In thinking about the Next Generation Schedules initiative, I am reminded of Redskins Coach George Allen’s famous quote “The future is now.” The time for the Next Generation Schedules is NOW. In responding to the budgetary challenges facing GSA’s customer agencies, the federal government will increasingly look to shared services models to leverage resources and save taxpayer money. The Office of Management and Budget’s focus on shared services for information technology is just one example.
The GSA schedules are one of the, if not the most successful, shared services model in government today, accounting for over $50 billion in government purchases annually (includes GSA and VA schedules). Customer agencies rely on the GSA schedules framework to compete and place tens of thousands of delivery and/or task orders each year. It is a framework that allows customer agencies and contractors to focus on requirements and pricing at the order level. However, more can be done via the GSA schedules to create sound, competitive opportunities for contractors that deliver best value to customer agencies and the taxpayer. In my view, that is what the Next Generation Schedules is about—addressing key contracting issues in order to deliver a more efficient and effective program for government, industry and the taxpayer. And for the GSA schedules the “The Future is Now!” There are three key structural contract issues GSA can address now to enhance the value of the program and respond to the budgetary and procurement challenges currently facing customer agencies.
First and foremost, provide “Other Direct Cost” (ODC) capability on GSA schedule service contracts. This important step would allow schedule contractors to more effectively provide comprehensive service solutions to agency requirements through the GSA schedules. Currently the lack of ODCs hinders the effectiveness of the GSA schedules program. It leads agencies to create their own contract vehicles rather than use the schedules. Addressing ODCs will empower agencies to more efficiently and effectively compete and acquire comprehensive service requirements through the GSA schedules. Addressing ODCs now will increase opportunities and competition through the GSA schedules, reduce contract duplication, and deliver greater value to customer agencies and the taxpayer. And it can be done now! Federal Acquisition Regulation (FAR) Clause 52.212-4 (Alternative I) authorizes the acquisition of ODCs and materials at cost through task orders for services under commercial item contracts. The FAR clause is currently in GSA schedule contracts. The addition of ODCs is also the first step in implementing a general cost reimbursement capability for the GSA schedules. A capability that Shay Assad, Director of Pricing, Department of Defense, has asked GSA to address.
Second, reduce the number of schedule solicitations. Currently there are 40 solicitations (GSA and VA). The solicitations should be consolidated down to a handful—with a goal of a single solicitation (contractors could then choose to consolidate their contracts or maintain separate contracts depending on their business models). The current structure of the schedules often forces companies to submit multiple offers for multiple contracts when a single contract would be more efficient. Consolidating solicitations allows companies to efficiently and effectively consolidate contracts rather than having multiple contracts across schedules and business lines. This approach would provide the opportunity for contractors and GSA to reduce costs associated with seeking, obtaining and managing multiple schedule contracts. It is an opportunity to leverage contractor and GSA resources through a more efficient structure. Consolidating schedules would lead to a more efficient and effective platform for market research by customer agencies.
Third, reform the outdated schedule pricing policies. The current schedule pricing policies in the General Services Acquisition Regulation essentially date from the early 1980’s. The 1982 policies were written to address commercial pricing practices for products which made good business sense at a time when the majority of GSA schedule purchases by the federal government were for products. However, today the majority of purchases through the GSA schedules are for services. As a result, preparing, submitting, evaluating, negotiating and awarding a services schedule contract using the current pricing policies is like putting a square peg in a round hole. Moreover, for both services and products, schedule pricing for customer agencies is driven by the second level competition for task orders based on individual agency requirements. The new task and delivery order competition requirements for schedules are the result of statute and regulation. The current pricing policies do not reflect this new dynamic. The current regulations increase the complexity and cost of price negotiations and contract compliance for government and industry. It is time to bring the schedule pricing policies into the 21st century.
We believe these steps align with Administrator Tangherlini’s vision of expanding and improving GSA’s shared services model.