Efficiency lost in quest for perfect competition
- By Chip Mather
- Aug 30, 1998
In an Op-Ed commentary last year, I made the statement that if I were in charge of the Air Force's Desktop V replacement, I would conduct a General Services Administration schedule-style blanket purchase agreement competition. After reviewing the Air Force's new BPA procedures, I am afraid I would change my mind.
As much as I advocate acquisition reform and streamlining, I am forced to admit that when reform meets bureaucracy, the smart money should be on bureaucracy.
I believe GSA schedules are sterling examples of what acquisition reform can accomplish when combined with common sense and a willingness for efficiency and effectiveness: They stop reform efforts at the "good enough" level. Pursuing the perfect competition has proven to be costly, not to mention largely unattainable. If correctly executed, "effective" competition can provide nearly identical results as full-and-open competition. Spending days or weeks evaluating 200 schedule and open-market responses for a $55,000 order is not cost-effective.
GSA instituted simple and effective procedures that can result in hiring high-quality vendors and providing top-of-the-line products at discounted prices.
Agencies do not need to repeat these steps when ordering IT products or services. For orders over the micropurchase threshold, GSA suggests agencies perform market research and identify three contract holders who can meet their requirements. Using pricing already established on the contract, the agency selects the contractor offering the "best value" and resulting in "the lowest overall cost alternative." For small-dollar buys, this process provides a quick and easy way to place an order. For larger dollar requirements, agencies are encouraged under GSA procedures to seek additional price reductions— a little additional work but worth the effort for the larger orders.
In addition, GSA married the speed and ordering efficiency of BPAs with the established FSS contracts. For agencies with a recurring IT requirement, BPAs have proven to be a valuable streamlining tool. The process to compete and establish a BPA is simple: The agency performs market research and identifies three or more schedule holders whose products can best meet the requirement. The agency requests quotes from the "best value" pool and, in the most straightforward application, awards on price.
Apparently, this must be a case of "too good to be true." Agencies seem determined to complicate the process.
The Air Force provides one of the most dramatic examples of a bureaucracy complicating a simplified reform process. In May the Air Force issued direction on the use and establishment of BPAs (www.safaq.hq.af.mil/contracting/policy/AQC/98-c-07.htm). To be honest, some of the direction makes sense and should be applied to the award and management of BPAs. But most of it adds significant and unnecessary requirements to GSA procedures.
The Air Force announced in its policy letter that it changed the basic objective of the process from effective and efficient, to "maximum possible competition." Under the new direction, the objective of a BPA competition is "to enhance competitive opportunities to the maximum extent possible." This standard of competition is not required by the Federal Acquisition Regulation for Federal Supply Service contract ordering or BPA establishment. In fact, "maximum possible" goes beyond the standard of competition for full and open source selections.
Following its self-imposed objective, the Air Force directed its activities to follow source-selection principles when establishing BPAs. This directive includes issuing Commerce Business Daily or bulletin board announcements. Receiving 200 or 300 responses to an invitation to compete for a BPA will not assist streamlining or obtain a less expensive, higher-quality product. Nor will it result in any better solution than that provided from a competition among the agency-identified most highly qualified FSS contractors. In addition, Air Force BPA competitions must be approved and coordinated by the local small-business representative who can appeal the decision to use the FSS contract. Formal acquisition plans are required. All this for orders against existing contracts for commercial goods and services.
Even more troubling is that the Air Force added the requirement to compete all orders under BPAs. The policy memorandum notes, "In accordance with FAR Subpart 8.4, competition among schedule contractors shall be obtained when awarding BPAs and resultant orders." (Emphasis added.) Contractors winning an Air Force BPA have literally won the right to compete. Furthermore, the Air Force guidance indicates that if competition is not obtained, a formal Justification and Approval must be processed. The FAR requirements for J&As do not apply to micropurchases, simplified acquisitions, orders from FSS contracts or BPAs, or orders from task- or delivery-order contracts such as governmentwide acquisition contracts or multiagency contracts. Why should Air Force activities be required to execute these formal full-and-open competition justification documents?
The Air Force further advocates maintaining competition throughout the life of the BPA through an open season. New GSA schedule holders would be permitted to submit packages during the year and evaluated under this standard: If the offeror would have won in the original competition, it should be awarded a BPA. This truly fits the Air Force's goal to "enhance competitive opportunities to the maximum extent possible."
The Air Force's new requirements effectively turn the streamlined and efficient BPA competition into a source-selection. By adding the open-season provision, the Air Force creates a source-selection that never ends. Given the choice, I would just as soon compete, evaluate and award a traditional contract. Maybe that was the intent all along.
-- Mather is a senior vice president at Acquisition Solutions Inc., a firm that provides acquisition support and best-practice guidance to federal agencies. He developed the streamlined source-selection techniques applied to the Air Force's Desktop IV and V acquisitions. Mather can be reached at [email protected]