GSA sees wave of expiring service contracts as chance to cut duplication

Tens of millions of dollars in agency-by-agency service contracts are due to expire next year. GSA hopes to transition a large proportion of the spending into g...

Jared Serbu: GSA sees wave of expiring service contracts as chance to cut duplication

A wave of professional services contracts is due to expire across the government during fiscal 2016, and the Obama administration wants to use the opportunity to consolidate that work into a smaller number of multiple-award contracting vehicles. Or, at the very least, to ensure agencies don’t create any more of their own.

A General Services Administration analysis of agency-by-agency contracting data shows that roughly $26 billion in existing professional services contracts will reach their end during 2016 — many more so than will finish their period of performance during 2017. Presumably, much of the work will need to be recompeted to vendors in some form or fashion, and the White House would like it to be performed under fewer contracting vehicles than exist today so that the government can get the most out of its purchasing power.

“From a federal perspective, we’re going to be trying to make sure we’re supporting agencies in looking at existing contracts first — in particular, for their existing indefinite delivery indefinite quantity (IDIQ) contracts,” said Tiffany Hixson, the Region IX commissioner for the Federal Acquisition Service, at a conference organized by the Coalition for Government Procurement. “There are hundreds of them across government, and we either need to be using the ones we already have at an agency level or moving the work to GSA Schedules or OASIS. We’re really going to be pressing on reducing contract duplication in the professional services space.”

GSA’s analysis of governmentwide spending data shows that even with the proliferation of IDIQ contracts throughout government — there are now 2,500 of them according to a separate analysis by Bloomberg Government — most of the professional services work winds up going to a relative handful of firms anyway. About 80 percent of federal spending on professional services went to just 140 companies in the last year.

GSA’s figures also show an increase in funds for services being bid on the open market instead of through multiple-award contracts: open market competitions increased 10 percent between 2011 and 2014 even as budget constraints crimped agencies’ ability to spend on services. Overall spending on services, at least as they’re categorized by GSA, fell from $60 billion to $41 billion over that same period.

Roughly 20 percent of the government’s professional services spending was through GSA’s Schedules program, but the ratio of service outlays that run through GSA vehicles is likely to increase as its OASIS program becomes more mature.

Three giant government entities recently signed memoranda of agreement with GSA to consolidate large proportions of their existing service spending under OASIS: The Army and Air Force each have committed $500 million per year, and the Department of Homeland Security is on board for $250 million. In 2015, the first full year OASIS was up and running, agencies spent more than $578 millionthrough the multiple-award contract, according to GSA’s OASIS dashboard.

Hixson said several factors motivated those big service buyers to move to the new contracting vehicle.

“I think it’s about having the right vendor base — we like to think we’ve checked the box on that — but there are probably going to be a couple of pools coming up soon where we’re going to offer some on-ramps to new vendors just based on the level of competition and depth that we’re seeing and what we’re hearing from our customers about the need for a broader contractor base,” Hixson said. “I think the fee structure under OASIS is also a big factor in them making that decision.”

In the first three large MOUs it has signed with agencies, GSA has offered deep discounts in exchange for promises of their large-scale use of OASIS. The standard fee for agencies who wish to use OASIS on an ad-hoc basis is 0.75 percent of every dollar which passes through the multiple-award contract, but the Army and Air Force negotiated fees of 0.1 percent, and DHS, with its somewhat-smaller commitment, was able to secure a 0.25 rate. The MOUs also guarantee the agencies dedicated teams of support staff from GSA who can advise them on best practices for professional service contracting.

Hixson said the implementation of the sliding-scale fee model now is creating pressure for GSA to find a similar way to lower its rates for agencies who buy large amounts of services off of the schedules.

“There’s a lot of mechanics involved in that which are going to be very expensive, internally, for GSA to change. But we’re going to have to get our arms around it,” she said.

The Obama administration has shown significant interest in consolidating the government’s purchasing power around a smaller number of purchasing vehicles, including most recently with its announcement last week that agencies would be required to buy all new desktop and laptop computers from one of three governmentwide contracts administered by NASA, GSA and the National Institutes of Health.

A similar directive is expected with regard to identity protection services. GSA created a new blanket purchase agreement for those services, partially in response to the recent Office of Personnel Management data breach. The Office of Federal Procurement Policy plans to issue a memo by December requiring all agencies to use that new BPA as their sole source for credit monitoring and related services.

“The work we did in that space wasn’t just a matter of throwing up a new contract vehicle,” Hixson said.  “We spent seven months working with the CIO community, the privacy community and the cyber community to make sure the requirements were right. I think you’re going to see more of that happening in areas like that where there’s a very defined requirement and there’s a very defined contractor base.”

Hixson said GSA also is planning to adjust its existing schedules to reflect areas where the government is repeatedly asking for the same services from the same vendor base.

For instance, its Office of Governmentwide Policy is looking at a new schedules-based approach to buying acquisition training for federal agencies.

“Instead of creating a new blanket purchase agreement, we’re going to define the requirements at the [Special Item Number] level,” she said. “The whole idea is we don’t want to run all of the vendors through a new BPA competition and make them go through that whole exercise, let’s figure out how to use the schedules authority we already have, define our requirements governmentwide, build that in and then let contractors come in and compete for a schedules contract. We’re also looking at language services across the government. This is an area where most of the vendors who provide those services are already on the schedules, but a lot of the spend, it is still being competed on the open market. That’s not living up to the standards that OMB has for us. You’re going to see a lot of work in this space, where we don’t just throw up another contract, we make sure it’s the right fit so that when we say you have to use it, it really is meeting the needs for most of the government.”

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