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.

Recently, we focused on the benefits of adding cost reimbursement capability to the Multiple Award Schedule (MAS) program so that contractors with commercial item goods and services on Schedule also can offer cost-reimbursable labor. It highlighted the many ways in which hybrid contracts that include both commercial and cost reimbursement capabilities would be a “win-win-win” for customer agencies, the General Services Administration and industry.

This article focuses on the practical steps that GSA can take to modify the existing MAS program to include cost reimbursement capabilities.

It is important to note that no additional legislative authorization is needed to add cost reimbursement capabilities to the MAS program. GSA, as the administrator of the program, already possesses the authority to expand it. The primary statutory authorities for the MAS program are 41 U.S.C. § 152(3) (Competitive Procedures) and 40 U.S.C. § 501 (Services for Agencies), and nothing in these statutes, or any other statute, prohibits GSA from adding cost-reimbursable capability to the MAS program. Rather, the only relevant statutory requirements here are for GSA to continue to ensure that the MAS program is open to all “responsible sources” and that “orders and contracts under [the MAS program] result in the lowest overall cost alternative to meet the needs of the Federal Government,” 41 U.S.C. § 152(3).

So long as these requirements are satisfied, with respect to cost-reimbursement capability under the Schedules, GSA is well within its statutory authority to add that capability to the program. GSA’s Alliant, OASIS, and OASIS SB programs, which already combine the use of commercial and cost reimbursement contracting, can serve as a roadmap.

GSA can add cost reimbursement capability to the MAS program by taking a few simple steps:

1. GSA will need to revise the solicitation to include contract terms and conditions that apply to cost reimbursement contacts. Included in this revision would be the ordering provisions under the solicitation.
2. GSA will need to identify those contract terms and conditions in the solicitation that only apply to orders for the acquisition of commercial items (FAR 2.101) and limit the application of those clauses to orders for commercial items. In order to ensure that all necessary clauses are included in any resulting task orders, GSA can include a provision, as it does in the OASIS solicitation, explaining that all applicable and required provisions/clauses set forth in FAR 52.301 will flow down automatically to all MAS task orders based on their specific contract type, statement of work, competition requirements, commercial or non-commercial nature, and dollar value as of the date the task order solicitation is issued.
3. GSA will need to identify the offerings that are available for purchase on a cost reimbursement basis. The MAS solicitation is broken into 12 Large Categories of commercial items, with subcategories and Special Item Numbers (SINs) that have corresponding North American Industry Classification System (NAICS) codes. The solicitation then can be amended to include a single SIN covering cost-reimbursable labor, with offerors able to propose direct labor categories that complement their commercial-item SINs to allow Schedule holders to offer complete solutions to customer agencies.
4. GSA must decide the offer preparation instructions and evaluation criteria it wants to use for cost reimbursement contracts. Currently, the instructions and evaluation criteria are tailored to commercial contracting, but this section can be modified to include criteria specific to cost type task orders. Again, OASIS provides a model for this, as it establishes straightforward criteria for GSA to assess the fairness and reasonableness of proposed direct labor costs and indirect rates.

Adding cost-reimbursement capability to the Schedules is not a heavy lift. With a few changes to the Schedule Solicitation, GSA could open the possibility of cost-reimbursement task orders on Schedule contracts, without reinventing the wheel and adding to contract duplication. Leveraging the existing Schedules infrastructure will save customer agencies, GSA, and contractors tens of millions of dollars in contract administration costs as compared to creating a fundamentally duplicative, cost-intensive Services MAC that abandons the OASIS model and undercuts the Schedules program. Just as importantly, the expanded scope of the Schedules program will enhance competition for customer agency solutions across government. Again, it is a win-win-win for customer agencies, GSA and industry.

Over the years, GSA, to its credit, has implemented significant changes to the Schedules program to deliver greater value to customer agencies. Most recently, the Schedules consolidation initiative provides the framework to host this change. The Coalition stands ready to host a GSA-Industry roundtable to discuss this blog and share the roadmap.

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