On June 12th, the Coalition issued a “Best Practices for Federal Supply Schedule (FSS) Blanket Purchase Agreements (BPAs). It provides a framework for increasing the effectiveness of FSS BPAs for government customers, FSS contractors and ultimately taxpayers. FSS BPAs are an important tool in the procurement toolbox to support program and mission needs across government. Federal Acquisition Regulation (FAR) 8.405-3(a) provides that “ordering activities may establish BPAs under any schedule contract to fill repetitive needs for supplies or services. Ordering activities shall establish the BPA with the schedule contractor(s) that can provide the supply or service that represents the best value.” The BPA best practices will assist customer agencies in maximizing best value outcomes when utilizing FSS BPAs.
The key in government and commercial contracting is requirements. As the best practices states, “commercial contractors overwhelming report that they offer their best terms and prices to customers who provide the most detailed information about their requirements and usage.” The best practices goes on to state that “BPAs should be structured with a focused set of requirements to enhance effective competition and pricing. Real requirements lead to price competition in the FSS ordering process.” To this end, the best practices further advise that “BPAs reflecting single agency requirements should be preferred over multiple agency or government-wide BPAs. Single agency BPAs allow the government to state specific realistic, authentic requirements that can be accurately priced.” This guidance is at odds with the current strategic sourcing approach that utilizes government-wide or multi-agency BPAs. However, one size does not fit all with regard to leveraged acquisitions. There may be certain products or services that lend themselves to government-wide BPAs. At the same time, unique needs at customer agencies mean that in many instances single agency BPAs may more effectively deliver best value outcomes. Establishing a single agency BPA does not mean that the agency is not creating a strategic sourcing vehicle—rather it is an opportunity to create a clearly defined, robust vehicle. Agencies could report such BPAs back to the Office of Federal Procurement Policy (OFPP) as part of OFPP’s strategic sourcing initiative.
Communicating detailed, sound requirements is also vital to reducing vertical contract duplication. Too often, agencies establish generic, undefined BPAs for products or services with no guarantee of usage—this happens in the strategic sourcing context as well. As a result, contractors first invest in negotiating and establishing their FSS contracts. FSS contractors then use more bid and proposal funds to compete for a BPA that is undefined, this is especially true when it comes to services. Finally, the real, detailed requirements are competed at the task order level under the BPA. This is vertical contract duplication. It is more efficient and effective for an agency to take its task order requirement and compete it directly among the FSS contactors and eliminate the costly competition for an undefined FSS BPA. The current Performance Management CPI/Services BPA issued under MOBIS is a prime example of vertical contract duplication. The Coalition previously addressed the issue of vertical contract duplication in a letter to the Administrator of Federal Procurement Policy which can be viewed here.
Let’s be clear. Given our nation’s current budgetary challenges, the Coalition understands the current efforts to leverage requirements and increase best value outcomes through strategic sourcing. FSS BPAs should be the central tool to accomplish these goals across government. However, the key to any best value outcome is the effective communication and competition for well-defined requirements. And with regard to requirements, one size does not fit all. In some instances government-wide FSS BPA(s) may be most effective. In many instances, single agency FSS BPA(s) will be more effective in delivering best value outcomes. In those circumstances, GSA can assist agencies in getting the most out of their FSS BPAs. In other instances, a task order competition (with no intermediary BPA) directly among FSS contractors will be the best acquisition strategy.
Please let us know what you think of our BPA best practices. We are all in this together.
Next week I am off with the family to the Outer Banks and Carolyn Alston will be writing the “Comment of the Week.”
GSA Seeks Comments on Change to Continuous Open Seasons
GSA published a notice in the Federal Register this week on a new Demand Based Model (DBM) designed to improve the performance of Multiple Award Schedule (MAS) contracts. The goal is to realign MAS suppliers based on the demands of the current Federal market. GSA reports that the MAS program has grown to more than 31 Schedules and over 19,000 contractors in the last 20 years under continuous open “seasons” to receive new offers. In addition, GSA projects that over 50 percent of MAS contacts awarded in 2011 will not have significant sales, and that the Federal Acquisition Service will spend millions of dollars supporting and managing these low/no sales contracts. The concern is that this system results in significant costs and burdens for both Government and industry.
