This column was originally published on Roger Waldron’s blog at The Coalition for Government Procurement and was republished here with permission from the author.
On May 13, the General Services Administration issued a request for information (RFI) seeking industry feedback on a “governmentwide cloud acquisition strategy and Blanket Purchase Agreement.” The RFI details the acquisition strategy to deliver a multiple award BPA for commercial software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-a-service (IaaS).
The RFI raises a number of questions:
First, on page 5 of the RFI, GSA compares the generic governmentwide multiple award BPA strategy with other acquisition tools by highlighting the negative features of these tools, including single award BPAs and GSA’s IT GWACs. It is perplexing that GSA would characterize these key acquisition tools in such a manner, especially when certain GSA IT GWACs are identified as Best in Class contracts.
Insight by Sonatype: Stephan Mitchev, acting CTO at USPTO, discusses how USPTO is looking at supply chain issues to address cybersecurity concerns. Dr. Stephen Magill, VP of product innovation at Sonatype, provides an industry perspective.
What message is being sent to its customer agencies and industry partners regarding these tools? Make no mistake, Coalition for Government Procurement members strongly support the Federal Supply Schedule (FSS) program. GSA’s industry partners, however, also understand that single award BPAs and the IT GWACs play critical, positive roles in supporting customer agency mission requirements. Unfortunately, the RFI creates the impression that GSA is competing against itself, undercutting its overall approach to the federal customer.
Second, the RFI and previous generic, governmentwide BPAs raise questions regarding additional fees charged to customer agencies and the addition of BPA contract terms/features that are not included in the underlying FSS contracts. Additional fees charged for the creation of generic, governmentwide BPAs raise questions regarding GSA’s overall fee structure. Perhaps it is time for an overarching review of the fees and operating costs to determine whether the Industrial Funding Fee is set at the appropriate level. With regard to supplemental BPA terms that are not included in the underlying FSS contracts, GSA should engage in dialogue with its industry partners and customers as to whether these terms should be negotiated at the FSS contract level. Too often, it appears one justification to executing a governmentwide BPA is to add a standard feature that could have been included at the contract level.
Finally, generic, governmentwide multiple-award BPAs create vertical contract duplication (that is, redundancy in the administrative processes and terms of the contract), increasing costs for FSS contractors, GSA, and customer agencies. FSS contractors must negotiate and administer their FSS contracts, compete for and manage a generic, governmentwide multiple award BPA, and, ultimately, compete for and manage a task order issued under the BPA. Why not ensure the FSS contracts include the terms/features responsive to the federal market and then compete a task order under the contracts? A generic, governmentwide, multiple-award BPA creates an additional layer of cost, administration, and process that increases costs for all.
Sound requirements development is fundamental to success. BPAs that include sound, fulsome requirements enhance competition, reduce costs, increase value, and lead to positive business and mission outcomes. Nine years ago, on June 4, 2012, the “FAR & Beyond” blog issued a set of “Best Practices for Federal Supply Schedule BPAs.” These best practices remain fundamental to leveraging the FSS program to meet customer agency needs. Here is that blog reprinted in its entirely:
Best practices for Federal Supply Schedule BPAs
As promised, this week’s blog post proposes best practices for Federal Supply Schedule (FSS) Blanket Purchase Agreements (BPAs). The purpose is to promote practices that enhance competition and opportunity for government and industry. Sound FSS BPAs leverage requirements and deliver best value to customer agencies. Correspondingly, sound FSS BPAs result in positive business outcomes for FSS contractors.
GSA Schedules – best practices for establishing blanket purchase agreements
The GSA Schedule program provides agencies with an excellent platform to acquire commercial services, solutions, and products at reasonable prices. Agencies can forge relationships with commercial partners and further leverage their buying power by establishing Blanket Purchase Agreements (BPAs). The regulatory requirements for establishing BPAs are set forth in FAR 8.4. In addition to complying with the regulatory requirements, there are specific strategies that have proven to be successful in allowing an agency to structure BPA’s in a manner that increases the ability of GSA Schedule contractors to respond in a more competitive manner. This paper sets forth best practices that have resulted in BPA’s that are successful for both federal agencies and GSA Schedule contractors.
Commercial contractors overwhelmingly report that they offer their best terms and prices to customers who provide the most detailed information about their requirements and usage. Commercial customers that get the best deals share the following traits. They have:
- Known, requirements which they share with potential suppliers;
- Commitment to acquire a specific volume;
- Centralized program management; and
- Strategies for partnering with suppliers
Specific information about the factors listed above, when included in a statement of work, have great potential to enhance the government and industry’s ability to provide best value to the taxpayer.
Specific requirements, volume commitments, and/or guaranteed minimums for BPAs will lead to enhanced competition and better pricing. Generic BPAs that rely on subsequent task order competitions introduce a level of complexity and cost that is counterproductive.
Best BPA Practices
The following practices have resulted in BPA’s that improve efficiency and enhance real competition while providing best value to the government.
1. Focus on requirements. BPAs should be structured with a focused set of requirements to enhance effective competition and pricing. Real requirements lead to real price competition in the FSS ordering process.
- BPAs reflecting single agency requirements should be preferred over multiple agency or governmentwide BPA’s. Single agency BPAs allow the government to state specific, realistic, authentic requirements that can be accurately priced.
- Include maximum as well as minimum requirements. This information enables bidders to provide targeted pricing and avoid the need to build in cushions to cover risks and changes that may never materialize.
- Include a sound estimate of the government’s anticipated usage.
2. Include real economic incentives for competition. Commercial pricing policies commonly extend favorable pricing to customers with terms and guarantees that offer the company an economic benefit. Economic incentives include:
- A commitment to acquire a guaranteed minimum volume;
- Absent a guaranteed minimum the BPA can include a list of required users;
- If an agency cannot commit to a guaranteed minimum or list of required users, the BPA should be evaluated based on technical requirements only; price can be established based on competition among technically qualified BPA holders at task order level.
3. Pay attention to BPA management. Major BPAs should have a program manager assigned to ensure effective execution, implementation, and administration. Too often BPAs are established without a focused management plan for effective use. Program Managers can be particularly effective in:
- Establishing robust communication between the contractors and end users to continually improve the contract administration.
- Eliminating unnecessary administrative requirements that add unnecessary costs to the process.
- Monitoring agency ordering.
- Periodically reviewing BPA’s to ensure continued best value.
4. To the extent allowable, involve industry partners in the development of acquisition strategy. The government should use industry meetings and statements of work to share statements of the agency objectives. In some cases, agencies are focused entirely on negotiating low price and may miss opportunities to acquire new commercial solutions that could improve the delivery of services or provide cutting edge technology. Agencies may also be focused on lowering the unit price of products or services without considering more significant opportunities to lower the total cost of operations by changing what or how they buy. Fully incorporating industry discussions early in the process can open opportunities for suggestion new, cost saving strategies from commercial partners.
5. Eliminate “generic BPAs” (no stated users, no minimum volume, broad statement of requirements). Generic multiple award BPAs that rely on subsequent task order competitions add an extra level to the FSS ordering process that is unnecessary and should be avoided. These BPAs represent vertical contract duplication and increase costs for both government and industry. Moreover, any price competition when establishing these BPAs is illusory. Subsequent BPA task order competitions for specific requirements establish the real price paid by the government — it is more efficient to compete these requirements directly against GSA Schedule contracts.