Agencies turn to GSA Schedules for T&M contracts

Regulations proving why a time-and-materials contract was the only option weren't applied to Schedules program

The vast majority of commercial services purchased on time-and-materials contracts went through the General Services Administration’s Multiple Award Schedules program, according to a report issued today. But it also said regulations showing that a T&M contract was the only option have not been applied to the program.

Agencies bought $9.1 billion worth of services on T&M contracts from February 2007 to December 2008, the Government Accountability Office said in the report. However, contracting officers could circumvent a Federal Acquisition Regulation’s rule requiring more details on why the officer wasn’t using a type of contract with less risk than a T&M contract.

Under T&M contracts, companies are paid for their time and their materials. The contract type is very risky for the government because costs can grow significantly in a short amount of time.

In 2007, the FAR was revised to allow agencies to use T&M contracts to buy commercial services using a streamlined procurement process. There were safeguards though. One of them required contracting officers to write a detailed determination and findings report to proving why no other contract type was suitable for the purchase.

GSA officials told GAO that the GSA administrator can decide what procedures apply to the program. The program is unique from usual contracts, and legislative language is unclear as to whether the rule requiring contracting officers to justify their decisions to use a T&M contract applies to the Schedules. In a legal opinion, GSA said the Schedules program has other safeguards requiring contracting officers to check that prices are reasonable.

GAO wasn’t convinced though. “It is not apparent to us that the regulations cited by GSA provide the government with risk mitigation equivalent to that provided by” the FAR requirement, it wrote.

However GSA officials said they were working to develop a similar rule that requires contracting officers to show why the T&M contract was the only option.

GAO recommends that regulators amend the regulation to make it clear that the FAR’s safeguard applies to the Schedules program.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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Reader comments

Fri, Jul 24, 2009 Mike McManus WPAFB, OHIO

Time & Materials is a pricing strategy -not a contract type. Our ability to determine the appropriate pricing strategy is a direct function of our ability to define the perameters of the require. The less we are able to define them the less responsibility we can transfer via pricing to the contractor. CONTRACTING DOES NOT DEFINE REQUIREMENTS!. Technical experts (and program management) establish the requirement. Contracting has to take that requirement (trusting in the integrity of the techies) and develop a contract with the appropriate pricing strategy. finally, regardless of the pricing strategy utilized the program office has to keep their eyes on the contractor.

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