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Unpriced Schedules: Now More Than Ever

Coalition members have been strong supporters of unpriced an Schedule, and, over time, their position has become the consensus view in this community.  A testament to this fact is the enactment of Section 876 of the Fiscal Year (FY) 2019 National Defense Authorization Act (NDAA), where Congress provided authority for agencies, including, specifically, GSA and its schedules program (41 USC 152), not to include price or cost as an evaluation criterion when awarding services contracts that are acquired at an hourly rate.  This authority previously had been granted to DoD.

It is no wonder why belief in the unpriced Schedule has taken hold.  An unpriced Schedule carries with it the promise of significant efficiencies, among them:

– Streamlining of contract award to allow for evaluation against an actual requirement;

– Reducing costly, burdensome oversight mechanisms associated with auditing of the award and the Price Reductions Clause (PRC);

– Enhancing competition by allowing customers to focus on speed and need achieved by competition for agency-specific service requirements at the task order level;

– Increasing flexibility in the structuring of contracts by lending itself to common commercial practice; and

– Decreasing barriers to market entry for small businesses and innovative solutions, thus, empowering Federal customers to leverage technology and improve their efforts to meet end mission goals.

A recently-released GSA Inspector General (IG) review of the Contract-Awarded Labor Category (CALC) tool, however, shows that old inefficiencies die hard.  It also illustrates why utilization of the unpriced Schedule is long overdue.

In its report, “FAS’s Use of Pricing Tools Results in Insufficient Price Determinations,” the IG found that “flawed use” of CALC and the Contract Operations Division Contractors Database (CODCD) labor category pricing tool led to price analyses and price reasonableness determinations that were “invalid” and “could result” in services overpayment by agencies.  The report stated,

“[t]he intent of the MAS Program is to leverage the government’s buying power in an effort to provide customer agencies with competitive, market-based pricing. … GSA’s contracting officers are required to seek the best price granted to the contractor’s most favored commercial customer … .”

To emphasize this point, the report described GSAM requirements that guide pricing determinations:

GSAR 538.270-1, Evaluation of offers without access to transactional data, provides that the government is required to seek the offeror’s best price (i.e., the most favored customer’s price) and outlines methods that contracting officers should use to compare the terms and conditions of the MAS solicitation with those of the offeror’s commercial customers.

 Certainly, the MAS Program provides agencies a significant opportunity to leverage the government’s buying power, but the program also seeks to provide an efficient channel through which agencies may obtain commercial products and services quickly.  Pursuant to statute, all responsible sources participate in the program, and orders “result in the lowest overall cost alternative to meet the needs of the Federal Government.” (41 USC 152).  Thus, the program allows the government to access cutting edge technology at the point it becomes available in the market, thereby avoiding having agencies relegated to the status of “lag users,” as they were in the days prior to modern acquisition reform.

Moreover, it is important to consider the entirety of GSAR 538.270-1, which includes key qualifying language:

[h]owever, the Government recognizes that the terms and conditions of commercial sales vary and there may be legitimate reasons why the best price is not achieved.

This qualification reinforces the rationale for leveraging the unpriced Schedule.  By acknowledging that terms and conditions may be distinguishable, not only between commercial solutions, but also between commercial solutions and necessary government requirements, it highlights the ambiguity and complexity associated with contract-level pricing that is detached from government needs reflected in a specific order.  It also compels consideration of the cost associated with auditing such a process and the pricing derived from it.  An unpriced Schedule focuses the price evaluation on actual requirements at the actual time they are being sought in the market.  Such task order competition for agency–specific requirements drives cost-effective, best–value mission support.  Focusing resources on that competition, rather than contract–level prices, is a win–win–win for customer agencies, GSA, and industry partners.

Based on the foregoing, including the benefits of the unpriced Schedule, it remains a mystery why there has been such a delay in implementing an unpriced Schedule.  It appears that now is the time for GSA to move forward with the unpriced Schedule and bring improved efficiency to the MAS Program.  Coalition members believe that the potential efficiencies no longer can remain unexplored.

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