GSA is proposing the Demand Based Model to modernize and enhance the performance of the MAS program. In addition, the plan is intended to maintain the program’s value to Federal agencies as a streamlined vehicle by reducing duplicative contracts, improving contract administration, and increasing the level of GSA customer support.
The Demand Based Model would modify the current practice of a continuous open season for all Schedules. Under the new model, GSA is proposing to-
- Assess each Special Item Number (SIN) level requirements in terms of Federal demand, existing sources, sales performance under existing contracts, changing market dynamics, socio-economic considerations, etc.
- Based on this assessment, GSA would determine whether to-
- Maintain a continuous open season for the entire Schedule
- Maintain a continuous open season for only certain SINS under a Schedule
- Close the Schedule or certain SINS on a temporary basis to new offers
- Publish the decision in FedBizOpps. Options would be to-
- Maintain a continuous open season for the Schedule or SIN
- Temporarily close the Schedule or SIN
- Temporarily re-open after a decision to close the Schedule or SIN temporarily
- Merge the Schedule or SIN into one or more other Schedules or SINs
- Cancel the Schedule or SINs
- Temporary closures would be posted in the Federal Register with at least 30 days notice. No new offers would be accepted after the effective date, except that contractors may submit an offer for a new contract during or after the third year of their third contract option period.
- Schedules or SINS that are closed temporarily would be assessed on a periodic basis and would re-open via an open season at least once every 3 years.
Please review GSA’s notice for more details on the plan. The proposed effective date for the DBM is September 21, 2012.
GSA is seeking public comments on this model, especially from small business. In addition to general feedback, GSA is requesting responses to the following six questions. Please note that GSA is particularly interested in detailed comments that address specific operational implementation recommendations.
Questions
- There are a wide range of considerations GSA should employ in determining whether additional capacity is needed on a certain Special Item Number (SIN). This includes considerations such as number of contracts, sales trends, average sales per contractor, geography, socio-economic status on the SIN, degree of innovation in the industry, and views from other Federal Agencies. What else should GSA consider in making this decision?
- How much advance notice should GSA provide before making a decision for temporary closure? What business factors drive the amount of notice needed?
- Once GSA makes an announcement for temporary closure, there is potential for a high number of new offers before the effective date of the temporary closure. It is highly likely that nearly all of these offers will not generate business. What should GSA do with offers received in this window?
- To help industry best plan, should GSA’s reassessment be conducted annually, every two years, or every three years? What actions can GSA take to assist industry with planning? For example, is it better to know with certainty when a schedule or SIN will reopen even if that means the duration of closure is longer, or is it better for GSA to take a shorter term view of the question?
- Currently, over 50 percent of schedule contracts will not meet the sales retention criteria. Is reducing this percentage to 30 percent an appropriately aggressive interim goal?
- Are there other considerations on how to ensure minimum impact to industry with the implementation?
The Coalition will submit comments to GSA on the Demand Based Model due August 22, 2012. We are collecting feedback from members to incorporate into our comments and want to hear from you. Please contact Carolyn Alston at calston@thecgp.org or (202) 315-1053 if you have any input or concerns.
GSA, Federal Acquisition Service announced this week that Instructional Letters issued by its Office of Acquisition Management will be available on Data.gov. Instructional Letters (ILs) now on the DATA.GOV website. Instructional Letters are guidance issued to internal FAS acquisition personnel when regulatory or program changes require changes to solicitations or contracts. The guidance typically states the purpose of the change and provides background on the actions. This information can be helpful to contractors in understanding and negotiating changes to their GSA Schedule contract. Instructional Letters are listed by year from FY2007 to FY2012. Kudos to GSA for making this information accessible to the public.
2012 Wounded Veterans Charity Golf Tournament– Limited Spots Remain
Only five weeks remain until the 2012 Wounded Veterans Charity Golf Tournament and players are registering quickly! Limited spots remain, so don’t get shut out! Sponsorships are still available and will be integral to raising the necessary funds to promote the hiring of returning wounded service men and women, providing the training necessary to rejoin the workforce.
