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When is “Re-opening” a GSA Schedule Really Closing a Market Channel for Commercial Offerings and Small Businesses?

In 2010, the Federal Acquisition Service (FAS), in the name of “Demand Management,” closed Multiple Award Schedule (MAS) 75 – Office Products and Supplies (Schedule 75) to new offers.  Under FAS’s Demand Management strategy, Schedule 75 was closed because of the high number of contractors and corresponding program management costs, which effectively resulted in supplier suppression.  At that time, FAS stated that the schedule would reopen in 24 months.

Over six years later, however, Schedule 75 remains closed to new offers, limiting market access for new firms (especially small businesses) who hope to utilize the MAS program as a key channel to entry into the federal market.  The six-year closure also is impacting long-standing GSA industry partners under Schedule 75 whose contracts are expiring with no opportunity to submit a new offer to maintain contract coverage.  As a result, former, medium and large Schedule 75 contractors are and will continue to be locked out of the Schedule 75 marketplace.


Schedule 75 Request for Information

On December 15, 2016, FAS issued a Request for Information (RFI) setting forth its acquisition strategy for “reopening” Schedule 75.  According to this strategy, FAS will not reopen the entire schedule to new offers.  Rather, it will create a new Enhanced Special Item Number (SIN) 75 2XX that will “incorporate all of the Best in Class (BIC) features of FSSI OS3 while using the robust structure of MAS 75.  FSSI OS3 has achieved enhanced vendor requirements, improved pricing and savings, data spending tracking capabilities and vendor accountability.”  See page 2 of the RFI.

The new Enhanced SIN 75 2XX, incorporating the BIC features, will be open to new offers, but only for a limited period of time every two years.  At the same time, the current SIN 75 200 – Products, and SIN 75-210 -Services, will merge into a new revised SIN 75 200.  The revised SIN 75-200 and 75 85 – Restroom Products will remain closed to new offers.

On January 17, 2017, the Coalition submitted comments responsive to the RFI on behalf of its members.  The Coalition strongly supports immediately reopening all current Schedule 75 SINs and reestablishing continuous open seasons for new offers.  Continuous opens seasons promote increased access to the commercial market, increased opportunities for small business concerns, and the benefit of increased competition and innovation for the government over the long term.


The Ramifications of Enhanced SIN 75 2XX

According to the RFI, the new Enhanced SIN 752XX will “include all of the enhancements that made FSSI OS3 a Best in Class solution” and will “consolidate FSSI OS3 into one acquisition vehicle.”  In addition to the proposed “enhancements” laid out in the RFI, the new SIN 75 2XX will charge customer agencies a two percent Contract Access Fee (CAF) rather than the current .75 percent Industrial Funding Fee.  The proposed two percent fee for SIN 75 2XX mirrors the current OS3 fee of two percent.  The acquisition strategy creating SIN 75 2XX raises a number of questions among GSA’s industry partners.

First, as a threshold matter, continued use of the term “Best In Class” raises procurement policy and legal questions highlighted in the Coalition’s comments on the proposed Office of Management and Budget Circular No. A-XXX, Implementing Category Management for Common Goods and Services.  The “Best in Class” criteria outlined in the draft circular focused on a series of process/reporting requirements that are inconsistent with commercial practices and add little or no value to contract performance.  Moreover, the draft circular prompted significant questions regarding OMB’s legal authority to designate Best in Class contracts for mandatory use.   In addition, designating “Best In Class” contract programs without industry partner input/feedback regarding commercial best practices, undercut the effectiveness and legitimacy of such an approach.

Second, the market has spoken, and the current Schedule 75 remains the contract vehicle of choice as compared to OS3.  While OS3 has been in place the last two years, approximately 80 percent of the total dollar volume of office supply purchases through GSA have been via Schedule 75.  OS3 has accounted for approximately 20 percent.  Perhaps it is the two percent fee.  Perhaps customer agencies do not see the value in the “enhancements” included in OS3.  Perhaps Schedule 75 provides greater choice, competition, and value.  Perhaps it is all three!

Third, through the proposed Enhanced SIN 75 2XX and the continued closing of the rest of Schedule 75, FAS appears to be attempting to centralize and define the market for both customer agencies and contractors.  Following the approach to its logical conclusion, the only viable offerings via Schedule 75 will be through SIN 75 2XX with its “enhanced features” and higher fee structure.  Here, GSA is defining requirements for customer agencies rather than allowing customers and contractors independently to define, compete, and perform requirements at the task order level that deliver best value consistent with each customer agency’s unique environment.  The proposed creation of Schedule 75 2XX appears to continue an effort to transform the Schedules program into a market centralizer rather than a market facilitator.

Next Wednesday, March 15th, the House Subcommittees on Information Technology and Government Operations will be receiving testimony during their hearing titled, “Reviewing Challenges in Federal IT Acquisition.”  Among the potential topics for discussion may be the relevance of GSA’s MAS program in accessing the commercial marketplace to deliver best value mission support for customer agencies.

The Coalition strongly believes that the unique statutory and regulatory framework of the MAS program provides a unique, powerful capability to streamline processes and embrace commercial best practices.  The Coalition stands ready work with all stakeholders towards that goal.

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