BPA regs raise anxieties
- By Michael Hardy
- May 05, 2003
Proposed rule changes
A proposed rule requiring multiple bids on blanket purchase agreements closes several loopholes that can effectively short-circuit competition, analysts say. However, it also contains provisions that concern some industry advocates.
The proposed change to the Federal Acquisition Regulation, published last month, would require agencies to solicit at least three bids when ordering services or establishing BPAs under the General Services Administration's Federal Supply Service schedules contract program. It also requires agencies to request fixed prices when soliciting quotes on services and forbids agencies from taking advantage of another agency's existing BPA.
The proposal calls for agencies to consider at least three schedule providers when purchasing goods or fixed-price services, and it requires them to send a statement of work to at least three providers when seeking to order services at hourly rates. In either case, when establishing BPAs, an agency must also consider additional providers, although the proposal does not specify how many.
The fixed-price requirement troubles Larry Allen, executive vice president of the Coalition for Government Procurement, a Washington, D.C., industry group. Service companies often prefer time-and-materials billing.
Because the proposal requires that agencies request fixed prices but does not bar contractors who do not offer them, Allen does not believe GSA plans to forbid billing on a time-and-materials basis.
"There are some members of our group who fear that the language is so strong that time-and-materials purchasing is no longer permitted. I don't think that was GSA's intent, but we need to clarify it," he said. "That is far and away the most popular way to purchase services today. You don't want to take it away. You'll make it much more difficult for people to buy."
The provision that allows BPAs to span multiple agencies only if all the agencies involved were signatories to the agreement closes a key loophole, said Hope Lane, director of GSA schedule services at Rockville, Md., consulting firm Aronson and Co.
What has been happening is that some contractors who hold BPAs with a specific agency will find another agency with similar needs and ask GSA to allow that second customer to place orders from the BPA.
"It was kind of 'loosey-goosey' whether they could do it. They were avoiding a lot of competition by doing that," she said. "We had already seen FTS closing that internally by saying no," but the proposed rule solidifies the principle.
Another provision requires agencies soliciting services to provide their statement of work to any GSA schedule contractor who requests it. "They're opening up the competition even more," she said. "They're saying the agency can't limit it to the three [contractors] they sent it to if a fourth one hears about it and wants in."
Although many of the situations the proposed rule addresses are already covered by existing guidance, it is scattered over several places, said Chip Mather, senior vice president of Acquisition Solutions Inc. The proposals consolidate and strengthen the existing processes.
Neal Fox, GSA's assistant commissioner in the Office of Acquisition, said the proposed rule is intended to close loopholes, although he does not believe abuse of the system has been widespread.
Under current rules, agencies can purchase services under BPAs even if they have only one such agreement and the prices aren't fixed. That means there really is no competition, Mather said. "If the only way you can price it is by getting a quote from the vendor, then you [should] have to get competition," he said. "If it's prepriced, then it's already competed."
The proposed changes are an effort to close that loophole, Fox said. "It's trying to make sure BPAs aren't established going around the ordering procedures themselves," he said. "We want the blanket purchase agreements to be established using the appropriate amount of competition."
Companies, especially smaller ones, should favor the changes, said Robert Bell, president and chief executive officer of Space Systems Development Inc., a small, veteran-owned technology firm in Colorado Springs, Colo.
"Sometimes things happen behind closed doors, and it may not include a small business with a GSA schedule. Then, the BPA becomes a sole-source contract to the company that has marketed the hardest to the requesting agency," he said. "I have in the past seen companies be awarded BPAs because the customer likes the folks that they are dealing with."
"In the past, BPAs have been pretty wide open, pretty much open to the interpretation of the contracting agency," said consultant John Okay, president of J.L. Okay Consulting Inc. "This at least sets some uniform regulations for everybody."
The rule will make the agreements more competitive, he said, using the proposed new language. "That implies at least four contractors are going to have a look at the statement of work," he said. "It looks like the people who wrote this are trying to balance the need for competition against the reason for writing BPAs in the first place, which is to streamline acquisitions."
Under a proposed rule, agencies can establish blanket purchase agreements with one or more General Services Administration schedule contractors, if certain requirements are met:
1. BPAs can apply to multiple agencies only if all the agencies involved were part of the original agreement.
2. If an agency establishes multiple BPAs for the same products or services, it must send a statement of work for orders exceeding $2,500 to all the BPA contractors.
3. For services billed at an hourly rate, the ordering office must develop a statement of work and then specify a price for specific tasks when ordering against the BPA.
4. The ordering office will review its BPAs at least once a year to determine if the agreement still represents the best value.