The Coalition for Government Procurement

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

One Response to “Thoughts on “Modernizing GSA’s Schedules Program…””

  1. Prof. Samuel D. Bornstein

    RE: Standardized Part Numbers and Special Item Numbers. While the Mass Mod A382 makes sense and will lead to better decision making on price, my fear is that this effort is driven by LPTA which bases all purchases on lowest price alone. My fear is grounded by the current emphasis on Federal Strategic Sourcing (FSSI) on “mandating” the procurement of goods and services from the select few who are awarded the FSSI BPAs. One of the key aspects of Strategic Sourcing is to leverage buying power. This means that the Federal Government is trying to duplicate the Private Sector Strategic Sourcing programs which displace small businesses. The Private Sector does not have any concern for the plight of the “non-winners” , but the Public Sector should. By “mandating” procurement from the FSSI BPA “winners”, the Federal Government may appear to “win” (savings) in the short run, but the price of this “win” is the displacement of small businesses who may close their doors and lay-off their employees (Job Loss).
    CGP should push for a Cost-Benefit Analysis which includes the Economic & Social Costs of Job Loss, which was recommended by the SBA in the most recent OS3 Protest.

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