GSA Schedule Contracting - Kaufman & Canoles · Schedule Contracting • GSA manages most contracts for commercial products and services – Largest government – wide contracts

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GSA Schedule Contracting: Understanding the Process, Opportunities,

and Pitfalls

May 6, 2015

Christopher T. Page

Kaufman & Canoles

[email protected]

757.259.3847

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Important Note

The contents of this presentation are intended

for general information only and should not be

construed or relied upon as legal advice nor as

a legal opinion on any specific facts or

circumstances.

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Agenda

Overview of Multiple Award Schedule (MAS)

Contracting

Nuts and bolts of GSA Schedules

Benefits of GSA Schedules

Process and timeline to obtain GSA Schedule

Potential pitfalls for unwary contractors

GSA’s changing policies and priorities

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Overview of Multiple Award

Schedule Contracting • What are “Multiple Award Schedules?”

– Multiple contractors are awarded contracts under

various schedules and compete for the customer’s

business

– Different schedule contracts cover different

categories of services and supplies

– But all are Multiple Award Schedules

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Schedule Contracting • MAS Stated Objectives:

• Provide federal agencies (and other buying

concerns, including state and local governments)

with a streamlined acquisition process for

obtaining commonly used commercial services

and supplies at prices associated with volume

buying;

• aid customers to achieve the best value possible.

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Schedule Contracting (cont’d) • Authorization:

– Title III of the Federal Property and Administrative

Services Act of 1949 (41 U.S.C. 251 et seq.) and

– Title 40, U.S.C. 501, Services for Executive

Agencies

• Managed by:

– General Services Administration (GSA)

– Department of Veterans Affairs (VA)

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Schedule Contracting • GSA manages most contracts for commercial

products and services

– Largest government – wide contracts are administered under

the GSA Schedules Program.

– GSA Administrator has statutory authority to procure and

supply personal property and non-personal services.

• VA manages the schedule contract for medical-

related products and services

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Schedule Contracting • “Customers” (per GSA Order ADM 4800.2H) include:

– Executive and Federal agencies

– Most DoD

– The District of Columbia

– Mixed-ownership government corporations (FDIC)

– State and Local Governments

• Through cooperative purchasing

• Available schedules limited (includes IT, Law Enforcement,

Security)

– Government contractors authorized to spend Federal money

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Schedule Contracting • These “Customers” are creatures of habit

• Given the current financial climate, they have

a mandate to do more with less:

– Decrease risk

• need companies they can trust

– Increase speed and efficiency

– Least resistance to end products/services

• Leads to the appeal of the GSA Schedules

Program

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Overview of GSA Schedules

• GSA Schedules Program achieves approximately

$50 Billion dollars in revenue every year

– (~$39 Billion for GSA and ~$10.5 for VA)

• Unfunded contract that lists the prices the Federal

(and State in some instances) government has

agreed to pay to an organization for its products or

services

• Preferred contracting vehicles for buyers:

– saves buyers time and money when they purchase products

and services

– comfort doing business with pre-approved vendors

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• 33 different GSA Schedule Contracts

• 8 different VA Schedule Contracts

• Each Schedule Contract is Indefinite delivery, Indefinite quantity

(IDIQ)

• Awarded on basis of Special Item Numbers (SIN)

– Identify broad range of commercial supplies and services

– Toilet paper to IT Systems Engineering

• 5 year base period with 3 five-year options (can total 20 years)

• No bidding required

• Contractor applies by completing “schedule” solicitation

• Government-wide contract – “marketing” to multiple agencies

through Schedule

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• Who can participate?

