This week’s blog post continues the series on “Urban Myths” associated with the General Services Administration’s (GSA’s) Multiple Award Schedule (MAS) program. There is some belief that the best way to help small business on the GSA schedules is to apply small business set-aside rules to the program. Historically, that has not been the case. Over the last decade the GSA schedules program has out-performed open market procurements in providing opportunities for small business with over one-third of the dollar value of MAS orders going to small business concerns. While set-asides can be an effective tool, the historical performance of the GSA schedules demonstrates the right agency incentives combined with streamlined, flexible ordering procedures leads to greater opportunity for small businesses. In our view, imposing set-asides or otherwise limiting the flexibility of agencies using the GSA Schedules program could result in the unintended consequence of hurting small business.
Until recently, the Federal Acquisition Regulation (FAR) did not incorporate formal small business set asides into GSA Schedule ordering procedures. Instead, the FAR offered more general guidance that enabled agencies to structure preferences for small businesses. Specifically, FAR 8.4 provided only that-
1. Ordering activities could consider socio-economic status when identifying contractors for competition for an order or BPA and should consider, at least one small business when available on contract
2. Over the micro-purchase threshold, ordering activities should give preference to the items of small business concerns when two or more items at the same delivered price will satisfy the requirement and
3. Orders placed against schedule contracts may be credited toward the ordering activity’s small business goals.
Using these guidelines, federal agencies issued task and delivery orders to small business concerns that equate to more than 30% (or about $15 billion in sales) of the GSA/VA Schedule revenue.
In November 2011 the FAR Council issued an interim rule implementing Section 1331 of the Small Business Jobs Act of 2010. As a result, consistent with the statutory language, FAR 8.4 was revised to provide that agencies, at their discretion, could set-aside orders for small business under the GSA Schedules program. In May of this year SBA published a more detailed rule that provides additional procedures and requirements for set-asides on all multiple award contracts including the GSA Schedules program. The SBA’s proposed rule applies new complex procedures to the GSA Schedules including definitions and processes that previously applied only on formal set-aside programs. For example, in order to qualify as a “small” on a set-aside a concern must meet the size standard and must perform more than 50% of the work. A small concern on a very large requirement that performs only 45% of the work on a task order would no longer be eligible for award if the Schedule order were set-aside. These complex new procedures may actually make it more difficult to use small businesses via the GSA Schedules. Another unintended consequence will likely be a division of the marketplace as customer agencies find it easier to use contracts that are exclusively one type of contractor (e.g. small, medium or large) which will hurt small businesses under the GSA Schedules over the long term . The GSA Schedule is a commercial item program that empowers market forces to incentivize behavior. There are market forces that encourage collaboration between small, medium and large businesses. Small businesses are nimble. Small businesses are innovators. Small businesses are the first adopters of our economy, flexible enough to bring the workforce to the table as needed and leaders in many vital niche markets. Large businesses provide resources and infrastructure needed for successful major government projects. Medium sized businesses bridge the gap between bringing characteristics of both small and large business concerns to the federal marketplace. The current system of preferences does not adequately marshal these forces.
The Coalition for Government Procurement believes that there has never been a better time for government and industry to look for new and creative models to drive positive change for small business contractors and simplify preference programs for government. On October 30, the Coalition will host a Small Business forum entitled New Strategies for a Changing Environment. The event will feature a presentation by John Shoraka, Associate Administrator for Government Contracting and Business Development at the SBA. There will also be a panel of successful small businesses to include a small business reseller, a small business manufacturer and a large business that makes utilization of small business a corporate priority. The panel will be moderated by Joseph Hornyak, Partner, Holland and Knight whose practice includes a focus on small business. The panel will address the topic Small and Large Business Collaboration in the Federal Market – What Works and What Needs to Work Better. The Coalition hopes this panel will serve to jumpstart discussion of new models for utilizing small business concerns with the ultimate objective of an acquisition system that quickly and efficiently responds to agency needs and works well for businesses of all sizes. Click here for information about the forum.
