Last week the General Services Administration (GSA) announced the award of 21 Federal Strategic Sourcing Initiative (FSSI) Office Supply 3 (OS3) Indefinite-Delivery-Indefinite-Quantity (IDIQ) contracts.  The awards went to 20 small businesses and one other than small business. The number of awardees raises significant questions regarding the long term supply chain for office supplies.  The small number of contract awards reflects a GSA goal of reducing the number of office supply contractors in the federal marketplace.  Indeed, GSA’s Federal Acquisition Service (FAS) has described FSSI OS3 as a form of “supplier suppression.”  It is an approach that detaches customer agencies from contractors, limits choice and value for customer agencies; and reduces competition over the long term.

On January 31, 2014, GSA issued a separate OS3 solicitation seeking to award a set of IDIQ contracts covering four different CLINs:

CLIN 0001: General Office Supplies Full Catalog;

CLIN 0002:  Office Paper;

CLIN 0003: Toner/Ink; and

CLIN 0004: GSA On the Go

Unlike OS2, GSA chose not to use the GSA’s Schedule 75 as the platform for establishing a set of FSSI Office Supply Blanket Purchase Agreements (BPAs).  GSA cited the prior closure of the schedule to new offers as a primary reason for not using Schedule 75.  GSA explained that those firms who were precluded from submitting an offer as a result of the Schedule 75 closure would be precluded from a schedule based OS3 FSSI solution.  Therefore, to allow those firms an opportunity to compete, GSA chose to establish a new IDIQ contract.  In essence, GSA closed Schedule 75 because it believed it had too many contractors on schedule (remember Demand Management).  It then chose to conduct an acquisition to create a new set of contracts duplicating Schedule 75 because it did not have enough Schedule 75 contractors.  The irony is that the result is another set of contracts that severely limits the office supply market—thereby increasing barriers to entry, limiting opportunities for small businesses and reducing long term competition.

GSA’s press release announcing OS3 states in part that “[t]his initiative builds upon the success of OS2, which generated more than $370 million in savings and achieved a small business utilization rate of 75 percent.”  To the extent GSA is measuring savings based on discounts off the schedule contract price, it is an unremarkable claim.  The GSA schedules program is designed to foster competition at the task order level and for BPAs—competition that leverages agency specific requirements and seeks price reductions.  That is why individual agencies can and have competed task orders and/or established BPAs for their specific requirements at pricing better than FSSI pricing.  More fundamentally, where is the data on savings??  To the extent information on savings has been shared publicly, it reflects a methodology largely based on measuring the discounts off the schedule contract price.  It is a methodology that fails to address the ability of customer agencies to achieve as good or better savings when competing specific requirements via task orders or BPAs under the schedules program—an approach that would also provide greater opportunities for small business across the federal enterprise.

In touting OS3 savings, the critical questions are: (1) What prices were paid prior to the FSSI vehicles? (2) How do the FSSI prices compare?  and (3) What are the administrative costs to the taxpayer of establishing and administering these duplicative contract vehicles? Moreover, a true item price comparison for OS3 involves GSA comparing OS3 pricing against OS2 competitive pricing (task orders) not the GSA schedule contract pricing! That is the most accurate comparison.

Finally, it is important to note that on February 3, 2014 a Freedom of Information Act (FOIA) request was submitted to GSA seeking among other documents, all documents relating to all public statements by GSA regarding savings resulting from the FSSI. It should be noted that this FOIA request was initiated as a single request with the objective of reducing GSA workload and strain on resources by having to respond once versus multiple FOIA requests from GSA schedule contractors.  To date, there has been no responsive documents provided other than information on GSA’s FSSI websites.  In June of this year, the FOIA request was narrowed in response to a GSA request.  Since then there has been no further communication or response from GSA.  This delay in responding raises significant questions:  What analysis was done, or not done, to ascertain any savings?  How was it done?  Do we have all the results?  What has FSSI cost GSA operations?  What has it cost Government?  Where is the analysis of the data FSSI contractors have been mandated to report?  What are the fees collected to date by GSA for the OS2 BPAs?

In the name of transparency and accountability, we look forward to the release of all documents relating to the FSSI program.

Roger Waldron

President