Restoring integrity to GSA schedules

The three whistle-blower cases the JusticeDepartment joined against Accenture Ltd.,Sun Microsystems Inc. and Hewlett-Packard Co. represent the biggest challengeto manufacturers of commercial productsin this decade. The cases have ensnared dozens of technologymanufacturers and prime contractors.The General Services Administration'sallegationsagainst Sun should sober anyproduct company that holds aschedule contract. Sun's decisionto terminate its contractbecause of auditor demands tosee commercial sales data illustratesthe challenge companiesface when providing therequired commercial salespractice disclosures to GSA inseeking an award or update ofa schedule contract.A similar failure to discloseforced Oracle Corp., the buyerof PeopleSoft, to pay a record $98.5million settlement to the governmentfor PeopleSoft's alleged overchargeson sales of $204 million. Those kindsof damages are simply unacceptableto any company, and companies mustunderstand that they will be requiredto defend their disclosures with salesdata to withstand a GSA inspectorgeneral audit, whether it is pre-awardor post-award.Most of the news reports related tothe Sun case have focused on thesparring among the leaders of GSA,GSA's IG and the oversight committeeson Capitol Hill. What the newsdoesn't tell us is what companiesshould be doing to avoid trouble withthe GSA schedule contracts ? especiallyfor products. We also are nothearing why anyone should want tohold a GSA schedule contract or whyan agency would want to order fromit.In the past, GSA has called theschedules its crown jewels, and wemust ensure that manufacturers andgovernment understand why thatremains true. It's the only vehicle inthe government that can accommodatetechnology products with theirmany forms of licensing and otherterms. And it is the only vehicle thatoffers easy ordering requirementswith built-in reasonable prices thatallow competition to occur at thebrand level, thus avoiding limitedsource justifications without havingto go through a request-forquotationor request-for-proposalprocess.GSA should openly embrace theunique authority granted to it byCongress through the schedules program.When this authority is exercisedand audited to maintain programintegrity, business transactionscan be done much more easily thanany other method in a manner that istrue to the Federal AcquisitionRegulation requirements forcompetition.GSA must rebuild integrity in aprogram that only it has the authorityto run ? a program that must not beconfused with indefinite-delivery,indefinite-quantity contracts.Without such a rebuilding, contractors? especially commercial productmanufacturers ? who continue tomaintain a schedule face a significantmonitoring and disclosing burdencombined with off-the-charts legalrisks but with none of the promisedbenefits of streamlined ordering.When the rules are followed, productspurchased via a GSA schedulewill be commercial items in the truestsense of the term, pricing will be consideredcompetitive, and price reasonablenesswill be determined sothat additional competitive proceduresand questions about whethercertified cost or pricing data is neededat the delivery order stage areaverted. Section 1.2.2.6 of theDefense Contract and PricingReference Guide states that theFederal Supply Schedule contractingofficer already has determined thatthe prices are fair and reasonable.Moreover, it states that the schedulesare designed to be a ready source ofmarket information, even when theyare not used to make a purchase.The schedules program must bestrengthened so that the DefenseFederal Acquisition RegulationSupplement and similar guidance cancontinue to apply to the use of schedulecontracts ? at least for truly commercialproducts.