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Section 876 Implementation: Exploring the Possibilities

Blog readers will recall that, over the summer, we highlighted GSA’s issuance of an Advance Notice of Proposed Rulemaking (ANPR) regarding the implementation of Section 876, “Increasing Competition At The Task Order,” of the 2019 National Defense Authorization Act.  That section authorizes civilian agencies to award multiple award contracts for services acquired on an hourly rate basis without considering price as an evaluation factor at the contract level.  For GSA, this authorization of authority includes services pricing under the Schedules.  The Coalition filed comments on this ANPR, which can be found here.

In furtherance of the implementation of Section 876, GSA has been hosting a series of listening sessions.  GSA should be commended for holding these sessions, as they promote the exchange of information and further the collaboration between government and industry that is so helpful to improving the efficiency of the acquisition process.  This week, Coalition President Roger Waldron was privileged to participate in one such session, and he provided details on the benefits of the section, as well as what implementation should look like and implementation challenges.

At the outset, it is important to acknowledge the benefits of Section 876.  Increasing competition at the task order level expands government access to innovation, and, by so doing, allows the government to leverage the forces of the dynamic marketplace to provide best value support/pricing to agencies and their missions.  It reduces duplicative, formulaic, and burdensome administrative activities, thus reducing barriers to market participation by firms of all sizes, including small businesses.  Also, by focusing on prices at the order level where requirements are most definitized, it enhances the realism of prices received through competition, thereby unburdening GSA contracting officers to focus on other key contract issues, like cybersecurity and supply chain assurance.  In sum, Section 876 affords government the opportunity to avoid what our friend, Steve Schooner at GW Law School, has called the “Tyranny of Low Price.”

It should be noted that the implementation of this authority has been pending for two years.  The Coalition thus believes the time is ripe for GSA to embrace Section 876​ on its own terms, i.e., for services that are priced firm, fixed; aggregate team-based; T&M; and labor hour.  All of these methodologies represent pricing based on units of time, as ​envisioned under the statute.  In implementing the section, GSA should be guided by key drivers; specifically, the approach should:

  • Be simple and understood easily by all parties
  • Leverage the success and benefits of Schedules consolidation
  • Require no price or cost submission prior to the issuance of an order
  • Eliminate the PRC
  • Best value and fair and reasonable pricing driven by competition at the order level

So too, the authority should be implemented across the spectrum of services contracting, including commercial offerings.  There is nothing to be gained by any further delay with half-steps, like piloting implementation.

As noted in the recently released Coalition report, “Overview of Approaches to Acquisition Management Reform and Digital Transformation,” the government needs to improve market participation incentives for the industrial base in order to access the innovation necessary to address near-peer challenges in the current environment.  It can do so by addressing anti-competitive practices that could drive companies away, such as formulaic, outdated pricing regulations​, superfluous cost build evaluations​, and generally arbitrary price negotiation positions​ that serve process uniformity at the expense of needs-focused contracting, risking a commercial “brain drain” from  the Schedules.  For this reason, the Coalition believes the implementation of the Section 876 authority as discussed herein is a solution whose time has come, and we are gratified to see GSA endeavoring to make it a reality. ​

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