• Offer supplies or services found on a Schedule

• $25,000 in sales per year (or potential to achieve)

• Accept credit cards as payment

• Complete GSA Schedule Registration and

Certification

• Complete Past Performance History

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• Holding a GSA Schedule = exposure

– 700,000 registered users

– Approximately 600,000 searches on GSA

Advantage! per work day

– More than 70,000 e-Buy RFQs per year

Source: GSA-Advantage! Statistics FY 2012

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• Streamlined buying process benefits all

parties involved:

• No formal solicitation process = time saver

• Pre-negotiated terms and conditions

• “Fair and Reasonable” pricing

• No constraints on dollar amount – purchase at any

price (subject to micro-purchase and SAT)

• Increased visibility and credibility for vendors

• Certification process = transparency for vendors

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• Enter into Blanket Purchase Agreements

(BPAs) – multi-agency use

• Enter into Contractor Teaming Agreements

(CTA)

– 2 or more GSA Schedule holders team to provide

comprehensive solutions

• Authorized dealer/re-seller agreements

– Others sell off your Schedule

– Selling off another company’s Schedule

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Types of GSA Schedules

• Schedule list in the GSA e-Library contains all GSA

and VA Schedules

• Generic categories of supplies and services available

under each Schedule may be viewed by clicking

Schedule number in “Source” column

• Commercial Items in MAS

– FAR 2.10(b) definition of “commercial item”

includes supplies/commodities and services.

– Very broad

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• Services available (comprehensive list

available in GSA e-Library):

– Environmental

– Professional Engineering

– Logistics

– Language

– Management Consulting

– Temporary Administrative and Professional

– IT

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• Services available:

– Advertising and Marketing

– Financial and Business Solutions

– Security Solutions

– Facilities Maintenance

– Disaster Relief

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• Supplies available:

– Office supplies and Equipment

– Tools and Hardware

– Building and Industrial Materials

– Furniture

– Scientific Equipment

– IT Products

– Vehicles and Support Equipment

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• Supplies available:

– Appliances and Food Services

– Law Enforcement, Fire, and Security Products

• BROAD scope of supplies and services

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Nuts and Bolts

• Characteristics:

– Schedules contain no specified quantities – other

than minimum and maximum threshold (contract-

specific)

– Ordering activity involved sets thresholds and

delivery dates when issuing order

– Ordering activity may add terms and conditions as

long as they do not conflict with Schedule contract

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Nuts and Bolts


– Order placement and timing in accordance with

FAR 8.405-1 and 8.405-2

– May issue order for supplies or services without

Statement of Work (SOW):

• Orally

• Fax

• Paper

• Email

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Nuts and Bolts

• Characteristics: – May issue order anytime during effective period of Schedule

Contract

– Cannot place repetitive orders for same items

• Designed to avoid exceeding Simplified Acquisition

Threshold (SAT), which is currently set at $150,000

• Orders exceeding SAT require proper competition

– Schedule users permitted to negotiate reduction from

Schedule prices at anytime

• Schedule holders (Vendors) not required to agree

– Likewise, Schedule holders may offer reduced prices (more

on process later)

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Nuts and Bolts


– Order level thresholds:

• At or below Micro-purchase threshold ($3,000) –

Customer may place order directly with Schedule holder

without competition

• Micro-purchase – SAT – Customer must survey at least

three Schedule holders and make best value

determination. Typically accomplished through review of

GSA eBuy.

• Exceeding SAT – Customer must solicit or consider

multiple sources and must seek price reductions

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Nuts and Bolts


– Contract level thresholds:

• Each Schedule Contract contains a minimum and

maximum order threshold

• Schedule holders are not required to accept orders with

value less than minimum order or greater than maximum

order thresholds

– Many Schedule holder gladly accept such orders

– Have five days from receipt of order to reject

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Nuts and Bolts

• Pricing:

– Based on contractor disclosure on Form CSP-1,

Commercial Sales Pricing Format

– Government uses form to negotiate for most

favored customer pricing

– Form must contain current, accurate, and

complete data

• Otherwise, run risk of violating Price Adjustment Clause

found in Schedule contracts or False Claims Act

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Getting on Schedule

• Process involves many steps:

– Research / due diligence

– Registration/certification

– Proposal / “Offer” submission

– Negotiation with customer

– Award

• Typically takes 3-6 months to complete

• Continuous enrollment = pursue when ready

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Getting on Schedule

• First, determine if you have the resources

and time to pursue a Schedule Contract: – GSA Vendor Toolbox: https://vsc.gsa.gov/RA/

– Business Plan

• Estimate of expected return on investment

• Marketing plan

• Analysis of dedicated personnel to administer Schedule(s)

– Market research

• Comparable products/services offered

• Which agencies to target

• Buying trends

https://vsc.gsa.gov/RA/

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Getting on Schedule

• Second, Locate the right solicitation:

– www.gsa.gov/schedulesolicitations

– www.gsa.gov/elibrary

– Which Schedule or Schedules to hold?

