pricing | The Contracting Education Academy

August 4, 2016 By AMK

GSA says ‘a better Schedule 70’ is ahead

A General Services Administration’s top acquisition official has promised an improved Schedule 70 following an audit that found price discrepancies for identical products and some offered at higher prices than they were commercially available.

Mary Davie, the assistant commissioner of the Office of Integrated Technology Services, responded to the inspector general audit in a recent blog post, acknowledging the legitimacy of the report while explaining the years-long progress made to improve the Multiple Awards Schedules program.

“We agree with [the IG’s] concerns, which is why we have been working for the past three years to fundamentally transform the MAS program, reduce prices and streamline processes,” Davie said.

Keep reading this article at: http://www.nextgov.com/cio-briefing/2016/07/gsa-better-schedule-70-ahead/130336

April 12, 2016 By AMK

Establishing GSA order pricing may become more complicated

As commercial item contracts, GSA Schedules are subject to streamlined acquisition procedures intended to make the procurement process more efficient. One of the biggest advantages the Schedules offer ordering agencies is pre-negotiated pricing that has already been determined to be fair and reasonable.

Over the past several years, concern about pricing variability among the same or similar items on different schedule contracts led some agencies to publicly question whether they could rely on rates negotiated by the General Services Administration (GSA).

In March of 2014, the Department of Defense (DoD) issued a class deviation to FAR 8.404(d) requiring its contracting officers to make their own determination that GSA order prices were fair and reasonable using the proposal analysis techniques under FAR 15.404-1. NASA quickly did the same.

With federal procurement policy, where DoD goes, other agencies frequently follow. It isn’t surprising then that a new FAR case (2015-021) came out a year later proposing to overwrite 8.404(d) to match the language in the class deviations. If this FAR case makes it through the rulemaking process, it means that ordering agencies will have to complete a fair and reasonable price evaluation for all GSA schedule orders.

At the very least, agency contracting officers will be required to “obtain appropriate data, without certification, on the prices at which the same or similar items have previously been sold and determine if the data is adequate for evaluating the reasonableness of the price.” GSA’s contracting officers already do this when negotiating schedule pricing.

Keep reading this article at: https://www.govloop.com/community/blog/establishing-gsa-order-pricing-may-become-complicated/

January 14, 2016 By AMK

Reviews reveal common problem: Contract files lack documentation

The Defense Contract Management Agency (DCMA) reports that contract files contain insufficient documentation “across the board.”

DCMA regularly conducts reviews of each unit of the Department of Defense (DoD) that performs contracting functions. According to Claire M. Grady, who is DoD’s Director of Procurement and Acquisition Policy, “these reviews assess the effectiveness of the contracting function, analyze and assist in any problem areas, and identify noteworthy practices that may be beneficial to all organizations.”

On December 31, 2015, Grady’s office issued the results of the DCMA’s “procurement management reviews” for FY15. The report, in newsletter form, reveals that DCMA continues “to observe insufficient documentation across the board” in official contract files. The most common documentation flaws are:

Lack of rationale for contract decision-making in instances of a contract modification, commercial item determinations, proposal evaluations, and contracting strategy, for example.
Acquisition strategies aren’t linked to market research.
Missing documentation due to over-reliance on electronic systems.
Insufficient documentation of conversations leading to contract actions.
Lack of documentation of GSA Schedule pricing compliance.
Insufficient documentation that an independent government cost estimate (IGCE) provided the most appropriate basis for price comparison.
Lack of documentation of work performed by Contracting Officer Representatives (CORs).
Technical evaluation documentation not in alignment with solicitation evaluation criteria.

In addition to documentation deficiencies, DCMA notes that proposed prices were accepted without attempts to negotiate, thus representing “lost opportunities to save money or obtain better business deals.” The agency also found that annual reviews of COR files were not being conducted.

In a more positive vein, DCMA observed what it called “impressive” dedication by DoD’s contracting workforce and a “commitment to mission success.” They made note of leaders’ efforts to keep morale up and provide for training opportunities and well as electronic resources.

DCMA’s report also devotes attention to the unique challenge e-mails represent in documenting contract files. Because of the dominance of electronic communication, DCMA concedes that “the question of what should go into the official file is getting harder and harder to answer.” The agency recommends that “contracting personnel … do some critical thinking prior to putting e-mail correspondence into the file.” It recommends that the following questions be asked:

Does the e-mail contain verbiage inappropriate for an official contract file?
Does the e-mail provide a clear, succinct summary of the information for the contract file?
If the e-mail represents a decision, is all necessary information to support that decision contained in the e-mail or is a memorandum more appropriate?
Should a formal approval signature be obtained for that decision?

DCMA recommends that documentation should address both decisions and the rationale for each decisions. The full report can be accessed at: DCMA Procurement Management Review – FY15

September 16, 2015 By AMK

GAO says GSA needs to pay more attention to competition and prices on Schedule contracts

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.

August 19, 2015 By AMK

GAO: Agencies should be seeking deeper discounts on FSS contracts

Agencies aren’t consistently seeking discounts when procuring goods and services off the Federal Supply Schedules, says a Government Accountability Office report released Aug. 10.

The Federal Supply Schedules, or FSS, program allows agencies to buy commercial products and services from a list of approved vendors at discounted prices.

According to the General Services Administration, agencies placed more than $33 billion worth of orders through the FSS program in fiscal year 2014. The FSS portion of total federal contract spending represents about 6 percent of contract spending governmentwide, the report says.

That said, agencies should be pushing for discounts even further than those provided by the base FSS prices, GAO says.

Keep reading this article at: http://www.fiercegovernment.com/story/gao-agencies-should-be-seeking-deeper-discounts-fss-contracts/2015-08-13