The more things change the more they stay the same. That’s how I would describe the MAS policy addressing materials and/or other direct costs (ODCs) on task orders for services under IT Schedule 70, MOBIS, or the other service schedules. Almost eight years after the Services Acquisition Reform Act of 2003 authorized time and material and labor hour contracts for commercial services and almost 5 years since FAR implementation, GSA is still struggling with to how handle materials and ODCs on its commercial services schedules. As a result, agencies and, in some cases, contractors are increasingly turning to other contract vehicles that provide more flexibility regarding the handling of materials and ODCs at the task order level.

Currently, for some schedules, GSA requires materials and ODCs to be specifically listed and priced at the contract level in order to be included in a task order. This approach increases the complexity and decreases the utility of the MAS program as it creates a bifurcated ordering system. Under GSA’s approach, if a material or ODC is not listed on the contract, it must be acquired using open market competition procedures rather than through MAS ordering procedures. This is an overreaction to ATA Defense Industries v. U.S., 38 Fed Cl. 489 (1997) and Pyxis Corp., B-282469 et al., July 15, 1999, 99-2 CPD ¶ 16. These two bid protest decisions basically held that items not on GSA’s MAS contract must be acquired in accordance with the open market competition requirements of CICA rather than the MAS ordering procedures. GSA’s apparent interpretation of these cases is that all materials and ODCs must be specifically listed and priced at the MAS contract level.

Ancillary materials and ODCs are integral to the typical services solution. Under most indefinite quantity contracts these items are usually referenced in a general statement describing the overall scope/operation of the contract. Reimbursement and identification are then governed by the standard FAR clauses at the order level. This approach is sound procurement policy, balancing competition with cost effective procedures for acquiring needed services. Indeed, GSA does not require specific listing and pricing at the contract level for all materials and ODCs under other government-wide contracts such as Alliant. Why treat the MAS program differently?

Simply put, the solution to this issue is a FAR clause that is already in many MAS contracts! FAR 52.212-4, Contract Terms and Conditions—Commercial Items, Alternate I (Oct 2008) addresses materials and ODCs under commercial item indefinite quantity service contracts. Under the clause, specific itemization and pricing of all materials and ODCs at the 9

contract level is not required. With regard to ODCs, the insert at FAR 52.212-4(i)(1)(ii)(D)(1) instructs in part that “If this is an indefinite delivery contract, the Contracting Officer may insert ‘Each order must list separately the elements of other direct charge(s) for that order’, or if no reimbursement for other direct costs will be provided insert ‘None’.” Similarly, the clause provides for the identification of the material handling costs at the order level. See FAR 52.212-4(i)(1)(ii)(D)(2). The FAR guidance makes sense. It recognizes that these items are unique to the requirement articulated at the task order competition level. At the same time, the FAR recognizes that these items do not have to be specifically listed and priced at the contract level in order to be within scope.

Moreover, the regulatory history of the FAR 52.214-4 Alternate I demonstrates that the clause was specifically structured to provide flexibility at the task order level for ODCs. The Preamble to the final rule implementing FAR 52.212-4 Alternate I, is instructive. In response to a public comment requesting clarification as to whether the contracting officer awarding the contract or the contracting officer awarding a task order had the authority to determine the method for reimbursing ODCs and indirect costs under indefinite quantity contracts, the Preamble states the following:

As stated in the alternate clause at (i)(1)(ii)(D)(1) and (2) of 52.212-4 Alternate I, the contracting officer awarding the indefinite delivery contract can authorize the other contracting offices to determine how ODC and indirect costs will be reimbursed.

See Fed. Reg. Vol. 71 at 74673, December 12, 2006.

Ironically, at the same time GSA is apparently taking the position that all materials and ODCs must be itemized and priced at the contract level, many MAS service contracts include the FAR 52.212-4 Alternate I with “insert” language described above. Hopefully, GSA will fully embrace the flexibility found in the FAR—flexibility that many other indefinite quantity contracts are currently utilizing—to address ODCs and materials at the task order level.