As promised, this week’s blog post proposes Best Practices for Federal Supply Schedule (FSS) Blanket Purchase Agreements (BPAs). The purpose is to promote practices that enhance competition and opportunity for government and industry. Sound FSS BPAs leverage requirements and deliver best value to customer agencies. Correspondingly, sound FSS BPAs result in positive business outcomes for FSS contractors.
Please read our BPA Best Practices statement and provide us with your feedback. We look forward to your comments.
GSA Schedules – Best Practices for Establishing Blanket Purchase Agreements
The GSA Schedule program provides agencies with an excellent platform to acquire commercial services, solutions and products at reasonable prices. Agencies can forge relationships with commercial partners and further leverage their buying power by establishing Blanket Purchase Agreements (BPAs). The regulatory requirements for establishing BPA’s are set forth in FAR 8.4. In addition to complying with the regulatory requirements, there are specific strategies that have proven to be successful in allowing an agency to structure BPA’s in a manner that increases the ability of GSA Schedule contractors to respond in a more competitive manner. This paper sets forth best practices that have resulted in BPA’s that are successful for both federal agencies and GSA Schedule contractors.
Commercial contractors overwhelmingly report that they offer their best terms and prices to customers who provide the most detailed information about their requirements and usage. Commercial customers that get the best deals share the following traits. They have:
1. Known, requirements which they share with potential suppliers
2. Commitment to acquire a specific volume
3. Centralized program management
4. Strategies for partnering with suppliers
Specific information about the factors listed above, when included in a statement of work, have great potential to enhance the Government and industry’s ability to provide best value to the taxpayer.
Specific requirements, volume commitments and/or guaranteed minimums for BPAs will lead to enhanced competition and better pricing. Generic BPAs that rely on subsequent task order competitions introduce a level of complexity and cost that is counterproductive.
Best BPA Practices
The following practices have resulted in BPA’s that improve efficiency and enhance real competition while providing best value to the government.
1. Focus on requirements. BPAs should be structured with a focused set of requirements to enhance effective competition and pricing. Real requirements lead to real price competition in the FSS ordering process.
- BPAs reflecting single agency requirements should be preferred over multiple agency or government-wide BPA’s. Single agency BPAs allow the government to state specific, realistic, authentic requirements that can be accurately priced.
- Include maximum as well as minimum requirements. This information enables bidders to provide targeted pricing and avoid the need to build in cushions to cover risks and changes that may never materialize.
- Include a sound estimate of the government’s anticipated usage
2. Include real economic incentives for competition. Commercial pricing policies commonly extend favorable pricing to customers with terms and guarantees that offer the company an economic benefit. Economic incentives include:
- A commitment to acquire a guaranteed minimum volume.
- Absent a guaranteed minimum the BPA can include a list of required users
- If an agency cannot commit to a guaranteed minimum or list of required user, the BPA should be evaluated based on technical requirements only; price can be established based on competition among technically qualified BPA holders at task order level
3. Pay attention to BPA management. Major BPAs should have a program manager assigned to ensure effective execution, implementation and administration. Too often BPAs are established without a focused management plan for effective use. Program Managers can be particularly effective in:
- Establishing robust communication between the contractors and end users to continually improve the contract administration
- Eliminating unnecessary administrative requirements that add unnecessary costs to the process
- Monitoring agency ordering
- Periodically reviewing BPA’s to ensure continued best value.
4. To the extent allowable, involve industry partners in the development of acquisition strategy. The Government should use industry meetings and statements of work to share statements of the agency objectives. In some cases, agencies are focused entirely on negotiating low price and may miss opportunities to acquire new commercial solutions that could improve the delivery of services or provide cutting edge technology. Agencies may also be focused on lowering the unit price of products or services without considering more significant opportunities to lower the total cost of operations by changing what or how they buy. Fully incorporating industry discussions early in the process can open opportunities for suggestion new, cost saving strategies from commercial partners.
5. Eliminate “generic BPAs” (no stated users, no minimum volume, broad statement of requirements). Generic multiple award BPAs that rely on subsequent task order competitions add an extra level to the FSS ordering process that is unnecessary and should be avoided. These BPAs represent vertical contract duplication and increase costs for both government and industry. Moreover, any price competition when establishing these BPAs is illusory. Subsequent BPA task order competitions for specific requirements establish the real price paid by the government—it is more efficient to compete these requirements directly against GSA Schedule contracts.