Court limits sked buys
A decision issued last week by the U.S. Court of Federal Claims could curtail drastically the number of blanket purchase agreements (BPAs) that agencies strike with General Services Administration schedule vendors according to procurement attorneys familiar with the case.
The ruling freed from a protective order July 3 said agencies may not purchase "incidental" products from schedule vendors that are not listed as schedule items by GSA. Agencies buying items from schedule vendors frequently include these incidental products in their orders to avoid excessive paperwork observers said.
The decision came in response to a post-award protest filed by ATA Defense Industries Inc. against a contract for two target ranges purchased by the Army via GSA's Federal Supply Service schedules program. ATA charged that 35 percent of the Army's schedule order consisted of items not found on schedule contracts.
Some procurement attorneys said the ability to order nonschedule items via schedules has been abused to avoid competition especially when agencies award large BPAs.
"Agencies are using schedules in place of genuine competitive procurements because they have been able to include a lot of nonschedule items " said Carl Peckinpaugh a procurement attorney with Winston & Strawn Washington D.C. "This court says that the process is improper. It should have an immediate impact on agencies that use the schedules program."
The court ruled that agencies may not purchase from a schedule vendor those items not explicitly covered by its schedule contract without conducting a full and open competition for those items. "It is fundamentally inconsistent with Congress' unambiguous statutory mandate to allow a contracting officer when purchasing against the [schedule] to include in the purchase order `incidental' products that are competitively available unless the prices charged are the product of full and open competition " the ruling said.
GSA officials were unavailable for comment late last week.
Bill Shook head of government contracts at the law firm of Preston Gates Ellis in Washington D.C. said he hoped the ruling would "limit the continued expansion of BPAs."
He said some agencies have used BPAs to purchase nonschedule items without competition and may not get the best prices or the exact items users want. "GSA schedules only contain a fraction of the products out in the marketplace " Shook said. "BPAs are a way for agencies to get their integrator to cut a deal with a manufacturer for [nonschedule] items."
But other sources said they were concerned the ruling could result in additional work for procurement personnel who might want to purchase a few ancillary products quickly to accompany a major order.Bob Sherrey a partner at the McKenna & Cuneo law offices in San Francisco said the ruling could have "a tremendously deleterious effect" on agencies' ability to conduct efficient procurements. For example an agency buying a fax machine might find itself prohibited from buying extra toner cartridges at the same time.
Sherrey said agencies should be allowed to purchase these items via the schedule if they are "only a small percentage of the entire value" of the procurement and are "ancillary to the overall order."William Kovacic a government contracts professor at George Mason University in Fairfax Va. agreed that
"a hard and fast rule" prohibiting the inclusion of any nonschedule items would be "too rigid.
"I would suspect this case would force the development of a clear policy on what is considered incidental and what isn't " Kovacic said.