This month the Comment is focusing on four key fundamentals for efficient and effective procurement. This week’s fundamental is “Contract structures that increase efficiency, competition and access to the commercial marketplace.” In particular, the Coalition continues to highlight this fundamental with regard to the $50 billion Multiple Award Schedule (MAS) program managed by the General Services Administration (GSA) and the Department of Veterans Affairs (VA). Other Direct Costs (ODCs), MAS pricing policies and the role of the Price Reduction Clause (PRC), data collection requirements, Federal Acquisition Regulation (FAR) 8.4, and MAS Blanket Purchase Agreements (BPAs) are all areas the Coalition has addressed in an effort to stimulate even more efficient and effective contracts for customer agencies and contractors.
ODCs remain a top priority. The lack of ODCs on MAS services contracts reduces efficiency and competition for commercial solutions to government requirements. It also leads to contract duplication as customer agencies create alternative contract vehicles to address their needs. It does not have to be this way. The FAR provides a solution through FAR Part 12 and the commercial item clauses. FAR 52.212-4, Alternate I, provides an efficient and accountable method to include materials, ODCs and indirect costs in task orders under commercial item contracts. Importantly, as the Comment has noted before, most MAS service contracts already include the clause. The infrastructure for addressing ODCs is already in place!
With regard to the pricing policies and the role of the PRC, the Coalition welcomes the upcoming 2012 launch of the GSAR rewrite that will include a review of the current pricing policies and procedures. It is time. The current policy was written in the early 1980s! The commercial marketplace is a much different place. Services account for the majority of purchases by both commercial customers and the government. The internet exists! Technology has changed the way companies compete. Just as importantly, the new statutory mandates for task order competition now drive pricing under the MAS program—not the PRC. In response to GSA’s Federal Register notice seeking comment on the paperwork burden associated with the PRC, the Coalition provided two submissions with compelling information on the significant burden associated with the clause. The administrative costs of PRC compliance far outweigh its perceived benefits, especially when competition and requests for price reductions at the task order are mandated by regulation. The new FAR 8.4 competitive ordering procedures trump the PRC.
Data collection requirements are a new area where GSA is seeking to serve its customer agencies. It is an area where we look forward to working with GSA to identify commercial best practices. Lastly, the Coalition believes that the key to effective use of BPAs is the inclusion of volume commitments that create real incentives for contractors to participate while setting sound expectations for the work to come. On all these issues, the Coalition encourages feedback. Please let us know what you think!
A final note, our Spring Conference will include a session with GSA’s Steve Kempf, FAS Commissioner, focusing on the Next Generation MAS program and Jim Ghiloni, OASIS Program Manager. These conversations will provide a great opportunity to learn more about the acquisition strategies and potential contract structures for these two important contracting programs. We look forward to seeing you there!
2. Survey on Contract Duplication
Time is running out to submit responses to the Coalition’s contract duplication survey! Members have one more week before the survey closes. The purpose is to collect data on the costs and impacts associated with duplicative government contracts for the same or similar services. Note: Members will need their Coalition Login information in order to access the survey. If you do not know your login information, please contact Chelsea Wheeler at (202) 331-0975 or email@example.com.
Take the Contract Duplication Survey!
Please respond by COB Friday, April 27.
Survey responses will be used to develop a white paper that will serve as the foundation for a dialogue with acquisition leadership on the impact of contract duplication.
3. “Do Not Pay” Consolidated Website
The White House released a memorandum this week directing agencies to develop plans to use the Do Not Pay online tool. The Do Not Pay website is a one stop resource for agencies to access information from the Excluded Parties List System, the List of Excluded Entities, and other sources, to determine, whether payment recipients are eligible to receive federal funds. Until agency plans are in place to use the new Do Not Pay solutions, contracting will continue to use the Federal Awardee Performance and Integrity Information System (FAPIIS) to establish whether a contractor has the integrity and business ethics to receive a federal contract, in accordance with applicable statutes and regulations.
4. Navy Tightens Procurement Controls
Navy acquisition officials at a Navy League Sea-Air-Space (NAVSEA) conference this week voiced their support for greater centralization and accountability in contracting. For the Navy, tighter budgets mean more control over procurement decisions and limiting programs. Vice Admiral Kevin McCoy, NAVSEA’s commander, explained that approval at the highest level will be required for some contracts. Navy IT acquisition will be changing as well. Changes will include the development of a single approval authority and a formal protocol on procurement decisions for more senior Navy acquisition officials. Rear Admiral Patrick Brady, head of the Space and Naval Warfare Systems Command (SPAWAR), said that “It’s two parts. One is a contractual look. Is the vehicle we’re using as we go out and buy these things the right vehicle? Do we have somebody who looks at all the vehicles that are available? And the second thing is a technical authority look”. Vice Admiral McCoy also said that the Navy is looking to cut acquisition costs from service contracts.
