As you know, on September 30th the Coalition sent a letter to GSA regarding the recent class deviation addressing commercial supplier agreement (CSA) terms that conflict or are incompatible with federal law (Acquisition Letter MV-15-03). The letter requests rescission of the deviation, and it addresses the legal, policy, and operational ramifications of the deviation’s modification of the “order of precedence” provisions of the commercial item clause. It also makes clear the Coalition’s willingness to meet with GSA to discuss a solution that recognizes and balances the interests of government and industry while promoting commercial item acquisitions.
By letter dated October 21st, GSA responded to the Coalition’s request. A copy of the response can be found here. Although the Coalition is disappointed that the response does not directly address industry concerns, the Coalition maintains its interest in a dialogue on this significant change in procurement policy. In the interests of transparency, it is important to MAS contractors that GSA and the Office of Federal Procurement Policy share their ideas on how to address the following key questions:
How should GSA manage the workload associated with the potential renegotiation of thousands of MAS contracts across FAS (for instance, should it develop an operational implementation plan for FAS contracting officers)? Given the change in the order of precedence, commercial terms that were accepted by GSA in lieu of solicitation provisions and clauses no longer control. For prudent MAS contractors that seek the advice of counsel, a foreseeable consequence of this significant change likely will be to request that GSA “renegotiate” their contracts in order to clarify the applicability of commercial terms in any existing addenda. This contracting activity poses a significant logistical challenge, as well as potentially a huge new workload for FAS and MAS contractors.
How will GSA and contractors negotiate adequate consideration for the material change in the allocation of rights under MAS contractors? The change in the order of precedence is a material change in contract terms that compels contractors to cede material legal rights. As such, it must be executed through a bilateral modification to the MAS contract after negotiation and agreement on adequate consideration.
What impact will contractors’ renegotiated consideration have on the efficacy of GSA’s flagship program?Over the years, GSA has suffered unfair criticism of its schedule pricing. Readers of this blog know the great effort the Coalition has taken to defend the agency, in particular, to clarify that commercial pricing comparisons should be made to prices on actual task orders placed against the schedule, not schedule list prices. It is not clear to what extent the price impact caused by the class deviation will make associated products unattractive relative to the commercial counterparts of those products.
How does this change impact small business concerns? Moreover, at a time when DoD and OMB are seeking greater access to innovation, how will GSA attract new commercial firms to the GSA federal market given the low priority given to standard commercial terms and conditions? Due diligence requires an understanding of the impact of these changes as barriers to entry in the government space. To the extent that changes in the order of precedence create a negative incentive for new commercial firms entering the MAS marketplace by increasing uncertainty and risk and thereby reducing confidence and opportunities in the federal market, they undermine the government’s stated goal of increasing access to innovation.
How does the deviation square with statute and regulation governing commercial item acquisition, and does OMB countenance this position?As the Coalition stated in its letter, the Federal Acquisition Streamlining Act of 1994 (FASA) requires the head of the agency to ensure, to the maximum extent practicable, that commercial items may be procured to fulfill agency requirements, that requirements be modified so they can be met by commercial items, that specifications be stated to enable offerors to supply commercial items, and that policies be revised to reduce the impediments to acquiring commercial items. See 41 U.S.C. 3077. FASA is implemented at Part 12 of the FAR. FAR 12.301(a) provides, in part, that “contracts for the acquisition of commercial items shall, to the maximum extent practicable, include only those clauses required by law or “[d]etermined to be consistent with customary commercial practice.” FAR 12.302(c) precludes the inclusion of any term or conditions in a solicitation or contract for commercial items in a manner that is inconsistent with customary commercial practice for the item being acquired unless a waiver is approved in accordance with agency procedures.”
Is there an alternative to the current approach that meets the government’s needs while maintaining the preference for commercial terms and conditions? At the Coalition’s recent Fall Conference, it became clear that GSA and vendors were not divided over safeguarding the government’s interests in the issues identified. Rather, their disagreement is a matter of approach. To the extent that less intrusive, commercial approaches to addressing GSA’s concerns exist, GSA should consider them.
The Coalition strongly believes that there is a sound, efficient, and effective way to address the concerns that prompted the class deviation, and it stands ready to discuss alternatives with GSA and OMB.