Like many of you, I was out practicing my golf swing this past weekend for the Coalition’s upcoming Annual Joseph P. Caggiano Golf Tournament. As my shots hooked left and sliced right, I reflected upon the many procurement opportunities and reforms that we have seen so far in 2018. Unlike my golf swing, thus far, this year has provided some exciting results for the contracting community, as we have seen many positive and powerful developments for the General Services Administration and the Veterans Affair Department’s federal supply schedules programs. This week’s blog focuses on a few of these developments, including how both agencies will further enhance the schedules to deliver best value commercial solutions to customer agencies through sound business opportunities for contractors.
Raising the micro-purchase and simplified acquisition thresholds
As you know, the Fiscal Year (FY) 2018 National Defense Authorization Act (NDAA) raised the micro-purchase threshold (MPT) for civilian agencies to $10,000¹ and raised the simplified acquisition threshold (SAT) for all agencies to $250,000. Although much of the procurement community’s attention around last year’s NDAA has focused on its e-commerce provisions, the increase in the MPT and the SAT will have an immediate and significant impact in streamlining acquisition operations and supporting agency mission needs.
Specifically, by increasing the MPT and SAT, customer agencies will be empowered with additional flexibility to leverage schedule contracts quickly and efficiently. By streamlining federal procurement through contract vehicles, like the schedules program, customer agencies can achieve a “win-win-win,” where they are able to procure solutions that not only support their mission needs and goals, but are competitively priced, timely, and compliant. Moreover, this increase is a reasonably balanced approach that brings consistency to the contracting process and leverages contract terms to mitigate any possible unintended negative outcomes associated with this elevation in the threshold.
Historically, many have questioned whether GSA Schedule prices are fair and reasonable, and these concerns have led to several efforts by the agency to demonstrate their dedication to offering customers “competitive” prices. Earlier this year, however, the Coalition highlighted an MBA Professional Report that was published by the Naval Postgraduate School in December 2017 and that helped dispel many of the urban myths regarding fair and reasonable pricing on the schedules.
Specifically, the report was initiated by the Air Force to determine whether the agency could derive savings by establishing a platform preference. Interestingly, the report found, among other things, that, when comparing the acquisition outcomes for GSA Advantage and Amazon Business for the top 60 commercially available items purchased by the Air Force using government purchase cards (GPCs), prices were lower on GSA Advantage more than 80 percent of the time; prices on GSA Advantage were still lower than those on Amazon Business after applying quantity discounts; and shipping was both cheaper and faster on GSA Advantage.
As discussed in a previous FAR & Beyond blog, the report’s findings underscore the value of the schedules program, which negotiates with industry to ensure that products that meet the Trade Agreements Act, small business, AbilityOne, and other government requirements are available on GSA Advantage at “competitive” prices.
Introducing order level materials
After releasing a game changing final rule in January, GSA began incorporating Order Level Materials (OLMs) into the schedules program earlier this summer through mass modifications to a subset of schedules. Notably, based on data from GSA’s Schedule Sales Query (SSQ) tool, within its first two weeks of existence, the OLM Special Item Number (SIN) generated more than $31 million in purchases that support agency customer needs.
As many of you know, the Coalition has been a longstanding advocate for the inclusion of OLMs into the schedules program. OLMs provide a fantastic opportunity for GSA to streamline its schedules Program, thereby reducing incentives for agencies to establish duplicative contracts and minimizing burdens for government and industry. Moreover, OLMs provide increased contract flexibility to meet customer agency needs for integrated, commercial solutions. Recognizing these many benefits, GSA should eventually expand its application of the OLM rule into schedule contracts on a program-wide basis. There is no policy or business imperative that would be served in limiting the applicability of the new rule to a subset of schedules. Indeed, this limitation only enhances the potential for misunderstanding, and it reduces the potential positive impact for the entire schedules program.
Addressing inconsistencies between federal law and commercial supplier agreements
In February, GSA achieved another significant milestone in its efforts to enhance the schedules program when it published its final rule ensuring that certain contract language defer to federal law where there is a conflict with Commercial Supplier Agreements (CSAs), also known as “standard terms of sale or lease,” “Terms of Service (TOS),” or “End User License Agreements (EULAs).” Significantly, the rule, which will reduce proposal costs and streamline the contract negotiation process, contains two critical changes from the 2016 proposed rule:
Reverts the Order of Precedence — In the final rule, GSA reverted the order of precedence at FAR Clause 52.212-4 to that of the FAR clause prior to the July 2015 class deviation. Notably, the July 2015 class deviation altered the order of precedence, which contributed to concerns related to its consistency with existing law and regulation. In addition, the scope of the class deviation appeared to extend beyond what was necessary for GSA’s purpose. Thus, it appeared to possibly risk increasing burdens for contractors and enhancing barriers to entry into the federal marketplace. By reverting the order of precedence to its pre-July 2015 class deviation language, GSA ensured that the final rule is consistent with law and regulation, as well as optimized its ability to achieve its intended outcomes.
Removes Unnecessary and Duplicative Information Collection Burdens – The final rule removes the requirement for commercial vendors to provide the full text for all terms and conditions incorporated by reference. This requirement drew concerns related to its government-unique nature, as well as its potentially significant burden for both government and industry. By removing this language, the final rule focuses on terms that are not enforceable per Federal law, which enables GSA to achieve its intended outcomes in a manner that is minimally burdensome for all stakeholders.
As we wind down the government fiscal year, we already see developments that reflect the increased value of the Schedules program. In this regard, it is heartening to see the views of Coalition members considered in these thoughtful changes. We look forward to maintaining dialog with the government as it continues its efforts to improve the process to meet the changing needs of its agency customers.
Over the next two weeks, as Coalition members continue to dust off their golf clubs, register their foursomes, and coordinate their outfits for this year’s tournament, it is clear that the real winner of 2018 is the Schedules program for this “Grand Slam”* of procurement reforms.
* For my non-golf obsessed readers, the Modern Grand Slam in golf occurs when one individual wins the four Major Championships — the PGA Championship, the Masters, the United States Open, and the British Open — in a single calendar year, which, to date, has never been accomplished. For the purposes of the Coalition’s Golf Tournament, a Grand Slam occurs when the author manages to hit the ball off the golf tee four times in succession.
Roger Waldron is the president of the Coalition for Government Procurement, and host of Off the Shelf on Federal News Radio.
¹ Although the FY 2018 NDAA maintained the MPT at $5,000 for DoD, there are provisions included in the FY 2019 NDAA that increases the threshold to $10,000 for DoD. The FY 2019 NDAA is currently before the President awaiting enactment.