• Review descriptions of acquisition centers

• Analyze SINs associated with each Schedule

http://www.gsa.gov/schedulesolicitations

http://www.gsa.gov/elibrary

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Getting on Schedule

• Third, get registered and certified:

– Detailed, time-consuming administrative process

– Obtain the following registrations: • DUNS (free) – Data Universal Numbering System

• SAM (free) – System for Award Management; contains all

records from Central Contractor Registration (CCR)/FedReg

and Online Representations and Certifications Application

(ORCA) and exclusion records from EPLS, active or expired

• Past Performance Evaluation (fee) - register and provide the

names and email addresses of six to 20 of your customers

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Getting on Schedule

• Fourth, determine if your company qualifies

for any special government programs:

– GSA Office of Small Business Utilization

– Some programs require an additional certification

from:

• the Small Business Administration (SBA); or

• the Veterans’ Administration (VA) for Veteran-owned

small businesses (VOSB) and service-disabled Veteran-

owned small businesses (SDVOSB).

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Getting on Schedule

• Fifth, respond to a solicitation:

– All responses to solicitations require electronic

submission at eOffer/eMod

– Read solicitation and instructions thoroughly

• incomplete offers lengthen processing time

– 3 Sections

• Administrative

• Technical

• Price

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Getting on Schedule

• Administrative: – Review FAR Sections incorporated by reference

– Review Summary of Offer

– Copy of ORCA record

– Copy of CCR record

– Submit completed Form 1449 with e-signature

– Vendor Response Document

– Submit dated copy of commercial pricelist(s) with corresponding SINs

– Submit Commercial Sales Practice Format (CSP-1) – provides further detail

regarding pricing history

– Subcontracting plan (if applicable)

– Previous rejection letters

– Other GSA Schedule Contracts held

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Getting on Schedule

• Technical Proposal:

– Four evaluation elements

• Corporate experience

• Relevant project experience

• Past performance

• Quality control

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Getting on Schedule

• Corporate Experience:

– Federal marketing plan

– Organizational size

– Staffing capabilities

– Corporate controls (accounting, risk, QM, etc.)

– Potential subcontractors (if applicable)

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Getting on Schedule

• Project Experience:

– Within last 2 years

– 2 projects identified for each SIN

– How work experience is similar to solicitation work

– Customer reference information for each identified

project

– If no/insufficient experience

• May substitute experience of key personnel and/or

predecessor companies performing work

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Getting on Schedule

• Complete Past Performance Evaluation: – Submit with Offer

– Available online via Open Ratings (Dun & Bradstreet)

application https://www.supplierriskmanager.com/ppe-

order/login

– Surveys past customers to assess work performance

– Specify 6-20 references

– Each reference emailed online survey

– Appx. 35 day process

– Valid for 6 months

https://www.supplierriskmanager.com/ppe-order/login



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Getting on Schedule

• Quality Control Evaluation:

– Internal review processes

– Individuals tasked with reviewing projects

– Identity of subcontractors used and steps to

ensure subcontractor compliance

– Procedures for meeting urgent requirements

– How multiple task orders can be handled

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Getting on Schedule

• Price Proposal:

– Commercial Sales Practices (CSP-1 Form)

– Price Narrative

– Escalation (if applicable)

– Labor categories and descriptions

– Supporting documentation (invoices, quote

sheets)

– Professional compensation plan

– Service Contract Act Documentation

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Getting on Schedule

• Pricing (cont’d):

– Information required on CSP-1 include:

• Dollar volume of sales to public in last 12 months

• Discounts offered to commercial customers

• Customers that received the best discounts

• Policies governing pricing

• Deviations from pricing policy and concessions offered to

customers

– Government reviews data to negotiate “basis

of award customer”

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Getting on Schedule


– Industrial Funding Fee (IFF):

• GSA Schedule programs funded through IFF, which is

reflected in prices charged by Schedule holders

• Intended to reimburse GSA for administrative costs

associated with GSA Schedule programs

• Contractors collect fee as part of purchase price and

remit amounts to GSA.

