Waldron: Restoring balance

GSA has an opportunity to fix problems created by a thorny price reductions clause

The General Services Administration should examine the contradiction between the competitive task-order process and the noncompetitive pricing terms and conditions inherent in multiple-award schedule (MAS) contracts.

GSA’s continued reliance on the price reductions clause in those contracts is not productive. It increases costs to industry, government and, ultimately, taxpayers. Reliace on the clause also ignores three factors that have increased competition for task orders: revised ordering procedures, the use of online ordering tools and the growth of services. 

The clause requires that GSA and each MAS contractor identify a category of commercial customer against which they will track price reductions. If the MAS contractor offers a price reduction to the commercial customer, the contractor must offer the government a corresponding price reduction. Failing to do so can lead to complications and penalties for the contractor, including false-claims liability.

The MAS program operates under a regulatory framework that fosters task-order competition. For example, the Defense Department, which accounts for about 60 percent of the dollar value of orders under the MAS program, has implemented competition requirements in Section 803 of the National Defense Authorization Act for Fiscal 2002. For all DOD schedule contract orders exceeding $100,000, the contracting officer must provide notice and opportunity to compete to all schedule contractors capable of meeting the requirements or as many as feasible to reasonably ensure the receipt of at least three offers.

Another example of how the MAS program fosters competition is e-Buy, GSA’s electronic system for requesting price quotes. This Web site allows agencies to post requirements and receive proposals from MAS contractors. During the past fiscal year, the number of agency notices exceeded 53,000. Agencies received an average of three quotations or proposals in response to each notice.

GSA’s goal when it launched e-Buy in 2002 was to ensure competition and transparency for service orders under the MAS program. Service orders have grown to account for nearly three-quarters of the dollar value of orders under the program. Their amount depends on the complexity of the work, the technical approach, the labor mix and the skills required.

The Acquisition Advisory Panel found that commercial firms rely on competition rather than audits of pricing data to ensure best value. Consistent with its findings, the panel made a series of recommendations for improving the MAS program. First, it recommended that Section 803 ordering procedures be extended governmentwide. Second, it recommended enhanced competition requirements for task orders exceeding $5 million for all types of multiple-award contracts, including MAS contracts. Finally, it recommended that GSA establish a new information technology services schedule that would rely on competition for task orders instead of audited labor rates.  

Timing is everything. GSA has a wonderful opportunity to address problems created by the price reductions clause. As the Federal Acquisition Regulatory Council moves to implement the panel’s recommendations to expand Section 803 governmentwide and enhance competition requirements for orders exceeding $5 million, GSA could restore balance to the MAS program by eliminating the price
reductions clause.

Waldron (rwaldron@mayerbrown.com) is an attorney at the Washington office of Mayer Brown.

FCW in Print

In the latest issue: Looking back on three decades of big stories in federal IT.


  • Anne Rung -- Commerce Department Photo

    Exit interview with Anne Rung

    The government's departing top acquisition official said she leaves behind a solid foundation on which to build more effective and efficient federal IT.

  • Charles Phalen

    Administration appoints first head of NBIB

    The National Background Investigations Bureau announced the appointment of its first director as the agency prepares to take over processing government background checks.

  • Sen. James Lankford (R-Okla.)

    Senator: Rigid hiring process pushes millennials from federal work

    Sen. James Lankford (R-Okla.) said agencies are missing out on younger workers because of the government's rigidity, particularly its protracted hiring process.

  • FCW @ 30 GPS

    FCW @ 30

    Since 1987, FCW has covered it all -- the major contracts, the disruptive technologies, the picayune scandals and the many, many people who make federal IT function. Here's a look back at six of the most significant stories.

  • Shutterstock image.

    A 'minibus' appropriations package could be in the cards

    A short-term funding bill is expected by Sept. 30 to keep the federal government operating through early December, but after that the options get more complicated.

  • Defense Secretary Ash Carter speaks at the TechCrunch Disrupt conference in San Francisco

    DOD launches new tech hub in Austin

    The DOD is opening a new Defense Innovation Unit Experimental office in Austin, Texas, while Congress debates legislation that could defund DIUx.

Reader comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

More from 1105 Public Sector Media Group