We are still in need of a Title Sponsor and Beverage Sponsors. Become an Honor America Hole sponsor and bring three people to play with one of these deserving American heroes. Join us on August 29th at the Whiskey Creek Golf Club in Ijamsville, MD, for a day of golf in support of a great cause. Register here>>
Our thanks to those companies who have already made a sponsorship commitment: Luncheon & Reception sponsors: Bridgeborn Inc. and Cachendo; Honor Americans Hole Sponsors: CBRE and Integrity Consulting; Hole and Foursome Sponsors: Accenture, Baker, Tilly; Corporate Care; Dynanet Corporation, Koniag Services Inc.; Metters Inc.; Reznick Government; Toro and TWD; Strategic Sponsor: SAP America. A special thanks to our Keystone Members for their support: Allsteel, Booz Allen Hamilton, GDIT, HON, L-3, McKenna, Long & Aldridge, and Northrop Grumman. Consider joining these great supporters by sponsoring today! Become a Sponsor>>
DHS Halts Restrictions on Contractor Communications
Earlier this week, the DHS National Protection and Programs Directorate (NPPD) office confirmed that a controversial contractor checklist would not be implemented. The guidance established a list of criteria and information NPPD officials would have to gather before meeting with contractors. The guidance was created to ensure impartial government-industry communications and avoid possible conflicts of interest. However, the guidance included a controversial requirement that if a potential meeting “[related] to a current or planned contracting opportunity, a response to an RFI, an unsolicited proposal or any circumstance where DHS has identified a need for products or services,” then the meeting request would be terminated. The guidance was revoked based on concerns that it would put significant restrictions on industry and government communications, potentially hurting collaboration and acquisition outcomes.
GSA & VA to Award Major IT Contracts by End of 2012
Despite recent budget pressures, both GSA and the VA are planning to make major IT awards in the coming months. GSA is planning to release a request for information (RFI) for a continuous monitoring cybersecurity tools blanket purchase agreement (BPA) within the next week. Pete Burr, FEDSIM’s director of the civilian sector stated that GSA is planning to solicit requests for proposals (RRP) through Schedule 70 and award the BPA in November. The VA also announced its plan to award the Commodity Enterprise Contract (CEC), a 5-year, $5 billion-ceiling multiple award contract, used to procure IT hardware such as laptops, servers and mobile devices. Although the VA stated that it is still in the evaluation phase of the CEC MAC, the agency is planning to make awards before the end of the fiscal year. As for the VA’s other IT hardware MAC, T4, officials plan to expand its use to other agencies by creating an interagency agreement for the MAC in FY 2013.
Navy Updates Proposal Template
On July 20th the Department of the Navy (DON) Chief Information Officer (CIO) released an abbreviated business case analysis (BCA) template in order to “improve the efficiency of the department’s information technology and cyberspace-related procurement and business processes using business case analyses.” According to the Office of the CIO, the abbreviated IT Abbreviated Standard BCA template (A-BCA) is meant to foster efficient and effective communications of cost-savings ideas to the DON CIO and other leadership, from all sources, by providing a shorter and more condensed cost-savings focused format. The A-BCA includes a brief discussion of the problem statement; proposed scope; key assumptions; constraints and risks; costs, savings and other benefits; and operational impacts. The A-BCA does not replace the IT Standard BCA Template— it is meant to be a faster, more efficient start to a structured cost-savings conversation. The DON welcomes suggestions and comments to improve the A-BCA. The public can submit comments at www.doncio.navy.mil/ContactUs.aspx.
House Passes Defense Spending Bill – No Contractor Pay Cap
Last Thursday, the House approved the Department of Defense appropriations bill for FY 2013. The bill did not include the proposed amendment to cap contractor pay at $230,700 on the grounds that it is an issue of authorization- not appropriation. Two other amendments not provided in the bill include a Defense civilian pay raise and a provision to increase TRICARE fees. The bill was passed by a 326-90 vote and allots $606 billion in defense spending, $518 of which is non-war funding. The initial version of the bill was $3 billion higher than the Administration’s budget request; however after a veto threat, the House passed version was $1.1 billion less than the initial bill. The Senate has not passed a version of the Defense appropriations bill, but plans on a mark-up session in August after the recess.