Currently our GSA Open Competition Federal Strategic Sourcing Procurement proposal is being considered by the House Small Business Committee. Below I will explain our GSA Open Competition Procurement solution vs GSA’s current non-competitive procurement solution.
Unknown to many lawmakers GSA is currently eliminating all competition per schedule and replacing 1,000s of vendors with only 10 or 15 vendors per schedule. Example Schedule 75 Office Supplies – Currently most agencies are mandated to buy from only 15 vendors including 2 big box retailers, namely Staples and Office Depot, both which have been fined by GSA for fraudulent charges under 31 USC 3729 and SEC charges and were fined and penalized for millions of dollars.
Six Hundred Schedule 75 GSA Office Supply Vendors have lost substantial GSA government sales, including 1000’s of Schedule 36 and Schedule 70 vendors. Go to : http://www.stopfssi.org/testimonials.html to view business loss testimonials and http://www.govexec.com/contracting/2012/06/small-businesses-may-get-left-out-gsa-procurement-modernization-lawmakers-fear/56181/ . This will eventually happen to 40 schedules eliminating up to 18,000 current vendors via replacing them with only a handful of suppliers. Government agencies have mandated the use of GSA’s non-competitive procurement solution, meaning the most purchased items/services must be bought from these very few BPA Schedule Vendors. GSA calls this procurement solution Federal Strategic Sourcing Initiative or FSSI. GSA’s non-competitive procurement solution may become mandatory – go to : http://www.federalnewsradio.com/552/3029477/OMBs-Zients-hints-at-making-strategic-sourcing-mandatory – News media is starting to pick up on this uncompetitive $70 Billion dollar GSA procurement solution. This can be confirmed via googling this subject matter.
As a concerned GSA Contractor Vendor I want to present a GSA Open Competition Strategic Sourcing Initiative giving unlimited GSA vendors the opportunity to sell to the government vs GSA’s current non-competitive FSSI Procurement Solution that eliminates competition giving only a few selected vendors the opportunity to sell to the government. GSA’s procurement solution FSSI is in violation of the Small Business Jobs Act of 2010 and I am certain our Open Competition procurement solution saves the government more money vs GSA’s current FSSI procurement solution.
I know the government needs to show savings on visible paper for all to see.
Our open competition Federal Strategic Sourcing Initiative can fulfill this without additional taxpayer dollars and display and save more visible taxpayer dollars on paper vs GSA’s current FSSI anti-competition solution that creates oligopolies and monopolies.
Our open competition procurement solution does not require taxpayer money and it is funded via putting all nonessential GSA projects on hold or laying off given GSA employees or increase or maintain current GSA vendor schedule fees. No additional taxpayer dollars are required for this project.
Competition works and please give us the opportunity to present our OPEN COMPETITION Federal Strategic Sourcing Initiative Procurement Solution – Our Strategic Sourcing procurement plan gives visible cost savings in a competitive environment
We call this procurement solution:
The 21st Century Open Competition Federal Strategic Sourcing Initiative also know as OCFSSI
Our procurement solution is only a foundation base to work from and should be changed, tweaked and enhanced via an open inclusive democratic process.
Please allow experts to analyze and compute savings vs GSA’s current non-competitive procurement solution
Below is a summary of our 21st Century Procurement Solution :
On an annual basis each company that holds a GSA Schedule Contract should be allowed to bid on each item/service in given schedule so the government can obtain the lowest cost/highest quality per GSA contractual Schedule bidder. The winning BPA GSA vendors should be rewarded with 5% of the total sales and the non-winning BPA vendors obtain 95% of total sales. Via GSA software automation and/or manpower the non-winning BPA vendors cannot upload given item(s) to gsaadvantage.gov or offer given item to the government unless they can provide a lower price or match the winning vendor item prices. Hence, reward the winning bidder with 5% total sales of a particular item/service schedule but allow other non-BPA-competitors to offer a lower or same price entailing 95% of total sales.