• Schedule holder must pay the IFF = 0.75% of all sales

reported.

• IFF payments due quarterly after reporting of quarterly

sales

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Getting on Schedule


– Industrial Funding Fee (IFF):

• What if government customer asks contractor to bear

cost of IFF?

– Clear policy in place

– GSA cannot charge contractors a fee to run its program

– Government cannot ask contractors to absorb IFF as

negotiation technique

– Make sure you are armed with this information prior to

entering negotiation phase of process

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Getting on Schedule


– Price Narrative important to:

• Provide GSA Contracting Officer enough information to

determine prices offered are fair and reasonable

• Explain deviations from CSP (CSP-1 Form)

• Propose any economic price adjustments

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Getting on Schedule

• Economic Price Adjustments (EPAs): – Schedule holders permitted to re-negotiate or modify

Schedule prices

– Prices must remain firm for 12 months from date of award

– Thereafter, may request decrease at anytime during contract

– May request increase pursuant to the specific terms in the

Schedule

• Commercial Price Lists – equivalent

• Fixed escalations

• Market indices

– More on risks associated with EPAs later…

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Getting on Schedule

• Sixth, GSA reviews your offer: – Usually takes 30 to 120 days

– GSA Procurement Contracting Officer evaluates offer based on:

• Responsibility – healthy financial state; proper internal controls

and processes

• Responsiveness – complete and timely offer

• Scope – products/services offered match Schedule SINs

• Subcontracting plan – pertains to large businesses only (per

NAICS - revenue over $550,000/yr. = required)

• Price Analysis – “fair and reasonable” with supporting data

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Getting on Schedule

• Seventh, if necessary, a meeting is scheduled

with GSA to discuss terms and negotiate

pricing: – GSA’s goal is to create discount ratio for your Most Favored

Customer

– Must prepare Final Offer after meeting reflecting all discounts and

concessions agreed upon

– Offers routinely rejected for failure to meet evaluation criteria,

including fair and reasonable pricing • May request follow-up meeting and re-submit final offer for consideration

– If Offer accepted, then Schedule Contract awarded = ready to

do business!

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Getting on Schedule

• Schedule contract administration does NOT

stop after award

– Need dedicated team to:

• Monitor sales

• Process IFF payments

• Coordinate marketing efforts

– Know the top customers for your Schedule

– Take advantage of opportunities to attend industry

functions

• Coordinate contract modifications and audits

• Important to avoid pitfalls

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Potential Pitfalls

• Lack of Sales

– Contractor obtains schedule then year later left

wondering why sales are so low

– Possible causes:

• Prices too high – not competitive

• Delivery time

• Minimum order needs to be lowered

• Customer service

• Schedule appearance

– Product photos

– Complete and accurate descriptions of products / services

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Potential Pitfalls

• Lack of Sales (cont’d)

– Attempt to address through Schedule Modification

• Can seek modification after first year

• Shifting to electronic process – eMod system

• Modify products, prices, other terms (min.

order; delivery)

• Series of specific documents required – varies

widely by Schedule and nature of modification

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Potential Pitfalls

• Compliance Issues

– Variety of remedies available to Government

• Price reductions

• Poor performance ratings

• Cancel / terminate contract

• Civil False Claims Act

– GSA OIG Notable Cases

• Oracle - $200 million

– Material misrepresentations re: sales practices, discounts

• EMC Corp. - $128 million

– Defective pricing (inaccurate discounts); kickbacks

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Potential Pitfalls


– Price Adjustment Clause

• Government remedy if Contractor provides inaccurate or

incomplete information in CSP Form

• CO may make forward price adjustment (reduce price)

from date of sale at issue if Contractor fails to:

– Submit current, accurate, and complete information

– Disclose changes in commercial pricelist

• May also seek repayment for overpayments (with

interest)

• Termination for Default

•

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Potential Pitfalls


– Trade Agreements Act

• Must certify that end products are “U.S. Made or

designated country end product”

