Contractors need to rethink an old, tried and true federal sales vehicle

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A new round of government-wide acquisition contracts, or GWACs, is coming from a couple of agencies, including the General Services administration and the National Institutes of Health. For both contractors and federal agency customers, what might be the oldest GWAC continues to outshine them all, even if it is taken for granted. For a review of the numbers, federal sales and marketing consultant Larry Allen joined Federal Drive with Tom Temin.

Interview transcript:

Tom Temin: And of course Larry you are writing about and we are talking about the multiple award schedule program which just is the energizer bunny, is the little engine that could, name your metaphor, decade after decade.

Larry Allen: Bridesmaid, unsung hero, Tom, whatever moniker you want to hang with it. The fact is that GSA’s multiple award schedule program remains the largest governmentwide acquisition contract, both in terms of overall dollar volume and in the width of what you can buy from it if you’re a government agency. So often in the world of contracts we talk about information technology and professional services, and those are very important parts of what government buys. But the schedules program covers those areas and many, many more. And last year, we’re estimating that the schedules program did somewhere over $35 billion, we’re actually still waiting for some of the final numbers, but that’s a substantial amount of business. And it doesn’t begin to add the sales made by the VA’s version of the multiple award schedule program for pharmaceuticals and medical supplies, and even medical staffing. So when you add those numbers in, you’re going to have a multiple award schedule or federal supply schedule program, depending on where you sit, that’s going to well exceed $40 billion in business.

Tom Temin: And we also overlook sometimes the fact that many of the large acquisition programs that agencies do for themselves are blanket purchase agreements based on the schedules contracts.

Larry Allen: That’s exactly right. The Army has a program that is based on GSA multiple award schedules program, the new Air Force 2GIT contract is based on GSA IT schedule contracts, they’re probably some other examples, but those are the easy ones to remember. And those programs are often counted by people in industry Tom as separate programs because they have a separate program name or separate identity. But the underlying contracts are GSA multiple award scheduled contracts. And you couldn’t have those programs with the ease that you have them if they had been programs that the agency had started from scratch, which is one of the reasons why they’ve gone to GSA schedules is because it’s easier to start a program that can be tailored to their needs by using the flexible underlying vehicle that is the schedule.

Tom Temin: And is the consolidation of the schedules program by the GSA — which was quite a major development and getting rid of all of the different sub schedules and just having one multiple award program that was designed to make it easier on contractors — are they pretty much through that process now?

Larry Allen: Tom, they are most of the way through that process. And GSA has done a really very good job in terms of consolidating the schedules. It contains the elements that you just mentioned. But it also put all of the contractors on more or less an even playing field in terms of contract language, updated a lot of obsolete clauses, hopefully, I hope brought to the attention of contractors here the standard terms and conditions that you’re going to sell through and that you need to pay attention to to stay compliant. So it’s not a mishmash of things done over time. It’s an easy to use, easy to understand compendium of contracts, whether you’re a buyer or user. Right now, GSA and industry are still merging contracts from a company that might have had three or four schedules into one. But that’s going to become somewhat seamless to customers, Tom. Overall, that was a big undertaking, and GSA did it really well.

Tom Temin: I wanted to ask you also about the idea of free services because that affects GSA Schedule holders in some way. And it’s come up lately, because of volunteer groups that want to fix or repair or otherwise aid and abet the border wall that the United States has partially completed on the southern border.

Larry Allen: That’s right, we’re starting to get some discussion, Tom, about whether or not individual organizations could repair or complete the border wall along the US southern border. And while there are certainly a lot of angles to that discussion, strictly speaking from a contract perspective, the answer is probably no. The federal government has some very limited circumstances under which you can accept free goods and rebuilding a border wall is probably not one of them in this case. There are of course, exceptions to the no free good rule, imminent danger crisis would be one of them. That’s one of the things that people are trying to claim now, we have a crisis, imminent danger, I’m not really sure that it rises to that level. I’ll leave that for others to decide, but probably not. A couple of the other exceptions are health care related, whether it’s accepting help from the Red Cross or the Department of Defense, accepting help free goods in wartime or a public health crisis where free goods or free services are needed to help the nation get by the public health crisis. Otherwise, there are very, very limited circumstances under which a contractor can provide free goods. That doesn’t mean though, Tom, that the government doesn’t want to know that you provide free goods as a company as part of your commercial business. In fact, it can be a standard practice commercially to hand away free goods as an incentive or inducement for a customer to do business with you. And if you’re a GSA multiple award schedule contract holder, and you do give away free goods commercially, the government does want to know that you do that, even though they might not be able to take advantage of that free refrigerator, or that free teaching class that you give to show people how to use your fancy, sophisticated device — they do want to know that you give away free things because they will then try to negotiate on the schedule a deeper discount that reflects what they believe to be the value of that free good or service.

Tom Temin: But could the contractor alternatively just simply throw it in as part of the regular price?

Larry Allen: Well, a contractor could say, we’re going to add an extra benefit to government customer, we are willing to put it in writing that we’re not going to charge you for it. So if you have something in writing, that’s part of the contract that says we acknowledge we’re providing this for free, and we are not going to seek payment at a later date. That’s another way to allow the government to accept free goods, because the real concern is that a company or person would provide goods for free, and then come back and say, you know what, I really need to bill the government for my services. That’s a claim, the government could have to pay that claim, depending on how the court cases or other things came out. And that could bust their budget. At its core, all of this prohibition on free goods, Tom, gets to the federal Antideficiency Act, which believe it or not, goes all the way back to the late 19th century, and is precisely that the government doesn’t want to bust its budget, kind of ironic, but it doesn’t want to bust its budget in this case by having companies provide something for free only later to turn around and bill the government and then have the government not have money to pay for the things it thought it was going to have to spend on.

Tom Temin: Imagine if you would’ve told a late 19th century Congress that a future Congress would consider spending $5 trillion in the first three months of a new presidential administration. I’m not sure they would have believed the words.

Larry Allen: I’m pretty sure you’re right, Tom. I think they would have had thought of that as something like traveling to the moon, but even a little more strange than that. You never know. I think sometimes what only changes, Tom, are the people and the dollar figures.

Tom Temin: The decimal points change with each age on us. Larry Allen is president of Allen Federal Business Partners. As always, thanks so much.

Larry Allen: Tom, thank you and I wish your listeners happy selling.

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