What the FAS pricing guidance says, doesn’t say about order level competition

The PAP is a significant policy document, providing guidance to FAS contracting officers regarding the negotiation of Federal Supply Schedule (FSS) contracts. ...

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.

This week, in the spirit of “Fair and Reasonable Transparency,” the Coalition submitted to the Federal Acquisition Service (FAS) feedback on its “FAS Policy and Procedure (PAP) 2021-05, Evaluation of FSS Program Pricing.”

The PAP is a significant policy document, providing guidance to FAS contracting officers regarding the negotiation of Federal Supply Schedule (FSS) contracts.  It essentially modifies the Federal Acquisition Regulation (FAR) and General Services Acquisition Regulation (GSAR) regarding the negotiation of fair and reasonable pricing under the Federal Supply Service (FSS) program.  In so doing, however, the PAP is inconsistent with the FAR and operates to create a “low-price regardless of terms and conditions” contract-level pricing policy for the FSS program.

For example, it directs contracting officers to leverage the collective buying power of the federal government, notwithstanding the fact that FSS contracts are not governmentwide requirements contracts, whereby the federal government collectively promises to buy all its requirements through the FSS program.  Rather, FSS contracts are non-mandatory, multiple award IDIQ contracts with a guaranteed minimum of $2,500 over the 20-year contract term and the opportunity to compete for agency requirements at the order level. As such, how can contracting officers leverage what contractually doesn’t exist?

Beyond the non-mandatory nature of the FSS program, all task and delivery orders are governed by the FAR 8.4 competitive ordering procedures.  Significantly, the FAR-based competitive ordering procedures were mandated by Congress, recognizing that price and value are driven by competition for agency specific requirements at the order level.  In response to the Congressional mandate for order level competition, GSA not only updated the FAR ordering procedures, but also invested in electronic tools, like e-buy, to enhance transparency and increase competition at the order level.

The FAS policy focus should be on driving pricing and best value at the order level in response to customer agency requirements.   The real federal market exists at the order level.  It is where requirements are definitized, allowing FSS contractors and customer agencies to engage and conduct business on behalf of American people.  The unintended consequence of the PAP is the distortion of the FSS marketplace, limiting access to the commercial market and reducing competition and choice at the order level.  With reduced vendor participation in task order competitions, customer agencies lose the benefit of best value competitive pricing for their mission requirements. One also can see the ripple effect of the PAP in the challenges contracting officers and contractors are experiencing in processing Economic Price Adjustment (EPA) modifications.

The Coalition feedback on the PAP can be found here.  It is our understanding that FAS is working to revise and update the PAP.  As this effort unfolds, FAS’s industry partners look forward to a fully transparent process that engages all stakeholders.

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