• Issue for Contractors selling IT products

– Taiwan recently acceded to World Trade Organization's

Government Procurement Agreement = TAA compliant

– China accession remains stalled

• Buy American Act not applicable to Schedule Contracts

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Potential Pitfalls


– Price Reduction Clause

• Government’s way of monitoring Schedule pricing over

life of contract to ensure constant “most favored

customer” status

• If discounts greater than those identified in CSP Form

then Schedule prices reduced

• Price reduction relates back to date greater discount

offered

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Potential Pitfalls

• Compliance Issues – GSA’s Proposed Transactional Data Rule (GSAR Case

2013-G504)

– Proposed rule trades Price Reduction Clause for increased

reporting on contractor transactional data

• Intended to make prices paid more transparent

• Contractors report prices paid during performance of

contract

– Unit, quantity, prices paid per unit, total price

• More market intelligence for smaller businesses

• But, increased exposure for misreporting – False Claims

Act

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Potential Pitfalls

• Tips for GSA Schedule Compliance:

– Realistic Basis of Award (pricing)

• comes from sufficient initial due diligence / research

– Adhere to centrally controlled / standard pricing

structure

– Qualified support team (internal and external)

– Periodic independent compliance reviews

– Swift action if receive audit letters, subpoenas, etc.

• Contact counsel immediately

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GSA’s Changing Priorities

• Recent leadership changes at GSA

– Dan Tangherlini, Administrator of the General

Services Administration stepped down in February

2015

– Deputy Administrator Denise Turner Roth is acting

administrator

– President Obama will appoint a full-time successor

– New programs and policies will be shaped by

coming appointment

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GSA’s Changing Priorities

• GSA’s 2014-2018 Strategic Plan highlights

significant changes to the program

– “Hallways” initiative

– Consolidation of professional services schedules

– OASIS

– FSSI impact on small businesses

– Just to name a few

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Changing Priorities

• Hallways Initiative – Born out of need to reduce contractor inefficiency through

consolidation of multiple schedules:

• many contractors hold multiple schedules for professional

services - significant overlap

• each with separate negotiation and management

– 8 services schedules to be consolidated into 1 super

schedule by November 1, 2015

• MOBIS, PES, FABS, AIMS, LOGWORLD, Environmental and

Language

– Hallways could increase use of GSA schedules and bring

more business to contractors

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Changing Priorities

• OASIS and OASIS Small Business

– One Acquisition Solution for Integrated Services

– 1 contract to cover complex professional services

• Program management

• Management consulting

• Logistics

• Engineering

• Scientific

• Financial

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Changing Priorities


– Offers more flexibility than traditional schedules to

satisfy complex, integrated professional services

– Full-service offering

– Multiple award IDIQ (5 yr. contract)

• Agencies submit task orders against each pool (3-5 bids

per TO)

• Receive credit toward small business goals based on

use of SB pools

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Changing Priorities


– Market for all services offered equates to

approximately $60 billion per year

– Initial contracts already awarded

• 74 unrestricted across 6 pools (type of service)

• 123 to small businesses across 8 pools

– Multiple award IDIQ (5 yr. contract)

• Agencies submit task orders against each pool (3-5 bids

per TO)

• Receive credit toward small business goals based on

use of SB pools

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Changing Priorities


– Air Force already committed to program: • using program to purchase $1.4 billion in systems engineering,

R&D, and other services

• “old way” would require creation of separate multiple

award IDIQ for services

• Other agencies likely to follow AF lead

– On Ramps • Contracts permit GSA to add new contractors

• GSA monitoring competition based on use of contracts

• Likely to be executed in 2019 when initial contracts end

• Possibly before

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Changing Priorities

• FSSI – Federal Strategic Sourcing Initiatives

– Allows agencies to work together to create solutions

(typically BPAs) for commonly acquired goods and services

– Highly controversial in small business community

• Current practices reducing number of small businesses doing

business with agencies

• Awards going to select few

• FY15 National Defense Authorization Act in House

– Would require GAO to issue report on FSSI impact on

small businesses

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Questions?

Documents

GSA Schedule Contracting - Kaufman & Canoles · Schedule Contracting • GSA manages most contracts for commercial products and services – Largest government – wide contracts