Only 40 percent of orders placed against GSA Schedules in FY14 were based on three or more quotes — the number required by the Federal Acquisition Regulation (FAR).

This finding comes as a part of a recently-released Government Accountability Office (GAO) report.

According to the General Services Administration (GSA), total sales through the Federal Supply Schedules (FSS) program in fiscal year 2014 were $33.1 billion. This includes purchases by federal, state, and local agencies, including federal intelligence agencies which do not report their FSS spending publicly. GAO’s analysis of publicly reported federal procurement data shows that federal use of the FSS program has declined from $31.8 billion in 2010 to $25.7 billion in 2014 — a 19 percent inflation-adjusted decrease. This is consistent with the decline in overall federal contracting obligations. The FSS portion of total federal contracting obligations remained steady — between 5 and 6 percent.

The extent of competition on GSA Schedule orders is influenced by various factors. One factor identified in the orders from the agencies GAO reviewed — the Departments of Defense (DOD) and Health and Human Services (HHS) and GSA — involves situations where few vendors can fulfill agencies’ specific needs.

HHS had a significantly higher percentage of FSS obligations in fiscal year 2014 on orders that were competed but the agency received only one or two quotes — 51 percent — compared to DOD and GSA, which received one or two quotes for 35 and 32 percent of their FSS obligations, respectively. HHS’s practice of targeting solicitations to fewer vendors may be contributing to this higher rate.

The bottom line?  Agencies are paying insufficient attention to prices when using FSS, according to GAO.  Ordering agencies did not consistently seek discounts from Schedule prices, even when required by the FAR. In addition, GAO found cases in which officials did not assess prices for certain items, as required, or had insufficient information to assess prices. Contracting officials were not always aware of the requirement to seek discounts and told GAO that the need to assess prices was not emphasized in training and guidance. When contracting officials are not aware of these regulations, agencies may be missing opportunities for cost savings.

Why GAO Did the Study

The FSS program provides agencies a simplified method of purchasing commercial products and services at prices associated with volume buying. In 2011, the FAR was amended to enhance competition on FSS orders. Competition helps agencies get lower prices on products and services and get the best value for taxpayers.

In its report, the GAO examined competition and pricing for FSS orders. The report addresses: 1) how and to what extent the government is using the FSS program, 2) factors influencing the degree of competition for FSS orders, and 3) the extent to which agencies examine prices to be paid for FSS orders.

GAO analyzed data from the Federal Procurement Data System-Next Generation on obligations through the FSS program for fiscal years 2010-2014 and reviewed a non-generalizable sample of 60 FSS orders awarded in fiscal year 2013 by DOD, HHS and GSA, the agencies with the highest use of the FSS program. GAO also interviewed officials from these agencies and FSS vendors.

What GAO Recommended

GAO recommends that DOD, HHS and GSA issue guidance and assess training to focus attention on rules related to pricing. DOD, HHS and GSA concurred. GAO also recommends HHS assess reasons contributing to its higher rate of orders with only one or two quotes. HHS concurred.  The complete GAO report, publicly released on August 10, 2015, may be seen at: FSS – More Attention Needed to Competition and Prices.