fair and reasonable price | The Contracting Education Academy

February 1, 2018 By AMK

Urban Myths: Are GSA’s prices fair and reasonable?

Over the years, some have questioned whether GSA Schedule prices are fair and reasonable, and such concerns have led to the General Services Administration launching efforts, such as Transactional Data Reporting and horizontal pricing analysis, to demonstrate that it is dedicated to offering its customers “competitive” (however defined) prices.

Now comes an MBA Professional Report published by the Naval Postgraduate School, which provides a business case analysis comparing GSA Advantage to Amazon Business from the standpoint of prices and processes. The study was completed in response to a request from the Air Force, which is considering entering into a pilot with Amazon Business in order to strategically source micro-purchases using an online platform.

The results of the study may be surprising in light of the recent legislative activity and discussions surrounding online acquisition options for government. They also might inform those who cast a skeptical eye toward the value and vitality of the GSA Schedules Program. The authors gathered data on the top 60 commercially available items purchased by the Air Force using government purchase cards (GPCs) and compared the acquisition outcomes on GSA Advantage and Amazon Business.

Keep reading this article at: https://federalnewsradio.com/commentary/2018/01/urban-myths-are-gsas-prices-fair-and-reasonable/

September 26, 2016 By AMK

IG: VA contracts not based on need nor negotiated at fair and reasonable prices

The Office of the Inspector General (OIG) of the Department of Veterans Affairs (VA) has found significant weaknesses in the planning, evaluation, and award of a series of acquisitions, determining the contracts were not developed or awarded in accordance with acquisition regulations and VA policy intended to ensure services acquired are based on need and at fair and reasonable prices.

The VA contracts in question are known as Patient-Centered Community Care (PC3) contracts, designed to provide veterans with a comprehensive, nationwide network of high quality, specialty health care services.

In September 2013, the VA awarded the PC3 contracts for an estimated $9.4 billion, with a potential cost to VA of $27 billion. The OIG found that contracting officials solicited proposals from vendors without clearly articulating VA’s requirements. Thus, the vendors bidding on the solicitation did not have sufficient information on the type of specialty health care services they would need to provide, where to provide them, and their frequency. Thus, according to the OIG “the VA increased the risk of not achieving the objectives of PC3 by inadequately identifying its health care service requirements.”

Documentation supporting vital contract award decisions was either not in VA’s Electronic Contract Management System or incomplete. Of the documents available, the OIG noted that the awarded costs were actually negotiated at a higher rate than originally proposed by one of the vendors. Among the OIG’s other findings:

Evidence for negotiated cost decisions was not documented in the price negotiation memo.
Accountability for ensuring the effective award of the PC3 contracts was not vested with a senior executive at VA.
Although the contracting officer had the authority to execute these contracts, the level of oversight for this degree of contract risk did not provide reasonable assurance that VA’s interests were adequately protected.

The Veterans Access, Choice, and Accountability Act of 2014 (Choice) was enacted on August 7, 2014. According to VA’s Under Secretary for Health in a memo dated July 7, 2016, since implementing the Hierarchy of Care memorandum in May 2015, the use of Choice has increased tremendously, while PC3 use has dwindled. The OIG recommended the VA’s Principal Executive Director for Acquisition, Logistics, and Construction improve oversight and accountability, and ensure sufficient planning on all high dollar value and complex acquisitions. The Principal Executive Director concurred with the OIG’s recommendations and an acceptable corrective action plan was provided , the OIG reports.

Source: http://www.va.gov/oig/publications/report-summary.asp?id=3790

Read the OIG’s full report at: http://www.va.gov/oig/pubs/VAOIG-15-01396-525.pdf

August 26, 2016 By AMK

DoD’s new proposed guidance on commercial item pricing no longer includes ‘market based pricing’

The Department of Defense (DoD) has reversed course on its proposed preference for “market-based pricing” and is instead now proposing rules under which it would use “market pricing” to determine whether prices are fair and reasonable.

While the terminology is similar, the legal difference is significant.

Last year, we reported on DoD’s proposed guidance on commercial item pricing. The August 2015 proposed guidance implemented section 831 of the NDAA for FY 2013, which required DoD to establish standards for determining the adequacy of pricing information and when uncertified cost data is required. Among other things, this 2015 proposed rule introduced “market-based pricing” as the preferred method for determining a fair and reasonable price for commercial items in the absence of adequate competition. It defined market-based pricing as the pricing that non-governmental buyers in the commercial marketplace pay for an item. Contracting officers could presume that an offeror’s price for a particular item was “market‑based” if non-government buyers purchased 50% or more of the item’s sales volume.

The proposed rule proved controversial, however.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=520638

August 1, 2016 By AMK

IG: GSA wastes millions due to pricing problems in computer resale program

Despite years of efforts to streamline multiple award schedules used by information technology resellers, the General Services Administration (GSA) has been offering many identical items at varying prices, said an inspector general’s report released last week.

“GSA’s ability to obtain competitive, market-based prices may be impaired when IT schedule resellers have no/low commercial sales and when the Price Reductions clause is modified to exclude certain sales,” the report said, warning of “millions of dollars in unnecessary costs to the government.”

IT resellers typically buy computers and software in bulk and then add value through customization before selling the adopted product to agencies or commercial customers.

Keep reading this article at: http://www.govexec.com/management/2016/07/ig-gsa-wastes-millions-due-pricing-problems-computer-resale-program/130191

April 18, 2016 By AMK

DoD is better defining what lowest price means in contracts

The Defense Department is implementing a major change to the way it awards contracts to companies.

***Better Buying Power (BBP) is based on the principle that continuous improvement is the best approach to improving the performance of the defense acquisition enterprise.***

An April 1, 2016 memo from Claire Grady, DoD’s director of defense procurement and acquisition policy lessens the onus on source selection officials to justify paying more for their requirements than just lowest cost technically acceptable (LPTA). It also adds some transparency to how the department prices its requirements.

The policy change is part of the Better Buying Power acquisition reforms, which stated the LPTA requirements sometimes ended up costing DoD more money in the long run. A 2013 Market Connections and Centurion Research Solutions study found 65 percent of contractors and 43 percent of government workers thought LPTA hurt long term value for short term savings. Some critics said DoD places too much emphasis on LPTA contracts.

DoD now will try to make clearer the worth of delivering a capability above “technically acceptable” or the minimum requirement when awarding contracts.

Keep reading this article at: http://federalnewsradio.com/defense/2016/04/dod-tweaks-lpta-methods-save-money-help-industry/

See the April 1, 2016 memo from Claire Grady, DoD’s Director of Defense Procurement and Acquisition Policy, here: http://www.acq.osd.mil/dpap/policy/policyvault/USA004370-14-DPAP.pdf

The Department of Defense (DoD) has reversed course on its proposed preference for “market-based pricing” and is instead now proposing rules under which it would use “market pricing” to determine whether prices are fair and reasonable.

Despite years of efforts to streamline multiple award schedules used by information technology resellers, the General Services Administration (GSA) has been offering many identical items at varying prices, said an inspector general’s report released last week.

The Defense Department is implementing a major change to the way it awards contracts to companies.

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