires that where the government is seeking to collect data from the public, it must provide the public with notice and an opportunity to comment on the paperwork burden associated with the proposed new data reporting requirement.   The notice and opportunity to comment for procurement data collection requirements is done through the Federal Register.  The Paperwork Reduction Act ensures that the costs/burdens on the public of any proposed data reporting requirement are appropriately and transparently considered by the government.   It is an important tool to ensure accountability when the government seeks to impose new reporting burdens.

In this case GSA should address why it is not following the process called for by the Paperwork Reduction Act, as the burden on the public (MAS contractors) will be significant.  Indeed, given the millions of potential variations in models, parts, specifications and products, many MAS contractors will find compliance with the notice impossible, or at the very least cost prohibitive.  The Coalition has already heard from MAS contractors indicating that the notice will require significant changes to their electronic systems.  Here again is a situation where GSA is adding additional contract reporting requirements that increase operational costs for contractors without any real assessment of the burdens.

Moreover, although FAS has sought some feedback regarding the notice, to date there has been no real direct, fulsome dialogue with MAS contractors regarding the new requirements.  Perhaps the notice is intended to begin that dialogue.  However, the notice does not make that clear.  Rather it directs submission of the information to the extent it is available.   At the same time, FAS Commissioner Tom Sharpe has reached out to the Coalition seeking a dialogue regarding the notice.  To that end, the Coalition will be hosting a meeting with the FAS Commissioner and our members focusing on the notice and its impact.

As soon as we have worked out the logistics we will let you know the time and place of the meeting.

Roger Waldron

President

Last week GSA’s Federal Acquisition Service (FAS) Office of Schedule Programs issued a Request for Information (RFI) seeking feedback on “GSA Proposed Change to Add a Cloud Computing Special Item Number (SIN) on IT Schedule 70.”  The RFI indicates that the purpose of the new Cloud Computing SIN “would be to improve the way GSA offers cloud computing services through IT Schedule 70, increase visibility and access of cloud computing services to customer agencies, and to provide industry partners the opportunity to differentiate their cloud computing services from other IT related products and services. “ The RFI notes that the proposed change supports “OMB’s “Cloud First” policy by enabling agencies to take advantage of cloud computing benefits to maximize capacity utilization, improve IT flexibility and responsiveness and minimize cost.”

The goals of the RFI are to:

(1) Gain feedback from industry and any other relevant stakeholders on a proposed new Cloud Computing Services SIN; and

(2) Better understand how industry partners are selling cloud computing services today on IT Schedule 70, to support a decision on creating a Cloud Computing Services SIN.

Importantly the RFI seeks feedback from both customer agencies and industry partners.

The Coalition applauds FAS for issuing the RFI.  It is a thoughtful, positive step towards implementing efficient, effective and best value delivery of commercial cloud computing services for agency customers and the American people.  The due date for submission of comments is 4 pm, August 6th.  The RFI can be found here.

The Coalition will be submitting comments.  As a first step we are working with our IT Committee members to identify and develop consensus comments.  Over the longer term, as I previously mentioned in my June 27, 2014 FAR& Beyond Blog, the Coalition is on track to launch our Coalition Innovation Task Force (CITF).  The task force is charged with building on our earlier work setting forth a vision for transforming IT Schedule 70 into the IT Commercial Innovation Schedule.  In addition to the transformation of IT Schedule 70, the CITF will be identifying innovation opportunities across the federal enterprise.  For example, share-in-savings contracting mechanisms remain an opportunity to more cost-effective, flexible contractor support to meet mission needs.  The CITF will identify procurement practices and procedures that reduce barriers to innovation and solutions based contracting that leverages the growing convergence between information technology and services—like cloud services.  The Coalition and the CITF look forward to a robust dialogue with FAS on bringing best value innovation and solutions based contracting to customer agencies.

