Last week the General Services Administration (GSA) announced its Demand Based Model for the Federal Supply Schedules (FSS) program. Under the Demand Based Model GSA will close some schedules for new offers ending continuous open seasons for those schedules or for certain SINs within a schedule. GSA’s goal is to balance the number of schedule contracts with the government demand for the products and/or services on those contracts. GSA’s goal of balancing schedule workload to demand makes sense. However, the Coalition is very concerned that closing schedules to new offers sends the wrong message regarding competition and access to the commercial marketplace. Continuous open seasons are one of the central procurement policy pillars of the schedules program, reflecting the government’s faith in the commercial marketplace to provide the services and products that make a difference for customer agencies and the taxpayer. Continuous open seasons are also vital to small business concerns seeking to sell to the federal government. Twenty years ago, there were no continuous open seasons for schedule solicitations. At that time the FSS program was criticized as uncompetitive and static in the products, services and pricing offered to the government. The concern is that moving towards closing certain schedules to offers sends the wrong message to customer agencies and contractors regarding competition and access to the commercial market.
GSA already has a rarely used clause in its Schedule contract to address the balance between workload and demand. FSS Clause I-FSS-639 CONTRACT SALES CRITERIA (MAR 2002), provides that the Government may cancel a contract if sales under the contract do not exceed $25,000 within the first 24 months following contract award, and/or do not exceed $25,000 in sales each 12 month period thereafter. So the tool is already in the toolbox for balancing workload to demand— a tool that historically GSA has chosen not to use. In our view it makes more sense to address FSS contracts with low or no sales than close a market to commercial firms wanting to take their shot at competing for government requirements. Such an approach is consistent with the statutory mandate of the FSS program that it be open to all commercial sources. Closing schedules or throwing more personnel resources at the FSS program are not the long term answer to improving the efficiency or effectiveness of the FSS program.
Fundamentally, as last week’s Comment highlighted, structural reforms to the FSS contracts, solicitations and pricing policies, coupled with continued investments in e-systems, are the keys to increasing the long term efficiency and effectiveness of the FSS program.
- Addressing “Other Direct Costs” (ODCs) on FSS service contracts will increase the productivity and access to total commercial service solutions for customer agencies. It also will reduce contract duplication across government and within the service schedules. Most importantly, it will enhance competition for customer agencies and opportunities for the private sector thereby increasing use/demand for services via the FSS program. Importantly, the policy infrastructure for ODCs on schedule is already in place through the FAR commercial item clause 52.212-4.
- Reducing the number of solicitations and actively promoting and implementing a comprehensive option for consolidating contracts has the potential to dramatically reduce schedule contract duplication and workload for GSA and its contractors. Contractors should be provided an efficient and effective option to consolidate their contracts if they so choose. Some companies may want to maintain multiple contracts, but many, especially in the services arena, would love to consolidate their multiple contracts into a single schedule contract. It saves time and money for all parties while enhancing the government’s ability to conduct more effective market research and the contractor’s ability to market and compete.
- Reforming the pricing policies to reflect current commercial practices and acknowledging the statutory and regulatory competition requirements at the order level will increase the efficiency and effectiveness of the FSS program. Services account for over 60 percent of schedule orders. Pricing is now driven at the order level. The new FAR 8.4 includes robust competition requirements. The Defense Federal Acquisition Regulation Supplement instructs contracting officers to seek price reductions for any size order. Given the new statutory and regulatory requirements for competition at the order level, combined with the growth in services, the time for fundamental reform of the pricing policies is now.
- Making strategic investments in GSA’s e-systems, particularly the e-systems supporting the FSS program, can reduce workload, streamline the acquisition process and enhance competition. GSA should bring together customer agencies and contractors in a single strategic forum to map out the future e-systems for the schedules program. What is working? What can be improved? What can be eliminated? A joint Myth-Busters dialogue with customers and contractors is vital to the future development and maintenance of efficient and effective e-systems for the FSS program.
Implementation of the Demand Based Model should not divert GSA’s attention from addressing ODCs, reducing the number of solicitations and consolidating contracts, reforming pricing policies, and strategically investing in e-systems.
The Coalition looks forward to working with GSA on these four key areas.