5. Thank You to DLA Document Services, GSA & Members
The Coalition met with the Defense Logistics Agency (DLA) Document Services this week to engage in a Myth-buster’s dialogue with GSA about enhancing document solutions for mutual customers within the Department of Defense (DoD). DLA Document Services provides a full services portfolio ranging from traditional offset printing, through on-demand output to on-line document services. DLA is also moving towards innovative print management services for DoD customers and increasing small business awards. The Coalition thanks DLA Document Services Director, Steve Sherman and the DLA team- Director of Equipment Management Services Scott Peiffer, Chief of Contracting Chuck McNelley, and Chief of Operational Contracting Steve Hawkins for hosting the meeting. We would also like to thank GSA’s Jack Wise, Director of the Mid-Atlantic Office of Regional Acquisition Operations, the Schedule 36 team, the Coalition’s Imaging Equipment Chair Allan Essenfeld with Sharp Electronics, and all the members who participated and shared their expertise. We are looking forward to engaging further with DLA and GSA Schedule 36 in support of DLA Document Service’s tradition of world-class performance for the DoD customer.
6. False Claims Act Forum Recap
On Wednesday April 18, the Coalition hosted a forum, GSA’s MAS Program and the False Claims Act: Pitfalls and Practical Advice, featuring discussions by two panels of attorneys who advise Schedule contractors and who also are involved with cases and investigations where the civil False Claims Act (“FCA”) has been used to enforce compliance with terms, such as pricing terms, of Schedule contracts. The first panel included:
• Jason Workmaster of McKenna Long & Aldridge, who provided an overview of the key elements of the FCA, and
• David Dowd of Mayer Brown, who explained the scenario under which an FCA case involving pricing issues may typically arise.
The second panel discussed how and why FCA investigations arise and are pursued, how the lawyers for whistleblowers (known as qui tam relators) develop their cases, how the Inspector General and the US Department of Justice interact in investigating and pursuing (or declining) such cases, and how contractors defend and settle such cases. The second panel consisted of:
• Marcia Madsen of Mayer Brown, who moderated the panel and explained how the investigative process works, how cases are defended, and the importance of compliance;
• Christopher Mead of London & Mead, who discussed what considerations are involved in bringing a case on behalf of a qui tam relator, how the cases are pursued, and how the interaction works with the Government;
• Keith Morgan, Assistant United States Attorney for the District of Columbia, who discussed how his office reviews and makes decisions about these cases, and how his office works with the Inspector General, main Department of Justice, and relator’s counsel in investigating and developing the cases; and
• Jack Horan from McKenna Long, who responded to the points made by Mr. Mead and Mr. Morgan in the context of approaches for defending and settling such cases.
The discussion was lively and showed both the need for compliance and the impact on contractors of involving both qui tam relators and federal law enforcement authorities in enforcement of complex contract provisions.
The Coalition would like to thank all the speakers for their hard work on this event. We look forward to continuing the dialogue on this topic and other compliance issues of importance to our members.
It’s Getting Complicated – The MAS Program’s “Simplified” Acquisition Process
By Phil Seckman, Partner, McKenna Long & Aldridge
A March 2, 2012, final rule requiring competition for certain orders placed under Federal Supply Schedule (“FSS”) contracts increases the burdens on agencies before schedule orders can be placed. The trend toward increased complexity is eroding GSA’s ability to legitimately tout the MAS program as a simplified acquisition process. These developments may not all be bad for contractors, however. With increased competition, the basis for the Price Reduction Clause (PRC) is arguably similarly eroding.
The final rule implements Section 863 of the NDAA for 2009 (Pub. L. 110-417) as well as a March 4, 2009, memorandum issued by President Barack Obama, and makes changes that are reminiscent of the DOD specific changes required by the 2002 NDAA (Pub. L. 107-107 § 803). While these changes reflect the government’s commitment to the fundamental procurement policy that views competition as the best means of ensuring the government is paying fair and reasonable prices and achieving best value outcomes for each tax-payer dollar, the changes ignore that in the MAS context schedule contracts are awarded with prices that have already been found fair and reasonable, based upon the contractor’s disclosure of its commercial sales practices, and orders placed against those contracts were already considered competitive.
Under the new rule (with limited exceptions), the government must publicize each intended purchase under a multiple-award contract that will exceed the simplified acquisition threshold (including a work description and bases for selection) on e-Buy or FedBizOpps.gov. The notice must be provided either to every contractor under the multiple-award contract offering the supplies or services, or to at least “as many contractors as practicable.” See § 8.405-1(d); 16.505(b)(2)(ii)(D). If fewer than all contractors are notified, no purchase can be made unless three qualified contractors submit offers or the contracting officer determines that no additional qualified contractors can be identified. Additionally, all contractors responding to the notice must be afforded a fair opportunity to make an offer and have that offer considered by the purchaser. Id. Such consideration must be documented as part of the award decision. See § 8.405-1(f)-(g).
