For 35 years, the Coalition has provided members with unparalleled service in the realm of procurement policy. We track key policy issues and advise members on the latest developments in Federal contract regulation and legislation.
Voicing member interests to the Federal Government is a crucial aspect of the Coalition’s policy involvement. Government often turns to the Coalition for feedback and insight when launching new procurement programs and policies. The following are just some of the policy matters that the Coalition is currently engaged in:
- Contract Duplication
- Price Reductions Clause Reform
- Strategic Sourcing
- Contract Structure Reform (ODCs)
- BPA Ordering Procedures
- Myth-Busters Campaign
- Green Procurement
The establishment of multiple contracts for the same or similar products and services in the Federal marketplace increases administrative costs for both contractors and the Government.
Contract duplication occurs when individual firms hold multiple contracts for the same or similar services. This practice increases bid and proposal costs and contract administration costs for both Government and industry, costs that could be avoided through greater use of interagency contracts. In a March 2011 GAO Report titled Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue, GAO noted that unjustified duplication among available contracts can result in increased costs to the government. In addition, GAO recommended that “collecting improved data on interagency contracting to minimize duplication could help the government leverage its vast buying power.”
Contract duplication can be described in two ways, horizontal duplication and vertical duplication. Proliferation of contracts across agencies for the same or very similar requirements represents horizontal duplication. Generic multiple award BPAs that rely on subsequent task order competitions add an extra level to the FSS ordering process. These BPAs represent vertical contract duplication and increase costs for both government and industry.
Government-wide multiple award contracts, such as the GSA Schedules program, provide a streamlined competitive ordering process that can save both the public and private sectors time and money in the bid proposal context. The use of these pre-negotiated contracts allows the ordering activity to focus on requirements development rather than the administrative aspects associated with setting up an entirely new contract. Duplication could be reduced through increased use of existing government-wide contract vehicles when there is an opportunity for both contractors and Federal agencies to realize cost savings. As part of the acquisition planning process, contracting officers should be required to document and explain why existing contract vehicles do not meet the agency’s needs prior to establishing new contracts. This explanation should specifically address why creating a new contract is the best procurement method to meet the government’s needs.
Price Reductions Clause Reform
Recent changes in federal acquisition regulations require reform of the Price Reductions Clause (PRC) to reflect new competition requirements.
With the FAR implementation of Section 863 of the 2009 National Defense Authorization Act, the “Section 803” competitive ordering procedures that currently apply to DoD’s use of the schedules program now apply government-wide. As a result, notice and opportunity to compete must be provided for all orders over $150,000 to all contractors capable of meeting the requirement or as many as practicable to reasonably ensure receipt of at least three offerors. Given the mandate for competition at the task order level, the current Price Reduction Clause is no longer relevant. However, as currently mandated, the Price Reduction Clause increases industry and government oversight costs when pricing is being driven by competition at the order level. The compliance infrastructure costs especially hurt small businesses.
With the implementation of the competition requirements for task orders for all orders exceeding $150,000 pursuant to Section 863, the Coalition believes the Price Reduction Clause should be reformed or otherwise eliminated from MAS contracts. As a first important step, the maximum order threshold on MAS contracts should be lowered to $150,000 to bring balance back to the pricing requirements. This first step would reduce contractor compliance costs and risk while enhancing competition in the commercial market place.
Strategic sourcing is designed to leverage the buying power of the Federal government to drive lower costs.
The Federal government promotes strategic sourcing as a way to better leverage the government’s cumulative buying power to achieve cost savings. The Federal government is committed to establishing 10 new government-wide strategic sourcing BPAs for products and services in FY 2013 and 2014.
While the Coalition generally supports the strategic sourcing, one size does not fit all. Federal agencies often have unique requirements for products and services based on their individual mission. In this case, already existing contract vehicles like GSA’s Multiple Award Schedules have the potential to provide the best value to federal customers by allowing agencies to purchase goods and services while realizing savings, providing flexibility and choice, saving time, and controlling the procurement. Contract vehicles should be structured to maximize opportunity and best value for the Government, industry and the tax payer. Government-wide strategic sourcing BPAs that provide more defined requirements create more efficient procurements.
Contract Structure Reform (ODCs)
Contract structure matters—an accountable yet flexible GSA Schedule contract has the ability to provide a “total solution” for federal customer agencies.
ODCs are other costs charged directly to the Government that have not been included in proposed material, direct labor, indirect costs, or any other category of cost. ODCs can include but are not limited to: special tooling, travel expenses, relocation expenses, pre-production and start-up costs, packaging and transportation costs, royalties, computer expenses, federal excise taxes, and reproduction costs. In submitting a cost proposal, a contractor should list all ODCs and provide a basis for pricing. In other words, ODCs are costs other than labor and materials.
