Without good data, it’s tough to plan complicated procurements

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You’d think the government would be the most skilled buyer of office supplies in the world. It has the most offices after all. But a recent attempt at a blanket purchase agreement (BPA), landed the General Services Administration into a big fat protest with Office Depot. Smith, Pachter McWhorter, procurement attorney Joe Petrillo gave the Federal Drive with Tom Temin  details.

Interview transcript:

Tom Temin: Tell us what happened here, Joe?

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Joseph Petrillo: Well, this illustrates some of the problems that the government runs into when, as they frequently have been doing, they create larger and larger contracts by grouping together things that were done separately, and then putting them together in a single vehicle of some kind. And here, this problem arose under the issue under a program that GSA has called 4PL, for fourth party logistics. The basic idea is that GSA runs this program under the Multiple Award Schedules, also known as the Federal Supply Schedules. And it has a separate schedule for a group of contractors that basically act as intermediaries, bundling commercial item offerings in other schedules, so that the government can go to a single source and buy multiple items. In this instance, they were issuing a solicitation for a blanket purchase agreement under their 4PL program to handle the supply of hardware, industrial and office supply items at eight very large DoD installations. So in order to figure out how to award this contract and compete it successfully, GSA selected a market basket of 200 items.  It went through historical data, and it found what it thought were the 200 items that were ordered most frequently.

Tom Temin: Yeah, that sounds like trouble, right from the outset. Since you say industrial and office supplies. That sounds like a warning. These things don’t mix in terms of supplier base.

Joseph Petrillo:  Well, yeah, there is that issue here as well. As we’ll see in the Office Depot-filed  protest. And one of the issues they raised was, “Well, this has got too much hardware, industrial mixed with the office supplies”, that issue was unsuccessful. GAO is not going to keep agencies from putting things together if it reflects their needs. But in this instance,  they ran into problems also with this market basket. Office Depot noticed that only 15 of the 200 items were office supplies, the other 185 were hardware or industrial. So they filed a protest with GAO.

Tom Temin: The basis here was that Office Depot doesn’t carry these items, and therefore they probably couldn’t bid. Is that why they protested?

Joseph Petrillo: The 4PL contractors obtain items from other GSA Schedule contractors. So the fact that they don’t ordinarily offer those in the commercial marketplace isn’t necessarily determinative. They are going to be able to find the source. Here, the problem, though, that GSA confronted in constructing this market basket was the amount of data that it looked at, and the type of the data.  It had good data for all of these eight locations for the hardware and industrial items. Of the eight locations. Five of them already had 4PL BPAs, basic blanket purchase agreements, which provided good historical data in those instances. The other three had other data available from DoD databases, so they could get a pretty good handle on how much hardware or industrial items, what kind of items were going to be ordered. This was not the case for the office supplies, though. They had good historical data for only one of those eight locations, that one also had a 4PL BPA. But in that instance, that one was restricted to office supplies. So that particular BPA, provided good historical data. There were a partial data for three others, but one of the three only reported sales of $4 a year and if you believe a government can run on $4 worth of office supplies in the year, or anyone for that matter, that that doesn’t seem credible.  And the other four, they they basically had no data, they reviewed no historical data. So given the state of the data, it wasn’t surprising that the market basket they constructed only had 15 out of 200 items in the office supply category. Ordinarily, the government gets a lot of discretion about how their needs are defined, how they construct evaluation criteria. You know, they have a lot of flexibility and ability to do these things in different ways. But here, the evaluation criteria seemed too unrelated it to what was actually being purchased. The market basket of 200 was going to be used both in the price evaluation, try to figure out, you know whether the pricing was good, and in the technical evaluation, to try to figure out if the if the offerors could offer and supply exactly what the government needed in most categories.

Tom Temin: We’re speaking with Joe Petrillo. He’s a procurement attorney with Smith, Pachter McWhorter. And just one more question on the market basket or the basket of goods. Was the lack of data, meaning that the basket itself wasn’t representative of what might be needed, or that the basket didn’t represent reasonable pricing expectations?

Joseph Petrillo: It’s the first of those two. The data that was available for that one location indicated that office supplies were going to be about 25%, one quarter of the total purchases in a year. And so the only information showing exactly what the entire picture was, showed that that was probably going to be the case. But here only 15 out of 200 items were were going to be office supplies. One area where the GSA protest is a little confusing, is they count the number of items in the market basket. But then they compare that to the percentages of each category of items. And they’re not obviously the same kinds of things. But in any event, it seems that the market basket was not going to be representative.

Tom Temin: Alright, so Office Depot protested and what happened?

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Joseph Petrillo: Well, GAO looked at the record and said, look, the market basket system you’ve got here is not going to reasonably represent what performance is going to be like. So it’s not a good basis for evaluation. We’re going to sustain the protest and GSA is going to have to dig deeper, and try to find a better way of doing it. GAO suggested three things to get the additional data that GSA would need. One, GSA could look at its own information about sales under other schedules, the office supply schedule, which is group 75. It could go back to its customers to some of these locations and try to get additional supporting data from them. Or it could look at the one location that it does have good data. There’s one location where they have 4PL contracts for both hardware, industrial and office supply items, and extrapolate from that. So those are the you know, potential ways GSA could remedy the problem and and do a better analysis.

Tom Temin: All right, so they had a deplorable basket, you might say, the GSA.

Joseph Petrillo: Apparently so.

Tom Temin: Joe Petrillo is a procurement attorney with Smith, Pachter McWhorter.

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