These FAR changes are applicable to task and delivery orders placed against multiple-award contracts–including FSS contracts and Blanket Purchase Agreements (“BPAs”) awarded under FSS contracts pursuant to FAR subpart 8.4. The changes are also applicable to indefinite-delivery/indefinite-quantity contracts awarded pursuant to subpart 16.5. They do not, however, apply to BPAs awarded pursuant to FAR part 13.
Agencies traditionally have used the schedules to expedite acquisition, free of many of the requirements of a typical procurement action (i.e., developing the statement of work, publication, competition, etc.). In response to concerns raised by the GAO in November 2000, and in recognition of the shift in federal procurement from supplies to services, a number of changes were made to FAR subpart 8.4 to establish additional procedures when the government acquired services that necessitated the development of a statement of work. See 69 Fed. Reg. 34231 (Jun. 18, 2004). These changes ensured that the MAS program’s simplified acquisition procedures for supplies and many definite scope services would be reasonably balanced against the need for additional protections for services acquisitions where a fixed price or clear scope T&M arrangement was not yet available.
In fact, the great success of the MAS program that began in the late 1990s and that has resulted in the very significant growth in procurement dollars flowing through the schedules is, in large part, a product of the ease with which acquisition outcomes could be achieved while still ensuring the government was receiving a fair and reasonable price. The March 2, 2012, final rule, however, further erodes purchaser flexibility, could prompt agencies to reassess the value proposition of using the schedules, and is very likely to increase bid protests and disputes. These outcomes are antithetical to a simplified acquisition process.
On the other hand, there is a potentially positive development from the Final Rule. The shift toward increased competition for all schedule orders over the simplified acquisition threshold gives new viability to the long-running effort to remove the Price Reduction Clause from schedule contracts.
As noted in the response to comments in the Final Rule, one of arguments advanced was that the old FAR subpart 8.4 ordering procedures and the PRC reflected the balance between competition and price reductions for orders above the maximum order threshold (MOT). Specifically, the PRC recognizes that price reduction remedies are not necessary above the MOT because competition and requests for price reductions were required by the old FAR subpart 8.4. Importantly, the new FAR subpart 8.4 ordering procedures have replaced the MOT with the simplified acquisition threshold and, as such, the PRC should be revised and, indeed, largely eliminated. Thus, Contractors and industry organizations could have a viable new basis to push for regulatory change.
In light of the Final Rule, schedule holders will be well served by carefully assessing how these new notice and competition requirements present new risks but also new opportunities to secure agency orders. The notice requirements could have significant impacts on relationships that schedule vendors have established over many years of successful contract performance. On the other hand, vendors that have traditionally not enjoyed significant market share would be wise to carefully consider how to best leverage this new opportunity to compete for agency requirements that are fulfilled through the MAS program.
8. House Committees Pass Cyber Legislation
On Wednesday of this week, two cybersecurity bills passed committees in the House.
• Federal Information Security Amendments Act (FISAA) (H.R. 4257) was approved by the House committees on Oversight and Government Reform and Homeland Security. FISAA, introduced by Congressman Darrell Issa (R-CA) and Elijah Cummings (D-MD), seeks to update the Federal Information Security Management Act of 2002 and place the Office of Management and Budget at the helm of government information security efforts.
• Promoting and Enhancing Cybersecurity and Information Sharing (PRECISE) Act (H.R. 3674) was passed by the House committee on Homeland Security. The PRECISE Act, introduced by Congressman Daniel Lungren (R-CA), attempts to protect critical infrastructure, expand the role of the Department of Homeland Security (“DHS”), and encourage the sharing of more threat data with the private sector. While the original bill solidified DHS’s role as the central cyber authority, similar to Senator Lieberman’s comprehensive Cybersecurity Act of 2012, it stopped short of instituting an additional DHS-managed regulation for critical infrastructure companies. As introduced, the PRECISE Act maintained the current regulatory scheme while incorporating cybersecurity and critical infrastructure. However, strong opposition required that the most recent version of the bill be “slimmed down” with regulatory provisions removed.
Both bills are expected to come to a vote on the House floor as soon as next week. The House of Representatives is scheduled to consider multiple cyber bills next week in what is being called “House Cybersecurity Week.” Be sure to follow the Coalition on Twitter to receive the latest updates!
9. GSA Management Service Center Industry Days
The Management Services Center (MSC) is conducting its annual Industry Days conference. This event is available for MSC’s current contractors.
MSC invites all current MOBIS, PES, Environmental, LogWorld, Language and Consolidated contractors to attend our annual 2012 Industry Days. This year’s conference will be held in the clouds. Save travel dollars and travel time.
Just bring your coffee, donuts, virtual conference room and join us in the clouds.
Dates: Tuesday, April 24, 2012
Wednesday, April 25, 2012
Time: 8:00 AM Pacific Time to 12:30 PM Pacific Time
Some topics to be covered:
• GSA Updates
• Contract education
• BPAs, CTAs & Ordering Services
• Marketing your contract
• Question and Answer Sessions
For more information, visit the MSC Industry Day webpage. Registration details will be available on the website soon.