Currently, for some schedules, GSA requires materials and ODCs to be specifically listed and priced at the contract level in order to be included in a task order. This approach increases the complexity and decreases the utility of the MAS program as it creates a bifurcated ordering system. Under GSA’s approach, if a material or ODC is not listed on the contract, it must be acquired using open market competition procedures rather than through MAS ordering procedures.
The Coalition believes the current regulatory framework can be used to effectively implement ODCs on Multiple Award Schedule Contracts. The Government needs to provide an accountable yet flexible contract structure for the inclusion of materials and other direct costs (ODCs) on GSA schedule contracts. Agencies are seeking “Total Solutions” for their service requirements. These solutions typically include materials and ODCs. The inability to acquire these items on task orders limits the ability to compete requirements under the FSS. It leads to unnecessary and costly contract duplication as agencies seek other more flexible contracts—which in turn increases administrative procurement costs for both government and industry.
BPA Ordering Procedures
Recent acquisition regulations threaten the GSA Multiple Award Schedule (MAS) program by redefining competition requirements and restricting single-award contracts.
Streamlined task order competitions via the GSA schedules and GWACs are an effective tool to meet agency mission requirements while reducing transactional costs for both government and industry. As an example, Blanket Purchase Agreements (BPAs) using the GSA schedule are a vital tool for agencies in leveraging service and product requirements.
The Coalition believes that the interim FAR rule implements Section 863 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 includes unduly restrictive procedures for the establishment and use of Blanket Purchase Agreements (BPAs) under the FSS program. These new BPA procedures were not mandated by the statute and appear to be in response to a September 2009 Government Accountability Office (GAO) report entitled “Agencies Are Not Maximizing Opportunities for Competition or Savings under Blanket Purchase Agreements despite Significant Increase in Usage.”
Although intended to foster competition, these new procedures will unduly limit the flexibility, versatility and utility of BPAs under the FSS program. For example, the interim rule places significant limits on the use of single-award BPAs and establishes additional procedural requirements for orders under multiple-award BPAs that further limit flexibility. As a result, agencies will find it increasingly difficult to craft cost effective single-award or multiple-award FSS BPA solutions that address recurring requirements. This will reduce the overall cost effectiveness and utility of the FSS program, lead to unnecessary contract duplication and ultimately remove a key procurement tool for leveraging and competing government requirements. Significantly, the new BPA regulations will likely have a direct and negative impact on the Administration’s Federal Strategic Sourcing Initiatives (FSSI) as well as a host of other vital procurement programs that rely on BPAs to leverage requirements and achieve cost savings.
The OMB is moving forward with a myth-busters campaign to improve government-industry communication in the acquisition process, especially related to the requirements definition and the development of effective acquisition planning and execution.
The Office of Federal Procurement Policy (OFPP) officially launched the Myth-busters educational campaign on February 2, 2011. The purpose of this campaign is to improve government-industry communication in the acquisition process, especially related to the requirements definition and the development of effective acquisition planning and execution. The Coalition, with other trade association, corporate, and federal agency stakeholders, has provided input to OFPP on this initiative. The memo lists “10 Misconceptions About Vendor Communication” the pre-award acquisition process along with a “Vendor Communication Plan.” The Federal Acquisition Regulation (FAR) provides contracting officers and program managers with flexibility in communicating with industry regarding the development of requirements and acquisition strategies. The “Myth-Busters” memorandum encourages acquisition personnel to use the flexibilities found in the FAR.
The Coalition strongly supports this important initiative to improve government-industry communication. Improved communication is critical to ensuring our procurement system meets agency mission requirements while providing best value to the taxpayer. Effective communication improves requirements development, enhances competition, and increases mutual understanding leading to better performance outcomes for government, industry and the taxpayer.
Federal green procurement should recognize corporate leaders offering environmentally friendly products and services while maintaining a best value for the taxpayer.
Executive Order 13514: Federal Leadership in Environmental, Energy, and Economic Performance seeks to leverage agency acquisitions to foster markets for sustainable technologies and environmentally preferable materials, products, and services. The executive order calls for ninety-five percent of new contract actions to offer energy-efficient, water-efficient, bio-based, recycled content, non-toxic or non-ozone depleting products. Given that the Government will need to build a green procurement infrastructure that defines many of the current ambiguities in sustainable acquisition and educates the procurement community, increasing green procurement over time will require a phased approach.
The Coalition supports common sense green acquisition policies that 1) recognize corporate leaders offering environmentally friendly products and services, 2) use the commercial market as a model, and 3) leverage existing environmental programs rather than creating unique government requirements. We believe that public-private sector engagement regarding how to green the Federal supply chain is critical to developing an efficient and effective green procurement system over time.