Commentary

Providing best value through the Multiple Award Schedule

It is important to remember that burdensome contract pricing procedures are especially hard on small businesses and new entrants. These procedures delay the del...

Roger Waldron

February 9, 2024 5:57 pm

4 min read

This year marks the 40^th anniversary of the codification of the General Services Administration’s Multiple Award Schedule program in the Competition in Contracting Act, CICA (it’s a ruby anniversary in case you were wondering). The MAS is the Federal Government’s primary contract vehicle to acquire commercial products and services, with streamlined ordering procedures saving the Government time and money. There are over 16,000 contractors on the Schedule offering over 28 million commercial products and services. Right now, proposed legislative language announced by GSA presents an historic opportunity to bring the MAS program into the 21^st century. This legislation, if enacted, would put the MAS program’s focus where it belongs: providing best value to the Government.

In 1984, CICA set forth “full and open competition” as the foundation for government procurement and defined “competitive procedures,” it stated that the Schedules satisfy competition requirements if program participation is open to all sources that are responsible, and if contracts and orders “result in the lowest overall cost alternative to meet the needs of the Federal Government.” (Cf. 41 USC 152(3)). What constitutes the “lowest overall cost alternative” has been interpreted differently over time. Back then, when the MAS was a mandatory source and was limited to products, like office supplies, many in government interpreted the “lowest cost alternative” to default to lowest price, as price was the most discriminating factor.

Forty years later, the MAS program is no longer a mandatory source. The majority of acquisitions under the program are for services, and the products and solutions include some of the most cutting-edge technologies, such as cloud, geospatial, and cyber solutions. Further, the Department of Veterans Affairs, under the authority of the Schedule program, acquires lifesaving and life-altering medical devices and therapeutics for our veterans. Quality, quantity, delivery, and other terms and conditions have always been important, but in today’s market, Government buyers want the best value solution, certainly considering price, but also considering other factors that, depending on the circumstances, may prove more important in driving buying decisions, such as the unique experience, technology, delivery terms, time, or solution offered.

Unfortunately, the legacy “lowest price” interpretation of the current statutory language, among key stakeholders in government, has led to an unnecessary and misguided focus on pricing at the contract level, which has had a negative impact on the Schedule process for customer agencies and contractors. According to GSA, its MAS pricing procedures are its most burdensome information collection activity, resulting in estimated costs of $130 million imposed on MAS contractors annually. It is important, however, also to consider that contract prices on an indefinite quantity indefinite delivery contract, such as the MAS, are based on unknown requirements and must cover every possible contingency, e.g., quantity, quality, delivery, complexity, scale, location, security clearance level, etc. For this reason, pricing at the order level should be the focus of the value assessment because it is there that customer agency requirements in the immediate are definitized, and competition allows for a meaningful assessment of value based on the price paid for the commercial product, service, or solution. We need to trust ordering agency contracting officers to do their job and drive the criteria necessary to derive the best value for the taxpayer.

Unfortunately, the statutory language has resulted in the most favored customer concept, whereby commercial contractors must ensure their Schedule prices do not exceed commercial prices, leading to wholly unnecessary costs associated with addressing risks that do not in any way correspond to the commercial market. GSA has made strides to alleviate the burden in this area through its Transactional Data Reporting pilot program, but an obsession with Schedule contract level prices remains.

It is important to remember that burdensome contract pricing procedures are especially hard on small businesses and new entrants. These procedures delay the delivery of new and cutting-edge products and services, while ultimately raising administrative costs for the contractor that may eventually be passed on to the Government. Both sides of the aisle recognize the need to reduce burden and attract new entrants to the Federal market.

The simple act of amending the Competition in Contracting Act, as suggested in GSA’s recent legislative proposal, will bring clarity to the evaluation process, make a world of difference to thousands of contractors, and, ultimately, yield significant savings for taxpayers. The proposed change, replacing “lowest cost alternative” with “best value,” is a visionary step that will give GSA the necessary flexibility to structure contracts, regulations, and processes to increase value consistent with commercial practices, driving greater value for customer agencies and more opportunities for industry than exist now.