Competitive Quotes on FSS Buys: Hold the Pickle, Hold the Mayo-Can You Have it Your Way and Still Have Competition?

• Author: Major Dana J. Chase
• Pages: 05

COMPETITIVE QUOTES ON FSS BUYS: HOLD THE PICKLE, HOLD THE MAYO-CAN YOU HAVE IT YOUR WAY AND STILL HAVE COMPETITION?†

MAJOR DANA J. CHASE*

1. Introduction

   When government agencies want to buy commercial supplies or services quickly, they turn to the U.S. General Services Administration's (GSA)1 Federal Supply Schedules (FSS)2 to meet their needs. Instead of

   contracting directly with vendors, government agencies use the FSS program as a simplified process to obtain "commonly used" commercial supplies and services.3 These purchases satisfy the requirements for full and open competition, thereby allowing contracting officers to use different contracting vehicles such as Blanket Purchase Agreements (BPA),4 sole-source acquisitions,5 and negotiation-like competitions6 to

   obtain needed commercial supplies and services without having to

   pursue a lengthy procurement process.7

   Government agencies can obtain needed commercial supplies and services at a lower cost from the FSS than contracting directly with the vendor, due to the FSS program's ability to buy commercial supplies and services in volume.8 The GSA accomplishes this by awarding vendors indefinite delivery/indefinite quantity (IDIQ)9 contracts for their commercial supplies and services.10 Currently, there are over 6.8 million commercial supplies and services available from more than 14,000 vendors on the GSA schedules.11 These GSA schedules divide the vendors' commercial supplies and services into general categories, such as office supplies.12 The general categories are then subdivided into numbered schedules that give a general description of the commercial supplies and services available within that numbered schedule along with a pricelist.13 Government agencies use the schedule contractor pricelists to determine which schedule contractor offers the best price on the needed supplies and services.14 The agencies then place task and delivery orders15 for the needed commercial supplies and services to the schedule contractors who offer the best value.16

   With the ease of the FSS purchase process, the amount of supplies and services purchased using the FSS has increased substantially in recent years due to legislative changes to streamline further the acquisition process.17 The increase in FSS purchases is evident in the statistics provided in the Government Accountability Office's (GAO)18

   annual reports. For example, FSS purchases totaled $8.1 billion in fiscal year (FY) 1997,19 and $34.96 billion in FY 2004,20 thus making a 25 billion dollar increase in FSS sales in less than ten years.

   Although the FSS is designed to simplify purchases for supplies and services, government agencies must still comply with the Federal Acquisition Regulation (FAR)21 when ordering commercial supplies and services at various threshold amounts. 22 These ordering procedures are in place to assist the government in achieving the best value through competition for available commercial supplies and services using government funds.23 Further, FAR section 8.404(a),24 Use of Federal

   Supply Schedules, exempts the requirements under the FAR for FSS purchases made through the contracting methods of sealed bidding,25

   negotiated procurements,26 and simplified acquisitions.27

   When government agencies are looking to acquire best value28 from the FSS, however, they will use FAR part 15, Contracting by Negotiation, procedures to hold a FAR part 15 type competition.29 Even though contracting officers are not required under FAR section 8.404 to use FAR part 15 procedures when conducting negotiation-like competitions for FSS purchases, the GAO will apply FAR part 15 requirements when reviewing vendor protests.30 The GAO determined that, "where an agency intends to use . . . an approach [for FSS procurements] that is like a competition in a negotiated procurement, . . . and a protest is filed, we will review the protested agency actions to ensure that they were reasonable and consistent with the terms of the solicitation."31 The GAO further held that, "while the provisions of FAR part 15 . . . do not directly apply, we analyze [the protest] by the standards applied to negotiated procurements."32 This standard of review contrasts with the language in FAR section 8.404, which states that, "[p]arts 13 (except 13.303-2(c)(3)), 14, 15, and 19 (except for the requirement at 19.202-1(e)(1)(iii))) do not apply to BPAs or orders placed against Federal Supply Schedules contracts."33 Therefore, contracting officers are not on notice that the GAO will apply FAR part 15 procedures when reviewing FSS purchases using negotiation-like procedures.