GSA Introduces Green Buildings Curriculum
The GSA Office of Federal High-Performance Green Buildings released a facility management curriculum that meets a list of core competencies and skills required under the 2010 Federal Buildings Personnel Training Act. The Federal Buildings Personnel Training Act requires that federal building personnel are certified to demonstrate the core competencies within one year after release. GSA recommends completion of the online curricula to ensure that employees are in compliance.
The curriculum was intended to provide a program for continuing education to leverage cost savings through better management of facilities and maintenance. The online training center will open on August 1 and offers courses for both personnel directly managing energy, design, safety and sustainability and those in high-level management positions. The training will be provided on an open site (FMI.innovations.gov) accessible to the public, government and industry.
Latest Cybersecurity Bill Moves to Senate Floor
A new version of the Cybersecurity Act of 2012 (S. 3414) has been introduced by Sen. Joe Lieberman (I-CT). On Thursday evening a motion to move the bill to the Senate floor was approved 84-11. GOP Senators who had previously opposed the legislation now support the bill based on the removal of regulatory requirements for critical infrastructure companies. The Administration has also expressed support for the updated version.
New provisions in the bill would create a National Cybersecurity Council, which would conduct sector-by-sector risk assessments in partnership with owners and operators, private sector entities, and relevant Federal agencies. The council would establish an incentives-based voluntary cybersecurity program for critical infrastructure that encourages industry to adopt voluntary outcome-based cybersecurity practices. Companies that can demonstrate that they meet certain cybersecurity requirements, through third-party certification, would receive certain incentives and benefits. These benefits would include liability protections in the case of a cybersecurity attack, expedited security clearances and priority technical assistance. Additionally, the bill paves the way for cybersecurity information sharing and best practices between the public and private sectors.
The previous version of the cybersecurity bill, introduced in February, allowed the Department of Homeland Security to regulate privately owned systems controlling critical infrastructure. In contrast, the current bill takes a voluntary, incentive-based approach that encourages the private sector to adopt cybersecurity protections.
GSA Schedule Option Extensions – A Time of Risk and Opportunity
Guest Bloggers: Bill Bressette & Jeff Clayton, Baker Tilly
Many contractors don’t fully understand the disclosures that form the basis for the negotiated prices on their GSA Schedule contracts, but a company’s failure to keep those disclosures current may expose it to audit risk and financial liability when the Office of Inspector General (OIG) comes knocking. This is of critical importance at the time of option extension, when a contractor may be more likely to receive a pre-award audit of its Schedule contract. Let’s begin with a quick overview of the option extension process.
In September of 2011, GSA introduced the Option Process Ensuring iNtegrity (OPEN) for Federal Supply Schedule (FSS) contracts with the hope of streamlining the process and meeting Commisssioner Kempf’s goal of exercising options 60 days prior to contract expiration. In a nutshell, it refocuses the extension process on what it was originally intended to be—a unilateral modification that extends the contract with the same terms and conditions for another five years. It also translates into a much earlier notification letter for contractors, with notification approximately 210 days prior to option expiration and often a 45 day turnaround on the option package.
Two things are of critical importance here, 1) as a responsible GSA Schedule contractor, you will need to thoroughly review your historical pricing practices and ensure that your pricing disclosures are current, accurate, and complete, and 2) if you do find that you need to make changes to the terms and conditions of your contract you will need to accomplish those changes outside of the option exercise modification itself. For example, if a contractor wishes to add or delete products or services, request an economic price adjustment, or offer lower prices, the contractor will likely be required to do this independent of the option exercise. This means that what was previously a best practice recommendation is now a pragmatic and necessary step—contractors must start the review of their Schedules at least 12 months prior to option expiration and they should attempt to make any bilateral contract modifications prior to when they receive their notification letter.
