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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: April 3, 2003

SUBJECT: Federal Acquisition Regulation (FAR); Federal Supply Schedules Services and Blanket Purchase Agreements

SOURCE: Federal Register, April 3, 2003, Vol. 68, No. 75, page 19293

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Proposed Rule

SYNOPSIS: It is proposed that FAR Subpart 8.4, Federal Supply Schedules, be amended improve the application of acquisition basics on purchases for services from Federal Supply Schedules (FSSs) and blanket purchase agreements (BPAs) and reinforce sound multiple award schedule practices in general.

EDITOR'S NOTE: The Fiscal Year 2002 National Defense Authorization Act (Public Law 107-107), Section 803, Competition Requirement for Purchase of Services Pursuant to Multiple Award Contracts, directed DOD to take actions to improve its competitive procedures on FSS and other multiple award contracts. Many of those actions are the same or similar to those in this proposed rule. For more on DOD's implementation of the requirements in Section 803, see the October 25, 2002, FEDERAL CONTRACTS DISPATCH "Defense Federal Acquisition Regulation Supplement (DFARS); Competition Requirements for Purchase of Services Under Multiple Award Contracts."

For more on the acquisition-related provisions of the FY 2002 National Defense Authorization Act, see the January 2, 2002, FEDERAL CONTRACTS DISPATCH "Enactment of the National Defense Authorization Act for Fiscal Year 2002."

DATES: Comments are due on or before June 17, 2003.

ADDRESSES: Submit written comments on proposed rule to General Services Administration, FAR Secretariat (MVA), 1800 F Street, NW, Room 4035, Attn: Laurie Duarte, Washington, DC 20405. Submit e-mail comments to: farcase.1999-603@gsa.gov. Cite "FAR case 1999-603" when referring to this proposed rule.

FOR FURTHER INFORMATION CONTACT: Linda Nelson, 202-501-1900.

SUPPLEMENTAL INFORMATION: The FSS program, which is managed by GSA, provides agencies with a simplified process for obtaining commercial supplies and services at prices associated with volume buying. For most of its history, the FSS program consisted almost exclusively of products ("Federal Supply Schedules"). However, in recent years, the government has increasingly sought to acquire its services from the commercial marketplace rather than retain or develop the skills and capabilities itself. GSA has sought to facilitate broad access to service providers by adding services to the FSS. Now, services account for approximately 2/3 of the total FSS sales.

To assist its customers, GSA developed "special ordering procedures," but those procedures are buried within the FSS, and the regulations and procedures in FAR Subpart 8.4 still reflect the supplies-orientation of the FSS program as it existed years ago. Therefore, agencies have been inconsistent in adhering to certain basic acquisition requirements when buying services off the FSS, such as in their use of statements of work, effective pricing of orders, obtaining competition, and proper documentation of award decisions. The General Accounting Office (GAO), in its report GAO-01-125, Contract Management: Not Following Procedures Undermines Best Pricing Under GSA's Schedule, pointed out these deficiencies.

To significantly improve the application of acquisition basics on FSS purchases for services and reinforce the application of sound procurement practices to the FSS program generally, the FAR Council is proposing numerous amendments to FAR Subpart 8.4. The following are the most significant changes being proposed to FAR Subpart 8.4:

• To make FAR Subpart 8.4 easier to use, it would be reorganized as follows:
  
  FAR 8.401, General
  
  FAR 8.402, Applicability
  
  FAR 8.403, Use of Federal Supply Schedules (currently paragraph (a) of FAR 8.404, Using Schedules)
  
  FAR 8.404, Ordering Procedures for Federal Supply Schedules (new)
  
  FAR 8.404-1, Ordering Procedures for Supplies and Fixed-Price Services (currently FAR 8.404(b)(1), (2), and (3))
  
  FAR 8.404-2, Ordering Procedures for Services Using a Statement of Work (new)
  
  FAR 8.404-3, Blanket Purchase Agreements (BPAs) (expanded version of current FAR 8.404(b)(4))
  
  FAR 8.404-4, Price Reductions (currently FAR 8.404(b)(5))
  
  FAR 8.404-5, Small Business (currently FAR 8.404(b)(6))
  
  FAR 8.404-6, Documentation (currently FAR 8.404(b)(7))
  
  FAR 8.404-7, Payment (new)
  
  FAR 8.404-8, Ordering Procedures for Mandatory Use Schedules (currently FAR 8.404(c))
  
  FAR 8.405, Ordering Office Responsibilities (merely section heading -- no text)
  
  FAR 8.405-1 [Reserved]
  
  FAR 8.405-2, Order Placement
  
  FAR 8.405-3, Inspection and Acceptance
  
  FAR 8.405-4, Remedies for Inadequate Performance
  
  FAR 8.405-5, Termination for Cause
  
  FAR 8.405-6, Termination for the Government's Convenience
  
  FAR 8.405-7, Disputes
  
  
• FAR 8.401 would be amended to alert ordering offices that "GSA offers an on-line shopping service called 'GSA Advantage!.' It enables ordering offices to search specific information (i.e., national stock number, part number, common name), review delivery options, place orders directly with contractors (or ask GSA to place orders on the agency's behalf), and pay contractors for orders using the governmentwide commercial purchase card (or pay GSA). Ordering offices may access the 'GSA Advantage!' shopping service at http://www.gsaadvantage.gov. GSA's electronic quote system, 'e-Buy,' which may be accessed through GSA Advantage!, provides a medium for transmitting notice to contractors of the ordering office's needs."
  