   This article examines the purpose and history of the FSS and analyzes the current level of competition under the FSS. This article analyzes how FSS purchases through the use of Blanket Purchase Agreements (BPA), sole-source acquisitions, and unduly restrictive requirements limit competition. Specifically, this article concludes by

   analyzing recent protests on FSS acquisitions, that negotiation-like FSS competitions contradict the original intent of the FSS. This article concludes that contracting officers must apply FAR part 15 procedures when conducting FSS competitions over the simplified acquisition threshold and that the Department of Defense, Defense Federal Acquisition (DFAR) Supplement 208.404-70 should be added to FAR subpart 8.4 as a means to ensure full and open competition.

2. How Did We Get Here?

   In order to understand the changes in purchases made under the GSA FSS one must first look at the FSS program from its inception. This section discusses the purpose of the GSA FSS and the statutory changes that have affected the GSA FSS in the past twenty years. This section will demonstrate how the GSA FSS transformed from a highly regulated procurement vehicle to a streamlined method for government agencies to obtain commercial supplies and services through regulatory and statutory changes and how ultimately these changes limited competition.34

   1. The GSA FSS Program

      Section 201 of the Federal Property and Administrative Service Act of 1949,35 gives the GSA authority to administer the FSS program.36 The purpose of the FSS program is to provide government agencies with a convenient method of purchasing supplies and services by taking advantage of commercial buying practices, thereby saving the government time and money through volume buying.37 The GSA provides two types of schedules to accomplish its purpose. The first is the single award schedule, whereby a contract is awarded to one

      contractor to provide a single product at a specific price and location.38

      The second, and most used, is the multiple award schedule (MAS)39 in

      which the GSA negotiates indefinite delivery/indefinite quantity contracts with thousands of contractors for millions of commercial supplies and services.40 Once the government awards contracts to the vendors the GSA issues a catalog, separated into general categories and subcategories, known as the FSS or schedules to government agencies.41

      This catalog contains pricelists for every supply and service that a schedule contractor offers.42 The pricelist also contains a listing of the terms and conditions of each item on the schedule.43 Government agencies, in turn, use the FSS catalog to place orders with the contractors listed in the schedule.44 The schedules make ordering commercial supplies and services easy, allowing government agencies to obligate funds on the FSS purchases quickly.45

      The success of the FSS is evident in the number and variety of schedule contractors in the program. According to the GSA, the FSS program has more than 14,000 contractors providing more than 6.8 million products and services.46 This adds up to more than 34 billion dollars of government purchases from the FSS each year and the amounts purchased keep rising.47 However, even with the large number of contractors and items available on the FSS, competition in contracting is a concern for the federal government, which spends billions of dollars each year on goods and services.48

   2. Competition in Contracting Act of 1984 (CICA)49

      Congress enacted the CICA in response to a scandal involving government agencies spending thousands of dollars for readily available commercial items such as toilet seats, hammers, and wrenches.50

      Congress determined that these inflated costs resulted from inadequate competition for government contracts.51 The CICA requires government agencies to seek full and open competition in contracting.52 This means that government agencies must use competitive contracting procedures, allowing all responsible sources53 to compete, through sealed bidding, contracting by negotiation and FSS purchases when obtaining supplies and services.54

      The FSS program meets the requirements of a competitive contracting procedure in accordance with the CICA when participation in "the FSS program is open to all responsible sources and orders or contracts under the FSS program result in the lowest overall cost alternative to meet the needs of the government."55 In addition to the statutory requirements of the CICA, government agencies must also use the ordering procedures of FAR subpart 8.4 in order to satisfy all of the CICA's requirements.56 Further, the GAO has determined that if the government agency follows FAR subpart 8.4 ordering procedures57 there is no requirement for the government agency to seek further competition outside the FSS.58

   3. The Packard Commission

      Even though the CICA's goal was to prevent any further scandal in government contracting, the GAO found that "over half of the top 100 defense contractors" were involved in "approximately 200 fraud investigations."59 In an attempt to restore the public's trust in defense contracting, Congress and President Ronald W. Reagan "created the Blue Ribbon Commission on Defense Management" also known as the Packard Commission.60

      In 1986, the Packard Commission submitted their report to the President...