Infotech and the Law

New law aims to increase competition in DoD contracts

John Jensen

In my Aug. 13, 2001, article on the General Services Administration's Federal Supply Schedule, I discussed the standards that the General Accounting Office and the GSA itself have established for conducting procurements based on FSS contracts, formally known as the Multiple Award Schedule.

For example, agencies must evaluate offers consistent with the instructions in the solicitation and rationally evaluate past performance. Moreover, GSA itself has prescribed special proposal submission and evaluation guidance, "Ordering Procedures for Services," for FSS buys requiring a statement of work (

Congress also has weighed in. In Section 803 of the National Defense Authorization Act for 2002, Congress directed the Department of Defense to issue regulations "requiring competition in the purchase of services" under multiple award contracts. Orders more than $100,000 under multiple award contracts, including FSS contracts, must be made "on a competitive basis." The Defense Department is now preparing regulations implementing the statute's requirements (

The upshot can be summarized as follows: Generally, the Defense Department contracting officer must either give all holders of the appropriate FSS contract the opportunity to submit a proposal, or give as many contractors as practicable the opportunity to submit a proposal and actually receive three proposals. Both approaches satisfy the new competition standard.

If the contracting officer selects the second alternative but fails to get three proposals, an award can still be made if it is determined in writing that "no additional qualified contractors could be identified, despite reasonable efforts to do so."

The statute goes on to state that orders need not be awarded on this competitive basis in four circumstances. These are the same four circumstances in which an agency presently is excused from providing all contractors a fair opportunity to be considered for orders placed under multiple award contracts generally. The exceptions are: The procurement is urgent; only one capable contractor exists; the order is a logical follow-on award; or the agency needs to satisfy a minimum guarantee.

An order also need not be awarded on a competitive basis when a statute authorizes the purchase from a particular source.

The Defense Department's proposed implementing regulations state that for orders for services in excess of $100,000, the new rules replace the traditional rules for GSA ordering. The traditional rules generally require only that the agency review the catalogs or price lists of at least three FSS contractors before placing an order. Those rules remain in effect for all other purchases.

The Defense Department's proposed regulations also state that the award of blanket purchase agreements established under the FSS will also be subject to the new competition rules. A single BPA under the FSS, furthermore, will have to define the tasks and fixed prices for the tasks. For multiple BPAs, all holders will have to be given the opportunity to submit proposals for tasks.

Uncertainties abound as to what some of the regulatory language will mean in practice, as evidenced in many of the public comments to the proposed rule (

The final rule, which goes into effect by the end of June, should help increase the level of competition in Defense Department orders for services more than $100,000. Given the rampant growth of the FSS program and the relative absence of regulatory guidance to date on FSS purchases, the new rules were a predictable ? and probably desirable ? step to advance the federal policy of promoting competition in contracting.

John Jensen is a partner in the government contracts practice at ShawPittman in McLean, Va. He can be reached at

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