Aronie: Keep GSA schedules humming

In its current crisis, GSA cannot afford to neglect the schedule contracts program

Has anyone noticed that it has become more difficult to be a vendor on the General Services Administration schedule contracts lately? Don’t get me wrong — I love the program. But life as a schedule contractor isn’t what it used to be.

Take renewal negotiations, for example. I’m in the process of working through a negotiation for a client in which the federal contracting officer has taken the unreasonable position that she is entitled to our best pricing, even though the federal government is a relatively small customer of the company, and it costs us much more to sell through GSA schedule contracts than through nonfederal contracts. Furthermore, unlike the company’s best customers, which consolidate their large-quantity purchases at a single location, the agencies using the company’s GSA schedule contract buy small, unpredictable quantities at many locations.

Nevertheless, the GSA contracting officer seems to think she is entitled to most-favored customer pricing, which she interprets to mean the best pricing under all circumstances.

We have explained that GSA is entitled only to fair and reasonable pricing and that most-favored pricing does not mean the best pricing under all circumstances. We have also explained that applicable regulations require that she take into consideration differences between the schedule contract and our nonfederal contracts. But those arguments have fallen on deaf ears.

Here’s another example. A large company, which is also one of my firm’s clients, is trying to finalize its small-business subcontracting plan. The company is based in a rural area that lacks a diverse supplier base. Nonetheless, our federal administrative contracting officer has taken the position that our proposed subcontracting goals must match GSA’s federally mandated goals.

What really steams me about this one is that by pushing us to use the federal goals, the contracting officer will actually create a disincentive to strive for supplier diversity. When goals are a stretch but at least within sight, people reach. When goals are out of sight, they don’t even bother reaching.

And what about the audits GSA’s Office of Inspector General conducts? Another client recently completed its pre-award attestation review, during which the auditors concluded that the company was making too much money — in other words, its profit was too high — on the services it sells. Although it seems to me that it’s not any of GSA’s business how much profit a company makes as long as its prices are fair and reasonable, the auditors concluded that the prices were unreasonable because our profit was above some unwritten, double-secret threshold.

Based on the auditor’s conclusion, the contracting officer informed us that her hands were tied and she could not accept our offer. She wasn’t willing to meet with us and give us a chance to explain why our prices were fair and reasonable, notwithstanding an admittedly healthy profit. This is backward. Auditors advise and contracting officers negotiate, not the other way around.

I am not alone in dealing with such issues.

Some people have said that these problems — and many others like them — are the result of an undertrained and overburdened procurement workforce. Having worked with some impressive, hard-working contracting officers in the past 15 years, however, I lay the primary blame elsewhere. The problems facing the GSA schedule program stem from a lack of leadership and a lack of perspective at the management level. Both gaps need to be filled.

First, GSA must identify a true owner of the schedule program — someone who is knowledgeable and passionate about it, who has a history with the program, and who possesses the authority and resources to implement a sound vision. We need someone who understands the program’s origins and appreciates its potential, someone who doesn’t view the GSA schedule as just another contract vehicle but rather a unique approach to federal procurement.

Fortunately, GSA has plenty of such people. We simply need to put some of them into the game instead of marginalizing them on the sidelines.

Second — but just as important — GSA must step back and take a look at the use of schedule contracts. They are robust, dynamic, flexible procurement vehicles. If officials think the contracts are for procuring bits and pieces while governmentwide acquisition contracts are for procuring integrated solutions — as one senior GSA official recently said — they are ignoring how industry uses the schedule contracts and the fact that agencies rely on them every day.

A GSA schedule contract is not a traditional contract. It is a wholly different way of thinking about procurement. And it is far more than a vehicle for the acquisition of bits and pieces. The schedule program provides a relatively simple means of acquiring a broad array of goods, services and, yes, integrated solutions, and it has been doing so with great success for years.

Although I concede that a schedule contract is not right for every situation, to say it is not well-suited to the acquisition of integrated solutions is wrong. Such suggestions highlight the lack of perspective in some GSA quarters when it comes to the program.

Although bashing GSA is currently in vogue, I still view the schedule program as a jewel in the federal procurement crown. In the past 40 years or so, the creative and passionate professionals of the Federal Supply Service changed the way this country thinks about government contracting. The program opened the federal government to the widest range of contractors ever, and it significantly reduced the cost and time of the procurement process. It also did more for small businesses than most other procurement vehicles combined.

When understood and used properly, a GSA schedule contract is an astoundingly simple, wonderfully cost-effective and highly flexible procurement vehicle. When misunderstood and used improperly, it is a waste of space on the procurement shelf.

Here’s hoping that we don’t add any more clutter to that already packed shelf.

Aronie is a partner in the government contracts group of Sheppard Mullin Richter and Hampton in Washington, D.C., and co-author of “Multiple Award Schedule Contracting.” He can be reached at: jaronie@sheppardmullin.com or (202) 218-0039.

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