Balance. In order for the procurement system to deliver best value to the taxpayer, it must have balance. That is, the contracts, task orders and blanket purchase agreements (BPAs) must be structured to deliver “the goods” to both government and contractors. Government wants successful contract performance at a reasonable price. Industry wants to make a reasonable profit. Across the procurement system we can see agencies and contractors struggling to find that balance. Take the case of BPAs established under Federal Supply Schedule (FSS) contracts. The September 2009 Government Accountability (GAO) report entitled “Agencies Are Not Maximizing Opportunities for Competition or Savings under Blanket Purchase Agreements despite Significant Increase in Usage” indicates that agencies can achieve additional savings through improved management of FSS BPAs. In this regard, GAO’s recommendations focused primarily on putting in place additional “competitive” procedures for the establishment of BPAs in FAR 8.4. The result is the current BPA coverage in the March 16th FAR 8.4 interim rule—for your consideration please review the Coalition’s May 16th comments setting forth our members’ concerns regarding the new FSS BPA rules.
When I reviewed that GAO report, one recommendation struck me. On page 24, GAO recommended that in order to assist agencies in requesting and obtaining discounts when establishing FSS BPAs, GSA should “include in the guidance on GSA’s website specific language which agencies can use in their requests for quotation to clearly request discounted pricing when establishing schedule BPAs.” This recommendation stemmed from GAO’s observation that in some cases agencies had failed to seek price reductions when establishing FSS BPAs. However, this recommendation is incomplete. Merely asking for a discount is not enough.
In order to create a “balanced” situation that ultimately serves the taxpayer, agencies need to think in terms of the economic incentives that drive industry. Requirements should be clearly stated and BPAs should be structured to incentivize contractors to provide additional discounts. That is, agencies should include firm commitments on the volume of purchases that will flow through the BPA. Indeed, when I was at GSA I advised customer agencies to consider including a guaranteed minimum in an FSS BPA in order to incentivize contractors and increase competition. Too often, current FSS BPA practice is for agencies to ask for “everything” (e.g. data/transactional reporting requirements, additional price discounting, and technical performance requirements) while essentially promising nothing in terms of guaranteed work. Balance is lost and in the long run this practice will reduce competition. Clear guidance is needed.
In thinking about new guidance for use of FSS BPAs, a Myth-buster thought hit me: why not put together a top ten list of best practices and share it with the procurement community? And that is what I propose to do. The Coalition has a new action item—we will develop a top ten list of best FSS BPA practices. Please contact Aubrey Woolley at email@example.com with any suggestions as to what should be included.
This Best FSS BPA Practices list will be driven by Coalition members, though we welcome other interested parties including GAO, OFPP, GSA, VA and government customers to participate. Having cross-cutting participation from the procurement community is a real “Myth-buster.” Once the initial Best FSS BPA Practices list is developed the Coalition will offer the list to GSA and the VA to assist their customers and keep it updated based on continuing procurement community input.