 

Roger Waldron

President

Utilization of small business concerns is a top priority of the current administration. A plethora of new laws, policies, and changing strategies impact this important aspect of federal contracting. The Coalition is fortunate to have a membership that includes innovative businesses of all sizes.  Important objectives of the Coalition include being an information conduit regarding matters affecting small business policies and providing a voice for our vibrant small business members.  Two years ago the Coalition launched a Small Business Committee that  serves as an open forum for members to discuss acquisition policy and compliance issues, as well as Federal contracting opportunities that are unique to small businesses. The committee creates opportunities for members to have access to federal and industry experts and to work together to understand and succeed in the federal market.   We have also sought to provide opportunities for small and large businesses to jointly leverage their capabilities to foster success in the federal market.

Continuing these important objectives, on July 23, 2014 the Coalition will host a Small Business ForumHot Topics Impacting Small Businesses and their Large Business Partners. Presenters include outstanding representatives from the Hill, government agencies, and industry.  The Keynote speaker is Emily Murphy, Senior Counsel, House Committee on Small Business.  The forum will feature a panel on Contractor Teaming Arrangements and Joint Ventures.These tools are important to all businesses, but particularly allow small businesses to develop new strategies for tackling the federal market.  Despite the potential, there are many questions about the risks and rewards of these new strategies.  From formation to payment, the Small Business Forum will provide a venue to have your questions answered by an outstanding panel with real world experience.  The panelists include:

  • Kenneth Dodds,  Director, SBA
  • Joseph Hornyak,  Partner, Holland and Knight, LLP
  • Mark Lee, Deputy Director, GSA, Office of Government-wide Policy
  • Marian Morley, Vice President Government Sales and Operations, Allsteel

Chairmen of the Coalition’s Small Business Committee will moderate this session.

  • Jim Connal, Vice President, Contracts and Compliance, Red River Computing
  • Tom Walker, Government Manager, Nucraft, Furniture

The Small Business Forum will also be a great opportunity to:

  • Catch up on initiatives such as strategic sourcing, and find out what to expect next for small businesses in the federal acquisition arena, and
  • Network with companies that offer opportunities for teaming and subcontracting relationships.  Companies already registered include some of the most successful contractors on the professional services, furniture GSA IT schedules and GWACs.

We hope that you will be able to join us for this engaging small business discussion.  For additional information, click here.

Correction:  Last week’s Flash stated that Vicksburg surrendered to the Army of the Potomac.  Actually, Vicksburg surrendered to the Army of the Tennessee.   Thanks to all those who pointed this out to me. 

Roger Waldron

President

Happy 4th of July!

July 3rd, 2014

This week the FAR & Beyond blog is dedicated to the Fourth of July.  The blog highlights a speech given by President Abraham Lincoln during the Civil War.  We hope everyone has a wonderful July 4th weekend!

On July 4th, 1863, Confederate forces at Vicksburg, Mississippi surrendered to the Union Army of the Tennessee, a major military victory for the North during the Civil War. Word of Vicksburg’s surrender did not reach Washington until the day of July 7th. The news quickly spread throughout the District, and a military parade to the White House was organized by officers of the Massachusetts Thirty-Fourth Regiment, accompanied by a crowd numbering in the thousands. President Lincoln, who had refrained from publicly celebrating Independence Day on the Fourth while the fate of Vicksburg was uncertain, felt compelled to address the assembled citizens, bands and soldiers. Around 8:30 PM, Lincoln appeared at the window of the portico of the White House, and issued this speech (as reported by the Washington Evening Star, July 8, 1863):

“Fellow-citizens: I am very glad to see you to-night. But yet I will not say I thank you for this call. But I do most sincerely thank Almighty God for the occasion on which you have called. How long ago is it? Eighty odd years since, upon the Fourth day of July, for the first time in the world, a union body of representatives was assembled to declare as a self-evident truth that all men were created equal.

That was the birthday of the United States of America. Since then the fourth day of July has had several very peculiar recognitions. The two most distinguished men who framed and supported that paper, including the particular declaration I have mentioned, Thomas Jefferson and John Adams, the one having framed it, and the other sustained it most ably in debate, the only two of the fifty-five or fifty-six who signed it, I believe, who were ever President of the United States, precisely fifty years after they put their hands to that paper it pleased the Almighty God to take away from this stage of action on the Fourth of July. This extraordinary coincidence we can understand to be a dispensation of the Almighty Ruler of Events.