  
• FAR 8.404-1 would state that its procedures apply to "ordering services that are listed in the schedule contracts as a fixed price for the performance of a specific task (e.g., installation, maintenance and repair)."
  
  
• FAR 8.404-2 would address ordering procedures for services "priced at hourly rates." For orders under the micro-purchase threshold, ordering offices would be permitted to place the order with any FSS contractor that can meet the agency's needs. For orders exceeding the micro-purchase threshold, the ordering office would be required to:
  
  
  • Develop a statement of work that includes the work to be performed, the location of the work, the period of performance, the deliverable schedule, applicable standards, and any special requirements, such as security clearances, travel, or special knowledge.
    
    
  • Use performance-based statements of work to the maximum extent practicable (see FAR Subpart 37.6, Performance-Based Contracting).
    
    
  • Provide the statement of work and selection criteria to at least three schedule contractors. "Schedule contractors should be requested to submit firm-fixed prices to perform the services identified in the statement of work."
    
    
  • For orders expected to exceed the maximum order threshold ("each schedule contract has a maximum order threshold...that represents the point where it is advantageous for the ordering office to seek a price reduction), the ordering office shall "provide the statement of work and selection criteria to an appropriate number of additional schedule contractors that offer services that will meet the agency needs."
    
    
  • The ordering office must provide the statement of work and selection criteria to any schedule contractor upon request.
    
    
  • "The ordering office shall evaluate responses received against the selection criteria provided to the schedule contractors. The ordering office is responsible for considering the level of effort and mix of labor proposed to perform a specific task being ordered and for making a determination that the total price is reasonable. Place the order or establish the BPA with the schedule contractor that represents the best value..."
  
  
• While FAR 8.404-3 would state that it is within the discretion of the office establishing a BPA to decide the number of BPAs to award, "the number of BPA awards should be based on a strategy that is expected to maximize the effectiveness of the BPA(s). In determining how many BPAs to award, consider (i) the scope and complexity of the requirement(s); (ii) the technical qualifications of the schedule contractor(s); (iii) the administrative costs of BPAs; and (iv) the need to periodically compare multiple technical approaches or prices."
  
  
  • Establishment of a multi-agency BPA against an FSS is permitted if all participating agencies are signatories to the BPA.
    
    
  • If the ordering office awards one BPA, authorized users may place the order directly under the BPA when a need for the supply or service arises.
    
    
  • If the ordering office awards multiple BPAs, the ordering office shall do the following before issuing an order exceeding $2,500:
    
    
    • Forward the requirement or statement of work along with the selection criteria to the number of BPA holders according to the procedures provided in the BPA;
      
      
    • Evaluate the responses received and make a best value determination; and
      
      
    • Award the order to the schedule contractor that represents the best value.
    
    
  • If the BPA is for hourly rate services, the ordering office must develop a statement of work unless the BPA contains fixed prices for specific tasks.
    
    
  • Ordering offices must review BPAs at least once a year.
  
  
• FAR 8.404-6 would require ordering offices to document the circumstances and rationale for restricting consideration of schedule contractors to fewer than required by proposed FAR 8.404-1 (consider at least three FSS contractors if order exceeds the micro-purchase threshold) or FAR 8.404-2. For sole source requirements, ordering offices would be required to:
  
  
  • Prepare sole source justifications
    
    
  • Prepare justifications and approvals (J&As):
    
    
    • For an order exceeding $100,000 but not exceeding $500,000, the contracting officer must certify the accuracy and completeness of the J&A.
      
      
    • For an order exceeding $500,000 but not exceeding $10,000,000, the competition advocate must approve the J&A.
      
      
    • For an order exceeding $10,000,000 but not exceeding $50,000,000, the head of the contracting activity must approve the J&A.
      
      
    • For an order exceeding $50,000,000, the senior procurement executive of the agency must approve the J&A.
      
      
    • For orders requiring a statement of work, the ordering office must document, as a minimum:
      
      
      • The evaluation methodology used in selecting the contractor for award;
        
        
      • The rationale for any tradeoffs in making the award decision;
        
        
      • The price reasonableness determination required by FAR 8.404-2; and
        
        
      • The rationale for using other than a firm-fixed price order or a performance-based order.
  
  
• FAR 8.404-7 would allow agencies to make payments for oral or written orders by any authorized means, including the governmentwide commercial purchase card.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

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