GSA panel on track with schedule policy

Buylines | Policies, strategies and trends to watch

To the credit of former General Services Administration
Administrator Lurita Doan and Acting Administrator
David Bibb, GSA's Multiple Award Schedule (MAS) Advisory
Panel is moving forward. The next meeting of the 15-member
panel was scheduled to be held May 22 at the GSA auditorium.
Such meetings are open to industry.

Statutory authority and implementing
regulations require the GSA administrator
to define schedule contracting procedures.
That's to ensure that the program is open
to all responsible sources and orders and
that contracts result in the lowest overall
cost alternative to meet government
needs.

This is an extremely high standard.
How can the GSA administrator assure
Congress that purchases on GSA schedules
always will be the lowest overall cost
alternative when most orders are placed
by agency procurement officers over
whom GSA has no control?

This is what the MAS Advisory Panel
must address for the benefit of all stakeholders,
including agency buyers, schedule
contractors, GSA schedule contracting
officers and the oversight community.

Current GSA MAS policy ? last revised
in 1982 ? addresses the lowest overall
cost alternative requirement by instructing
contracting officers to seek mostfavored
customer pricing on schedule
contract catalogs. Thus, orders against
those contracts will automatically result
in the lowest overall cost alternative.

This contracting system is built on the
theory that the rough-and-tumble world
of the competitive commercial marketplace
provides the basis for schedule contract
prices. The contract requires contractors
to fully disclose their U.S. pricing
and negotiate a most-favored customer
basis-of-award relationship that, when
maintained, automatically provides competitive
pricing for the duration of the
contract.

The price reduction
clause assures that
schedule prices will
fall in lock step with
basis-of-award customers
throughout the
term of the contract,
just as the economic
price adjustment
clause allows prices to rise.

The problem with this system is that it
was designed for pure commodities ?
identical items produced by many growers
or manufacturers, for which pricing information
is visible to all. Today, government
demands brand-unique items. But manufacturers
are loath to publish a catalog
that features the lowest price they ever
charged for a particular item lest the government
become a price driver rather
than a reflector of the commercial
marketplace.

On the professional services side,
hourly labor rates determined by simple
measures such as years of experience
and education have little to do with the
analysis required to choose the lowest
cost alternative that will fulfill the
requirements of a performance-based
statement of work.

The first advisory panel meeting
heard a presentation by Associate
Professor Christopher Yukins, co-director
of the government procurement
program at the George Washington
University Law School. He emphasized
that although catalog pricing has value
in the procurement process by setting
ceiling prices and baseline contract terms,
it cannot assure that an individual order
will necessarily result in the lowest cost
alternative for a given purchase request at
a particular moment in
time.

I hope the work of this
panel will result in an
MAS policy with enough
specificity at the contract
formation and order levels
to include safe harbor
provisions so that all of
us, including inspector general auditors
and congressional overseers, can operate
with confidence that there is a shared
understanding on the interpretation of
the rules.

Steve Charles (steve_charles@immixgroup.com)
is co-founder of consulting firm immixGroup Inc.

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