Another of our Presidents, five years afterwards, was called from this stage of existence on the same day of the month, and now on this Fourth of July just past, when a gigantic rebellion has risen in the land, precisely at the bottom of which is an effort to overthrow that principle “that all men are created equal,” we have a surrender of one of their most powerful positions and powerful armies forced upon them on that very day. And I see in the succession of battles in Pennsylvania, which continued three days, so rapidly following each other as to be justly called one great battle, fought on the first, second and third of July; on the fourth the enemies of the declaration that all men are created equal had to turn tail and run.

Gentlemen, this is a glorious theme and a glorious occasion for a speech, but I am not prepared to make one worthy of the theme and worthy of the occasion. I would like to speak in all praise that is due to the the [sic] many brave officers and soldiers who have fought in the cause of the Union and liberties of this country from the beginning of this war, not on occasions of success, but upon the more trying occasions of the want of success. I say I would like to speak in praise of these men, particularizing their deeds, but I am unprepared. I should dislike to mention the name of a single officer, lest in doing so I wrong some other one whose name may not occur to me.

Recent events bring up certain names, gallantly prominent, but I do not want to particularly name them at the expense of others, who are as justly entitled to our gratitude as they. I therefore do not upon this occasion name a single man. And now I have said about as much as I ought to say in this impromptu manner, and if you please, I’ll take the music.”

- President Abraham Lincoln

 

Roger Waldron

President

This week’s blog continues the discussion on Schedules Modernization.   I was interviewed this week by Federal News Radio’s Francis Rose regarding schedules modernization; to listen click here.

At the beginning of the year the FAR & Beyond blog identified Fourteen Thoughts for 2014 with each thought subsequently being addressed in at least one blog during the year.   In light of the Federal Acquisition Service’s (FAS) continuing focus on standardized labor categories as an element of Schedules Modernization, it is time to address Thought No. 6 of the Fourteen Thoughts for 2014:  “Standardized labor categories: Towards coin-operated Schedule contracts for professional services.”  

Standardized Labor Categories and Innovation

At a time when the Administration and the Office of Management and Budget (OMB) are seeking greater access to innovative solutions that increase Taxpayer return on investment (ROI), standardized labor categories are anti-innovation. Standardized labor categories put the lid on the private sector’s ability to deliver cutting-edge, best-in-class capabilities, services and solutions that save money for customer agencies and the American people.  Quite simply, standardized labor categories, like a coin-operated vending machine, limit choice, flexibility and competition.  Standardized labor categories do not leverage commercial business practices in delivering high value solutions to meet agency mission requirements.  Rather, standardized labor categories force firms to reengineer business practices and processes to fit the labor formula dictated by GSA creating inefficiencies in the procurement and performance of customer service requirements.

Economies of Skills, Flexibility and Innovation

Innovation in government procurement begins with a focus on leveraging economies of skill.  Schedule contracts for professional services and information technology (IT) must be structured to leverage economies of skill.  That means contracts must provide flexibility at the task order level for contractors to structure complex solutions to meet complex customer agency requirements.  Standardized labor categories for commercial services simply do not provide the necessary flexibility.

GSA’s Professional Services schedules and IT Schedule 70 have a wonderful opportunity to leverage economies of skill through innovation in schedule contract structures and pricing models.  The Coalition applauds any effort to incorporate ODC capabilities into schedule contracts.  Likewise, the Coalition believes it is time to explore the establishment of an unpriced schedule for IT and professional services, as recommended by the SARA Panel in 2007.  The government has yet to take full advantage of the ongoing convergence of IT and services in the commercial marketplace.  Cloud, software as a service (SAAS), as well as complex, integrated IT service solutions are driving innovation in the market.  Flexibility in pricing and task order structure are keys to leveraging economies of skill for these new, cutting edge services, thereby increasing Taxpayer ROI.

