The Federal Acquisition Service’s (FAS’s) Competitive Pricing Initiative (CPI) is intended to address price variability for identical items under competing Multiple Award Schedule (MAS) contracts. An unintended, positive consequence of this effort has been to highlight questions and concerns regarding the impacts of unauthorized resellers in the MAS program.
Under CPI FAS is collecting pricing information for identical items from GSA Advantage and DoD EMALL, comparing the relative pricing, and providing the information to specific MAS contractors. In doing so, FAS is seeking feedback from MAS contractors regarding the rationale for their pricing and its relative standing as compared to other MAS contractors. The current effort does not address unauthorized resellers and/or gray market items under MAS contracts. However, based on member feedback, unauthorized resellers and grey market items are being included in GSA’s horizontal price analysis and can and do distort pricing in the MAS marketplace.
Moreover, unauthorized resellers and grey market items also raise questions regarding fair competition, intellectual property rights, Trade Agreements Act (TAA) compliance and cyber security. In particular, as recent events have shown, cyber security concerns must be addressed. The good news is that GSA is developing a cyber acquisition risk profile for agencies to apply when buying products and services. Further, DoD and GSA have already identified the importance of purchasing from authorized resellers as key to mitigating cyber risks across the Federal government. We look forward to engaging GSA’s Emile Monette, Senior Advisor for Resilience and Cybersecurity, Office of Government-wide Policy and other stakeholders on cyber security acquisition requirements. At the same time, as the manager of the government-wide MAS program, GSA could take a big step in cyber protection by proactively addressing unauthorized resellers and grey market items under MAS contracts. Such a step would increase both customer and contractor confidence in the MAS marketplace (it would also increase contractor confidence in the CPI).
NASA SEWP’s Statement of Work includes a paragraph addressing Supply Chain Management and the relationship between the contractor and manufacturer. Paragraph C.1.3.7 provides that in order for the Government to assess the security and risks associated with supply chain management, contractors are required to submit certain information and make certain representations. Under the clause an authorized reseller is one where the manufacturer has a direct relationship with the contractor and is officially identified as a reseller for the manufacturer. An authorized reseller must provide a point of contact for the manufacturer who verifies their status. In addition, an authorized reseller may identify standards/certifications held by the manufacturer that mitigate, reduce or eliminate supply chain and related security risks. If the contractor is not a manufacturer and/or has not identified themselves as an authorized reseller then the contractor must either identify the source of the item as unknown or identify a third party source or provide information on the provenance or product level authorization that mitigates risk.
Under IT Schedule 70 and other product-based schedules, GSA requires a letter of supply submitted on the manufacturer’s letterhead and signed by a corporate official of the manufacturer. The differences between the NASA requirement and IT Schedule 70 are slight but the NASA paragraph provides greater assurance regarding supply chain management. In particular, the NASA paragraph/requirement provides greater transparency and assurance for grey market items.
Customer agencies and contractors rely on FAS to ensure contract compliance and the overall integrity of the MAS marketplace. Addressing unauthorized resellers and grey market items is vital to effectively and securely supporting agency missions for the American people. Addressing this issue is also necessary to assure valid price comparisons in GSA’s competitive pricing initiative. The Coalition looks forward to working with FAS on this important issue.