With contributions from Bill Gormley, Chairman of the Coalition
Roger Waldron is out this week. When I read his prepared Comment of the Week it actually was spot on in regards to addressing the important role that procurement plays in carrying out the mission of our Government. This became very evident in the April 2, 2012 GSA IG Report on Management Deficiency. The report highlights the importance of program managers developing clear requirements and contracting actions being executed properly. The following is Roger’s original comment:
“It is Spring break this week and my family and I are at the Grand Canyon. I have never been before. It is truly an amazing, beautiful and wonderful place. We are truly blessed as a nation with awe-inspiring natural beauty. Being here also really helps put things into perspective! It reminds me that the most important things are always right in front of you: family, friends and community.
With regard to perspective, in my view, the role of the procurement community in the operation of our federal government cannot be overstated. Procurement literally touches every program activity, mission, and arm of government. The infrastructure of government depends upon an efficient and effective procurement system. The keys to an efficient procurement system that delivers best value to the taxpayer are the following:
(1) A highly qualified, professional acquisition workforce;
(2) Sound requirements development;
(3) Contract structures that increase efficiency, competition and access to the commercial marketplace; and
(4) Contract rationalization that eliminates costly duplicative contracts and contract vehicles.
To use football terminology, these are the fundamental “blocking and tackling” of our procurement system. Layer after layer of contract oversight and audit can be imposed on the system, but ultimately, the success of the system in delivering best value to customer agencies is dependent upon these four fundamentals. Over the next four weeks the Comment of the Week will highlight each of these fundamentals.
This week’s fundamental is “Contract rationalization that eliminates costly duplicative contracts and contract vehicles.” At a time of significant budgetary challenges, the federal government and its contractor base can no longer afford contract duplication. On April 5, 2011, the Coalition sent to its member firms a survey addressing contract duplication. The purpose of the survey is to collect data on the costs associated with duplicative contracts for the same or similar services. Duplicative contracts unnecessarily increase bid and proposal costs as well as contract administration and overhead costs for both government and industry, costs that are ultimately borne by the taxpayer. The Contract Duplication Survey provides an opportunity to identify and articulate the impact of duplicative contracts. The information collected from the survey will be used to develop a white paper addressing the costs of contract duplication.
The Office of Federal Procurement Policy’s business case memorandum provides a good first step in addressing contract duplication. In the spirit of Myth-Busters, the next step will be to identify potential solutions and recommendations to reduce unnecessary contract duplication and share them with the procurement community.
We look forward to your responses to the survey and thank you for your participation.”
Roger Waldron, President
A similar message emerges, from Roger’s earlier prepared remarks and the referenced IG Report. That message is that agencies must concentrate on the fundamentals of procurement if they are to maintain efficient and effective procurement systems.
GSA could use this experience as an opportunity to focus once again on the fundamentals of procurement and build a stronger emphasis on the mission of GSA and its role as a leader in the procurement community.
Comments added by Bill Gormley, Chairman and former Assistant Commissioner, Office of Acquisition GSA
The Coalition for Government Procurement welcomes newly named Acting Administrator of the General Services Administration, Dan Tangherlini. Tangherlini comes to GSA from the Treasury Department where he worked as the Assistant Secretary for Management and Chief Financial Officer. In a letter to GSA employees this week, Tangherlini described how he was also a GSA customer while at Treasury and how impressed he was with GSA’s progress as both a service provider and a business partner. “GSA has made tremendous strides to promote efficiency and costs savings throughout the federal government”, Tangherelini wrote.
In addition to serving at the Department of Treasury, Tangherlini was city administrator and deputy mayor of Washington, DC under Mayor Adrien Fenty, and also spent six years in the Office of Management and Budget in the Clinton administration.
Tangherlini plans to continue to work with the GSA team to demonstrate value to customer agencies through improved efficiency and cost-effectiveness – building an even stronger GSA. The Coalition looks forward to working with Acting Administrator Tangherlini to achieve these goals in the best interest of customer agencies and the American taxpayer.
The Coalition is seeking member input on our contract duplication survey. The purpose of the survey is to collect data on the costs and impacts on member companies 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 Thurs., April 19.
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.
In a press statement released on March 29, the Administration announced the “Big Data Research and Development Initiative.” According to a blog post on the Office of Management and Budget’s website, the $200 million initiative will “accelerate the pace of discovery in science and engineering, strengthen our national security, and transform teaching and learning by improving the government’s ability to extract knowledge and insights from large and complex collections of digital data.” The blog post challenges industry, research universities and non-profits to partner with the Administration in this new effort to “glean discoveries from huge volumes of digital data.” The initial collection of agencies supporting the new initiative includes the Departments of Defense and Energy, the National Science Foundation, the National Institutes of Health, and the US Geological Survey.
On March 30, GSA launched the Sustainable Supply Chain Community of Practice. The initiative will focus on sharing information between government, industry, non-profits, and academia on how to best leverage supplier relationships to reduce environmental impacts throughout the supply chain. The Sustainable Supply Chain community will initially focus on six sectors: information technology, professional services, waste management, furniture, food concession services, and building materials. These sectors were identified based on a federal spend/output life cycle assessment (LCA) study, which ranked these sectors as having the most potential environmental impact on the federal supply chain. By becoming more sustainable, the federal supply would become more sustainable.
The Sustainable Supply Chain community will share corporate social responsibility reports, supplier and sustainable supply chain engagement and education materials, and individual sustainable supplier code of products. Participants will engage on data.gov.
On March 26, the Office of Federal Procurement Policy (OFPP) released a memo providing guidance to agencies’ FAIR Act submissions for FY2012. The Federal Activities Inventory Reform (FAIR) Act of 1998 and Office of Management and Budget (OMB) Circular A-76 require agencies to prepare inventories of the commercial and inherently governmental activities performed by their Federal employees. OMB expects that two recent developments will improve agencies’ workforce inventories, allowing them to develop the quality and composition of their workforce and mission capability. The Office of Federal Procurement Policy Letter 11-01, Performance of Inherently Governmental and Critical Functions and the preparation of service contract inventories pursuant to section 743 of the Consolidated Appropriations Act of FY 2010 (P.L. 111-117) will help agencies “identify more accurately” activities that should be performed by federal employees and “integrate Federal employee and service contractor inventories to support balanced workforce analyses.” OMB makes a number of recommendations for agencies to support their workforce inventory efforts including the classification of activities and the implementation of a pilot program for product and service codes.
The Office of Management and Budget (OMB) is initiating a new effort to track and consolidate spending on federal IT products and services. In a recent blog post, U.S. Chief Information Officer Steven VanRoekel explained that although agencies have improved efforts to “adopt private sector practices, reduce the IT infrastructure footprint, and innovate with less, the government still faces an unacceptable amount of duplicative and low-value IT.”
In order to further address this issue, OMB is establishing a new tool for agencies to use to assess the current maturity of their IT portfolio management process and make decisions on eliminating duplication across their organizations. The new tool called “PortfolioStat” was officially announced in a memo signed by both Mr. VanRoekel and Acting Director of OMB Jeff Zients. Agency heads will conduct an annual agency-wide IT portfolio review within their respective organization. According to the memo, a PortfolioStat session is a face-to-face, evidence-based review of an agency’s IT portfolio. These reviews might include data on commodity IT investments, potential duplications and investments that do not appear to be well aligned to agency missions or business functions.
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.
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.