This can be accomplished via 2 different procurement solutions See a) and b) below :
a) If GSA has the automated software and manpower sophistication, hence GSA can reward given winning BPA Vendor with 5% total sales of given item (not total schedule) and non-BPA vendors obtain 95% of item sales (not total schedule). This would incur more savings for the government and simultaneously give all vendors greater opportunities. Again, this depends on GSA’s capabilities.
b) If GSA does not possess automated software and/or abilities to reward BPA’s per item hence during the interim GSA can reward given winning BPA Vendors 5% total sales of given schedule and give non-BPA Vendors 95% total schedule sales. Simultaneously and during this interim GSA would develop software so all GSA vendors at a predictable future date can make bids per item vs per schedule. This per item bid option would save the government an incredible amount of taxpayer dollars.
c) Above option a and option b procurement solutions saves the taxpayers substantially more money vs the current GSA FSSI non-competitive procurement solution. Please allow experts to crunch the numbers, hence comparing our 21st Century procurement solution vs GSA’s current non-competitive FSSI procurement solution.
d) Keep in mind our open competition procurement solution gives thousands of vendors the opportunity to quickly offer new items on the market, services and any new technologies. GSA’s current FSSI procurement non-competitive solution curtails the introduction of new products/services and technologies. It’s simple math. Thousands of open competition vendors vs a hand full of vendors is more beneficial to government procurement needs.
e) Again our open competition solution does not require additional taxpayer dollars.
GSA’s current FSSI procurement solution potentially denies 18,000 companies from selling to the federal government., hence leaving only 10 or 15 companies per schedule selling items to Uncle Sam. Via Economics 101 past experiences a handful of companies vs 10,000s of vendors will eventually create oligopolies & monopolies.
I would like to present more 21st Century Competitive Solutions vs GSA’s current FSSI
Again, our Open Competition GSA procurement solution does not require taxpayer dollars. Our open competition procurement solution is funded via putting all nonessential GSA projects on hold or lay off given GSA employees or increase or maintain current GSA vendor schedule fees. No additional taxpayer dollars are required for this project.
I strongly believe GSA should modify existing software to control buyers rather than eliminating competition via the current GSA FSSI procurement program. If buyer breaks protocol hence buyer would be disciplined. This software project can be done without additional funding. GSA, DoD & NASA can prioritize this software project via existing employed Software Engineers. It takes the will and priority to make this happen. Also, if GSA claims it does not have available software engineers to complete this non-funded task hence, GSA can put all nonessential GSA projects on hold or lay off given GSA employees or increase or maintain current GSA vendor schedule fees. No additional taxpayer dollars are required for this project.
From what I can see there are some really big holes in the procurement process.
1) Via this GAO report http://www.gao.gov/products/GAO-12-705T most purchases were made outside of GSA procurement web site http://www.gsaadvantage.gov. ; A solution to this problem would be take away the buyers PHYSICAL credit card and store the credit card information online via http://www.gsaadvantage.gov ; This also protects the credit card # and information from possibly being compromised. Again this software project can be done with no additional funding. Amazon.com is a perfect example if you want to see how this works. I know the government is not a company but I am certain GSA has great software engineers to accomplish this task via a top priority and no additional funding software project. For open market purchases buyer currently utilize fbo.gov and/or other existing procurement sites. The same projects can be accomplished via these sites.
2) An independent software company should be allowed to screen scrape information from gsaadvantage.gov to prove selected FSSI Vendors “DO NOT” offer the lowest prices/ best quality.
3) Via Schedule Vendor uploads develop back end software to monitor and reject over-priced items. Example a box of paper should not sell more than $50 hence boxes of paper selling for more than $50 would be red flagged hence denying this item upload to gsaadvantage.gov. This is how it works : GSA would provide prices of winning BPA vendor to all non-winning BPA schedule vendors. The winning BPA vendor (obtaining 5% of GSA sales) would set the price per item, hence all non-BPA vendors (obtain 95% of GSA sales) must offer the same or lower price of given winning BPA vendor else be red flagged hence denying given item(s) upload to gsaadvantage.gov. In this open competition environment our OCFSSI procurement solution would stimulate incredible competition and government savings. GSA software engineers would need to create software to make above a reality. Top-notch software companies may be required to assist GSA software engineers.