The Coalition Innovation Task Force

The GSA Schedule program is in a unique position, with its statutory authority and access to the commercial marketplace, to drive access to commercial innovation in service delivery.  In response to this unique opportunity, the Coalition provided GSA and OMB with a white paper on transforming IT Schedule 70 into the Commercial IT Innovation Schedule.  As a next step, the Coalition will establish a “Coalition Innovation Task Force (CITF)”.  The task force will develop and recommend alternatives that deliver innovative solutions to meet federal agency needs.  The goal of the CITF is to harness a broad spectrum of ideas and experience to promote flexible, creative, and dare I say, innovative contracting structures.  The ultimate objective is to promote effective, efficient and exceptional solutions for government and its industry partners.  How can schedule contracts be restructured to leverage customer-focused supply management and service delivery?   How can the government leverage “share in savings” mechanisms to support agency missions?  How can cloud offerings be optimized via the Schedules program?  The CITF will tackle these questions and more.

In the coming weeks you will hear more about this initiative. We look forward to inviting the participation and thought leadership of government and industry in this important effort.

Roger Waldron

President

On June 12th Tom Sharpe, Commissioner of the Federal Acquisition Service (FAS), posted a new blog entitled “Modernizing GSA’s Schedules Program for Today’s Marketplace.”

As you may recall, earlier this year GSA published its Strategic Plan for the next four years.  The plan did not set forth a strategic vision for the MAS program—a troubling statement about the future of FAS given that the MAS program accounts for at least 75 percent of the dollar volume of all customer agency purchases made through FAS programs. As such, it is gratifying to see a renewed focus on the MAS program as evidenced by Commissioner Sharpe’s June 12 blog.  It is also gratifying to see FAS seeking to address Other Direct Costs and exploring the creation of an unpriced IT and professional services schedule that has the potential to better leverage the convergence of technology and services and “as a service offerings” like cloud.   It is also a positive step that FAS will be doing a “white space” look at the MAS program.  The Coalition looks forward to continuing the dialogue on the future of the MAS program as outlined in our Innovation Paper and our MAS Pricing White Paper.

At the same time, several of the “modernization” initiatives set forth in the June 12th blog raise significant questions about whether the future MAS will be an open, dynamic and innovative market for customer agencies and commercial firms seeking to do business with the federal government.   Here is a summary and comment on the initiatives outlined in the June 12th  blog:

Standardized Part Numbers and Special Item Numbers

First, FAS will seek to standardize part numbers or special item numbers to reduce price variability at the contract level and enable customers to make better price comparisons at the order level.

As a threshold matter, there has been little if any real dialogue between FAS and its contractors on the logistics of standardizing part numbers across the hundreds of thousands, if not tens of millions, of products and the variations of these products currently on MAS contracts.   FAS has not reached out to its contractor community to seek insight into how standardization will impact contractor costs, record keeping, systems changes, commercial practices or customer requirements.  Rather, according to the June 12th blog, FAS will be issuing a mass modification in June seeking standardization of part numbers.  Given the significant impact on MAS customers and contractors, the lack of dialogue on this issue is disappointing.

Standardized Labor Categories

Second, FAS will be working with stakeholders and service contractors to figure out the best approach to standardize labor categories for services.

Simply put, standardized labor categories are not only inconsistent with the commercial nature of the MAS program, they represent LPTA by other means.   Standardized labor categories will limit the ability of commercial firms to offer innovative solutions and pricing to meet customer needs.   As a result, standardized labor categories will drive best in class, innovative commercial firms from the MAS program.  Standardized labor categories are anti-innovation at a time when the federal government is seeking to embrace innovation.

Transactional Data

Third, in order for government to reduce what it is paying for products and services FAS will be collecting transactional data on products and services and providing it to customer agencies.  As envisioned by FAS, this transactional data will help agencies make informed buying decision decisions and negotiate better prices.

Price alone is incomplete data.  Terms and conditions, volume commitments, spending patterns, and performance requirements (SOW) all impact pricing.  Focusing on price alone will not assist agencies in making sound procurement decisions.  Not only is the quality of the data a concern, so is the quantity.  Given the millions of transactions under the MAS program how will agencies make sense of the pricing data?  If sound data is to be provided to customer agencies, it must include all the key elements impacting price.  The sheer volume of sound data is likely to overwhelm the customer.  Moreover, the variations in data collection requirements across government increases the complexity, cost and burden associated with this effort.