Perform a Broad GSA Schedule Compliance Assessment
This is an ideal time for contractors to revisit all key areas of GSA Schedule compliance, particularly in the areas of PRC and Quarterly Sales/IFF administration. They should take the time to test the preventive and detective controls established within their systems to ensure they are working as planned. Preventive controls are typically system controls designed to ensure a company follows an established policy or procedure. One such control might consist of a required field in the order entry system that ensures sales personnel include GSA Schedule Contract information at the time of order placement. This helps to identify a GSA sale up front and gives the contractor some level of confidence in the GSA sales numbers (and consequently the IFF remittance) that are reported on a quarterly basis. Detective controls may, for example, include a periodic review of sales data to identify PRC triggering deals which may not have been reported. Detective controls are designed to ensure that the preventive controls, including policies, procedures and training, are functioning as intended.
Policies and processes should also be reviewed to make certain that they adequately address the compliance concerns within the context of a contractor’s current organizational structure and previous contract disclosures. Changes in business unit structure/operations, sales or marketing practices, and certainly changes driven by mergers and acquisitions can often render an existing policy or process ineffective. For example, a contractor may have an adequate process in place for tracking all GSA Contract sales in its current system; however, through acquisition, the company acquires a business unit with different systems that will not be integrated or migrated for some period of time. If this unit will make use of your GSA Schedule, it’s likely that your current process for identifying sales in your system may not be capturing GSA sales made through the newly acquired unit. Finally, contractors should review the efficacy their training programs and periodic internal reviews. An annual compliance review is a good way to test your policies, procedures, and training. Personnel subject to periodic training on document retention, for example, should be expected to have maintained the appropriate sales files required by your GSA Schedule contract. During an annual compliance review, validating that the policies surrounding document retention are actually achieving the desired result will do two things: 1) It will identify the gaps between policy and practice; and 2) In so doing, it will identify any weaknesses in your training program.
Conduct a Historical Pricing Review and Update GSA Pricing Disclosures
A detailed review of a company’s pricing practices during the preceding 12 months will frequently reveal that discounting policies and practices have changed, particularly if they have not been closely monitored during the contract term. We recommend that contractors not only update their Commercial Sales Practice Format (CSP-1), but that they also draft a detailed narrative carefully describing all of their standard practices as defined in written policies/procedures and the non-standard practices as revealed by the historical pricing analysis. The CSP-1 Format is a standard form in every GSA solicitation.
While the CSP-1 requires you to explain all deviations from your “standard” practices, contractors often provide just enough text to answer the question. We often recommend that a comprehensive narrative be developed and attached to the CSP-1 as a material part of the pricing disclosures. This is the place to eliminate all ambiguity surrounding what you do and don’t do when it comes to your commercial customers. We have also used the pricing narrative to eliminate any potential misinterpretation surrounding what the contractor understands the price/discount relationship to be and how the PRC compliance will be handled. This allows the contractor to disclose all pertinent information to the GSA CO and removes ambiguities that might otherwise be interpreted in a disadvantageous way in the future.
Although the compliance review and historical pricing analysis can be time consuming, the effort pales in comparison to management’s distraction and the potential financial impact of an adverse audit report from the GSA Office of Inspector General (OIG). For large contractors who are more likely to be subjected to pre-award audits, the data and analysis produced during such an internal review will help expedite the performance of the onsite portion of the audit.
Conclusion
As we have seen in several recent high profile matters brought on by the GSA OIG and Department of Justice, the cost of non-compliance with GSA Schedule contract terms and conditions can be severe. Among the more highly publicized of these is the one in which Oracle Corporation settled False Claims Act allegations by agreeing to a $199.5 million dollar settlement. All contractors, regardless of size, should be prepared for the eventuality of an audit. When the time comes to exercise the option to extend a contractor’s GSA Schedule contract, they should take the opportunity to confirm that their practices are properly disclosed and that they have an effective compliance program in place. Although the additional disclosures that result may raise questions and complicate things in the near term, it will go a long way to ensuring long term GSA Schedule contracting success.
Baker Tilly provides a wide range of government contract consulting services, including GSA Schedule proposal preparation, contract administration, compliance and audit support. For additional information contact: Bill Bressette at 703 923 8624 or bill.bressette@bakertilly.com or Jeff Clayton at 703 923 8568 or jeff.clayton@bakertilly.com.
