Finding a better way to eliminate bulky MAS requirements

On Sept. 4 the General Services Administration proposed revisions to its earlier interim rule amending the GSA Regulation (GSAR) on acquiring commercial items. The proposed changes served to implement portions of the Federal Acquisition Streamlining Act and related Federal Acquisition Regulation changes and canceled GSA's 1982 policy statement on the multiple-award schedules (MAS).

On the positive side a broad consensus continues to exist that MAS is becoming a better more cost-effective and more user-friendly system for acquiring commercial items. Indeed successes are already evident. And the consensus extends into Congress and the Executive Office of the President.

However it also is abundantly clear that large differences remain over fundamentals such as data disclosures relevant commercial practices and audit rights. Some of the extreme severe aspects of MAS for which no significant commercial counterparts exist include:

* The requirements for massive data disclosures. These have their roots in a reductio ad absurdum application of GSA's most favored customer (MFC) policy. They discourage participation in the program unnecessarily imposing heavy burdens risks and systems nightmares. They are traps for the unsophisticated the busy and those with limited or inexperienced resources.

* The extensive auditing against those disclosure and related requirements.

* The potential for penalties and damages under the civil False Claims Act. The totals of these can reach staggering magnitudes - 200 or more times greater than the government's direct damages. And frequently they are claimed in situations of error or negligence where fraud in a classic sense can't be shown.

MAS had been identified as high-risk under the Office of Management and Budget's Circular A-123 in view of the results of inspector general audits. And clearly many in government - particularly from its prosecutorial investigative audit and contract arms - believe this shows that massive disclosures plus vigorous audit and enforcement are essential and should be continued.

On the other hand many of us believe the party at greatest risk under MAS is the contractor. MAS disclosure requirements (and related rules) are onerous and very difficult to apply error-free. This suggests a threshold question: Can't reasonable requirements/rules be fashioned that are less burdensome and do not ensnare so many? The answer is a resounding yes. The existing requirements/rules are not necessary. Proof of this is that there are no significant commercial parallels.

In the current environment the private sector is fearful of GSAR clauses that would be unduly ambiguous - giving field personnel too much opportunity to preserve the status quo. One of these is a GSA proposal to give contracting officers carte blanche to request additional documentation. We are reminded of an old adage of the legal profession that the big print giveth and the little print taketh away.

At a recent public meeting speakers proposed a number of sensible middle-of-the-road solutions. For example:

* It was suggested that offerers be required to (a) describe their standard discounting policies and summarize their nonstandard discounting practices and (b) make "best efforts" to identify their commercial MFC (without certification). This would eliminate massive disclosures of transactional data and reduce the risk of unfair penalties while giving the government what it needs to determine price reasonableness.

* It was suggested that the information provided be focused on commercial end users with an important exception. If the government expects to act as a non-end user data on other non-end user sales could be requested. Again this would give the government the data needed for determining price reasonableness without extending disclosure requirements to the irrelevant.

* GSA was requested to provide substantial guidance if contracting officers are to be permitted to request additional information.

* Frequently a contractor offers products from a manufacturer that does not contract for these with GSA. Rather than trying to force data disclosures from the latter GSA was requested to allow offerers to demonstrate price reasonableness and if they couldn't to determine this from a market survey.

* GSA was requested to clarify its position on post-award audits including a clear statement that the two-year period allowed commences with award. The auditors complain of work load but if disclosures are pared sensibly as suggested above this should not be a problem.

Efforts within GSA and the Federal Supply Service to enhance MAS are moving swiftly and successfully. But disclosure requirements and their outfalls hang over the reform movement like a sword of Damocles. The requirements need to be radically simplified to relieve contractors of unnecessary burdens and risks inherent in the past disclosure statements while continuing to provide contracting officers (albeit in simplified form) the information needed to determine price reasonableness. One consequence of this would be to stimulate broader commercial contractor participation in MAS. The government would then enjoy the benefits of greater competition in addition to the paring back of its own overhead costs.

Wallick is a partner in the law firm of Steptoe and Johnson a former member of the Section 800 procurement reform panel and a member of the Federal Information Technology Forum.


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