4) GSA does not buy in bulk for distribution purposes. Each agency has 100’s or 1000’s of government credit card holders. Most purchases are only a couple hundred dollars up to $3,000 on rare occasions. Most government credit card holders make their purchases via gsaadvantage.gov. It is totally illogical to force these government credit card holders to limit their vendor selection. Gsaadvatage.gov should be a highly competitive environment with GSA respecting The Small Business Jobs Act of 2010, Competition in Contracting Act of 1984 (CICA), and many unmentioned laws, regulations and GSA Contractual Vendor agreements.
5) GSA claims its employees are overworked and can no longer handle additional and/or existing vendors. Solution : All existing and future employee human tasks and operations should be analyzed via GSA’s Software Engineers to automate given human tasks. This would be an ongoing process even when this automated human task software assignment is completed hence automating any possible future human tasks. It may be possible to handle unlimited vendors and buyers once this project is completed. Keep in mind this has a double sided government savings benefit. GSA will be able to maintain an infinite number of vendors in a open competition environment and simultaneously eliminate numerous GSA employees. Again this can be a non-funded project as explained above.
6) I strongly believe an independent software company should be given the opportunity to present additional 21st Century solutions hence enhancing our 21st Century ALL AMERICAN Open Competition Federal Strategic Sourcing Initiative also know as OCFSSI.
7) Reduce the number of schedule solicitations. Currently GSA claims it costs $3,000 per year, per contract to maintain each contract and numerous GSA employees. 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. Also all human manual work should be analyzed via GSA software engineers for automation and efficiency.
8) Lawmakers should investigate if GSA’s software is awash in horrible spaghetti software code making it virtually impossible to make necessary modifications to move this agency into the 21st century. Hiring competent small business software companies would be the logical choice to fix this problem. Again, Our Open Competition GSA procurement solution does not require taxpayer dollars. Our open competition procurement solution is funded via putting all nonessential GSA projects on hold or lay off given GSA employees or increase or maintain current GSA vendor schedule fees. No additional taxpayer dollars are required for this project.
9) It is this writer’s belief FSSI is nothing similar to Corporate volume purchasing.
Example lets take Walmart. They currently have 66,000 vendors and counting each day. FSSI eliminates virtually all competition with possible oligopoly price fixing. Keep in mind all vendor prices are available via gsaadvantage.gov Giving very few companies exclusive selling rights via a long term contract and eliminating competition is not the answer. Why have 1,000s of existing GSA software programs go to waste monitoring a few vendors. GSA needs to enhance existing software to truly and easily maintain a vigorous open competitive market via existing web sites (gsaadvantage.gov and other existing procurement sites). Programmatically controlling the buyer via software is the 21st solution.
Thank you very much for reading and compiling this logical and open competition procurement solution called The 21st Century Open Competition Federal Strategic Sourcing Initiative also know as OCFSSI. I still believe in open competition and American Free Enterprise will always prevail over oligopolies and monopolies. I strongly believe our 21st Century Open Competition Procurement Solution is superior to the current GSA FSSI procurement solution. I am certain the American people would agree with me.
Our Goal :
We want Lawmakers to review and implement our Open Competition Federal Strategic Sourcing Initiative procurement solution. We want Lawmakers to repeal GSA’s current FSSI procurement solution and replace it with our Open Competition Federal Strategic Sourcing Initiative procurement solution. Our open competition procurement solution does not require taxpayer money and it is funded via putting all nonessential GSA projects on hold or laying off given GSA employees or increase or maintain current GSA vendor schedule fees. No additional taxpayer dollars are required for this project.
I am awaiting any questions and/or remarks you may have. Thank you so much for this opportunity to present our Red, White & Blue Procurement Solution.