DoD Issues Small Business Set-aside Guidance
Defense Procurement and Acquisition Policy (DPAP) Director, Richard Ginman, released a memorandum this week to Defense acquisition executives and officials on the use of small businesses under multiple award contracts. The memo was released to implement section 1331 of the Small Business Jobs Act of 2010. It encourages the Defense acquisition community to give increased attention to set-asides when placing orders under multiple award contracts.
The Maximizing Small Business Utilization on Multiple Award Contracts memorandum is posted at http://www.acq.osd.mil/dpap/policy/policyvault/USA004315-12-DPAP.pdf.
Rules Published on Time-and-Materials Contracts
Payments Under Time-and-Materials and Labor-Hour Contracts
DoD, GSA and NASA issued a final rule, amending the Federal Acquisition Regulation (FAR) making necessary regulatory revisions to authorize the use of time-and-materials and labor-hour contract payment requirements. The rule is effective on August 27, 2012. The final rule amends the basic FAR clause to provide consistent guidance for invoicing and submission of the final invoice under a time-and-materials contract. Under the new rule, provisions for invoicing and submission of the completion voucher follow FAR clause 52.216-7, which provides for invoicing on a bi-weekly basis for large businesses, more frequent invoicing for small businesses, and submission of a completion voucher no later than 120 days after the completion of work.
Changes to Time-and-Materials and Labor-Hour Contracts and Orders
DoD, GSA and NASA also issued a proposed rule amending the FAR to provide addition guidance when raising the ceiling price or changing the scope of work for a time-and-materials or labor-hour contract or order. The rule was proposed after the DFARs Council and Civilian Agency Acquisition Council expressed concern that contracting officers often conclude that a Determination and Findings (D&F) is sufficient to justify a change in the ceiling price. The changes proposed are based on the GAO’s criteria for determining if a task or delivery order is outside the scope of the contract and whether the order is one that the offerors could have reasonably anticipated.
Final Rule on Reporting Executive Compensation and Subcontract Awards
A final rule was published on July 26 on Reporting Executive Compensation and First-Tier Subcontract Awards. The Federal Acquisition Regulation (FAR) is being amended to require contractors to report executive compensation, and first-tier subcontractor awards on contracts of $25,000 or more. This information will be published on a free, public website containing full disclosure of all Federal contract award information. Contracting officers are to include FAR clause 52.204-10, Reporting Executive Compensation and First Tier- Subcontract Awards, in solicitations issued on or after August 27, 2012, and subsequent contracts. Look for a full analysis of the final rule and the impact on Federal contractors by McKenna Long in next week’s Friday Flash!
Coalition Launches Educational Webinar Series
Mark your calendars now! The Coalition introduces a monthly Educational Webinar Series to address issues relevant to our membership. Join us the 2nd Tuesday of each month for a 1 hour lunchtime webinar featuring topics of interest to Coalition members presented by a number of industry experts.
The series kicks off Tuesday, September 11th at 12:30 PM. Join Cherry, Bekaert & Holland for an educational webinar to discuss Limited Scope Audits, with a focus on Labor, to include a summary discussion of:
- Overview of what Limited Scope Audits entail
- Explanation of the different audit objectives between Department of Defense Limited Scope Audits and the Department of Labor limited-scope audit exemption option under ERISA
- Why do these audits occur?
- Potential Impacts of Limited Scope Audits on your business and business systems
Brad Smith, CPA and Chris Wade, PMP, CFCM from Cherry, Bekaert & Holland’s Government Contractor Services Group will be presenting.
Registration details coming soon.
Planning for Sequestration Webinar
Register for the Bloomberg Government webinar, featuring a panel of experts, to gain perspective on how the Defense Department may implement sequestration and strategies to reduce its bottom-line effects.
PLANNING FOR SEQUESTRATION
DATE: Thursday, August 2, 2012
TIME: 2:00 pm EDT (11:00 am PDT)
DURATION: 1 hour
COST: Free to register
Discussion topics will include:
- When and where will cuts hit?
- What spending will be protected?
- What recourse do companies have?