The costs of data collection and reporting on MAS contractors must be considered—costs that will inevitably be passed on to customer agencies.  Are such costs worth it?  Transactional data may provide some benefit during the market research phase but does that benefit outweigh the costs associated with collecting the data?   Are resources better focused in other areas/initiatives—like improving requirements development and streamlining the acquisition process?  The key to best value outcomes and pricing is not transactional data; rather it is sound requirements and volume commitments for agency specific requirements.

The current “modernization” of the MAS program is built on the assumption that the federal government is a single buyer, or rather, should act as a single buyer.  It is a faulty assumption.  The federal government contains many entities with varying missions, cultures, organizational structures, budget profiles, spending patterns, operational and technical requirements.  Not all agency missions are the same.   As such, the closer a procurement is to the requirements holder the more likely a sound, best value outcome.  That is why the Coalition has supported use of agency specific BPAs that set forth sound requirements and volume commitments.

Diversity is inherent in the federal market.  There are literally thousands of buyers with requirements and sellers ready to meet those requirements.  At its best GSA can provide an open, dynamic, innovative and competitive marketplace where customer agencies and commercial firms can transact business.  GSA’s time and talent should be focused on enhancing access to the diversity, dynamism and innovation of the commercial marketplace for MAS customer agencies.

Look for more commentary on Modernizing the Schedules program in future FAR & Beyond blog posts.

Roger Waldron

President

The National Dialogue on Improving Federal Procurement (aka the “Open Dialogue”).  An opportunity to jump start acquisition reform?? 

In April 2014, the National Dialogue was launched by the Chief Acquisition Officer (CAO) Council in conjunction with the FAR Council, the Chief Information Officers Council, the General Services Administration and OMB’s Office of Federal Procurement Policy.  With the use of social media, the National Dialogue collected feedback from the public about the rules, requirements and procedures that create barriers to the Federal market and ideas about how to improve the system.  The website, “Open Dialogue on Improving Federal Procurement” can be found here.  According to the website, the intent of the dialogue was to provide an opportunity for the public to discuss potential improvements to the Federal contracting process—think of it as a social media Myth-Busters effort!  The dialogue was divided into three campaigns:

  •  Campaign 1: Reporting and compliance requirements
  •  Campaign 2: Procurement Rules and practices
  •  Campaign 3: Participation by small and minority business, new entrants, and non-traditional government contractors

For each of these campaigns, the public was invited to provide insight, ideas and feedback on potential improvements that could be accomplished through executive action (regulatory, administrative or management) as well as through legislation.  The public recommendations for improvements were posted under each campaign with the corresponding opportunity to vote/endorse individual recommendations.

In May, OMB posted the final results of the National Dialogue on Federal procurement.  The Coalition for Government Procurement’s (“the Coalition’s”) reform recommendations topped the list of ideas to improve the Federal acquisition system and increase access to the Federal market.  The following Coalition recommendations made the final top 10 list in the National Dialogue, based on the number of votes received:

  • Reduce Extensive Data Collection Requirements
  • Remove the Price Reductions Clause and Reform Pricing for the Multiple Award Schedules
  • Address Burdensome Ordering Procedures for Blanket Purchasing Agreements (BPAs)
  • Reduce Contract Duplication
  • Increase Clarity of Intellectual Property (IP) Rights- GSA Schedules
  • Implement Other Direct Costs-GSA Schedules
  • Reduce Restrictive Experience Requirements- GSA Schedules

The results of the National Dialogue are a strong statement for improving the GSA Schedules program.  Collectively these recommendations would transform the GSA Schedules program into an innovation portal for government customers and commercial firms; a streamlined, efficient and effective marketplace where customer agencies could access the latest commercial technologies, services and products.  The Coalition’s reform recommendations will reduce barriers to entry into the Federal market thereby increasing competition, reducing cost, and promoting access to commercial innovation for government customers.

Significantly, the Coalition’s recommendations can all be accomplished through executive action.  OMB and the CAO Council are expected to review the results of the National Dialogue and determine the next steps to remove barriers and burdens in Federal procurement.  The Coalition looks forward to the implementation of the top recommendations received in the dialogue, which will lead to a more efficient and effective acquisition system for agencies and the American taxpayer.

Roger Waldron

President

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