The June 14, 2011 issuance of a proposed rule revising FAR 8.002, Priorities for use of government supply sources, continues a trend of regulatory changes that raise fundamental questions regarding the future direction of interagency contracting. The proposed rule would revise the FAR to eliminate the existing priority for the Federal Supply Schedule program found at FAR 8.002. The proposed rule would create a new FAR 8.004, Use of other sources that would merely suggest potential government sources of supply. The proposed FAR 8.004, instructs that when a requirement cannot be met through a mandatory source, agencies are “encouraged to consider satisfying requirements” through Federal Supply Schedules, Government wide acquisition contracts, multi-agency contracts, and any other procurement instruments intended for use by multiple agencies including Blanket Purchase Agreements under the Federal Strategic Sourcing Initiative (FSSI). “Encouraged to consider” is regulatory speak for do whatever you want so long as you at least “think about” using pre-existing contract vehicles. In the operational world, it is meaningless.

Coming in the wake of the December 13, 2010 interim rule implementing Section 865 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, this is another proposed step backwards for interagency contracting. The Section 865 interim rule requires that for Schedule orders exceeding $500,000, orders through other multi-agency or government wide contracts, or use of another agency’s assisted acquisition services, the acquiring agency must determine that it is the “best procurement approach” to meet the agency’s needs. In our comments on the interim rule, the Coalition observed that the new determination requirement essentially creates a presumption in favor of open market procurements. Unfortunately, the June 14, 2011 proposed rule only serves to reinforce that presumption. To top it off, an additional interim rule revising FAR 8.4. effective May 16, 2011, put in place a set of rules that limit the flexibility and utility of Blanket Purchase Agreements (BPAs) under the FSS program. Indeed, as the Coalition noted in its comments on the FAR 8.4 rule, the new BPA rules likely will make it more difficult for agencies to cost-effectively acquire goods and services to meet program requirements. The BPA rules will likely drive agencies to the open market, duplicating what is already on the Federal Supply Schedule.

This evolving regulatory framework promotes contract duplication. The irony here is that the government is promoting and investing in the Schedules program, as well as other government wide contracting vehicles, while putting in place a regulatory framework that drives contracting officers to conduct more open market procurements. The situation is untenable. Contract duplication drives government and contractor administrative costs higher, including bid and proposal costs. The taxpayer pays more. Indeed, individual companies track literally hundreds of IDIQ contacts across government; contracts that are for the same or similar products and services. And, whenever a new enterprise wide contract pops up, contractors are compelled to compete out of fear of being shut out of a particular federal market. Time and money are wasted in an effort to compete for items that are already on contract.

The Schedules program and the GWACs should be priority sources of supply. The Schedules program includes literally millions of commercial products and services. The GWACs provide comprehensive IT solutions. Indeed, there is no solution (product or service) so unique that it cannot be acquired through the Schedules program or a GWAC. Under these programs task or delivery orders can be tailored to meet an agency’s unique needs and ordering agencies have the authority to manage task order performance. The Schedules program and the GWACs contacts include negotiated, fair and reasonable contract prices/rates with the opportunity for additional task and delivery order level price competition.

Something has to give. Contract duplication remains costly for taxpayers and an unnecessary aspect of our procurement system. We can no longer afford it. The solution is right in front of us. We need to take advantage of it.