Agencies banned from buying 'incidentals'

A ruling last month by the comptroller general that made illegal a widely used method for buying products that are not listed on the General Services Administration schedule could change the way government agencies go about making purchases, according to procurement specialists.

Many federal agencies have depended upon the ability to buy so-called incidental items that are not listed on the GSA schedule from vendors when vendors are awarded contracts, said Carl Peckinpaugh, a member of the government contracts section of the law firm Winston & Strawn and a columnist for Federal Computer Week. For example, when an agency would award a vendor a contract for computers that are listed on the schedule, the agency would then buy cables for the computer from the same vendor, even if the cables were not on the schedule.

Although a 1997 U.S. Federal Claims Court decision ruled that the practice was illegal, the ruling largely was ignored by agencies because the court's jurisdiction over procurement matters was considered limited by many agencies, Peckinpaugh said.

The July 15 comptroller general decision came about after San Diego-based Pyxis Corp. complained that a competing software company, OmniCell Technologies Inc., Palo Alto, Calif., illegally had been selling to the U.S. Army Medical Command items that were not on the GSA schedule. The comptroller general supported the Pyxis' protest.

The comptroller general's decision probably will speak more powerfully to agency procurement specialists, said Helen Hurcombe, deputy associate commissioner for acquisitions and grants for the Social Security Administration.

"I think it's sending a message," she said. "I think that the usage of schedules has increased tremendously as a result of the way [GSA] has changed, and as a result, you have the potential for more abuse."

Hurcombe said she was aware of the comptroller general's decision and the court decision, and she said SSA began moving away from making incidental purchases several years ago. "We kind of anticipated this was going to be an issue, so we had always competed the nonschedule items, or we had the schedule vendor get the nonvendor items on GSA. We try to stick with the regulations as much as we can," Hurcombe said.

Larry Allen, executive director of the Washington, D.C.-based Coalition for Government Procurement, said he has mixed feelings about the ruling.

On the one hand, he said, incidentals were commonly used and have been a "huge convenience for customers," and if agencies opt to stop the practice it will add "more hurdles to the process." But on the other hand, all the decision does is tell agencies to follow existing procurement law, Allen said.

The 1997 court case is widely regarded as bad case law, and as a result, it was largely ignored, he said. The new ruling may change that, Allen said.

But while the decision may slow down procurement, Allen said, "I don't anticipate it will have a sea-change effect."

Vicki Reath, a spokeswoman for GSA, said, "We don't engage in speculation," when asked what effect the ruling would have on procurement. She said GSA would not comment on the matter further.

Several procurement officials throughout government were unaware of the ruling, and declined to comment.

But Arlyce Dubbin, director of acquisition operations and analysis service for the Department of Veterans Affairs, said the agency has stayed on top of the issue at least since the 1997 court ruling. "With VA, the impact would be minimal because we were not buying items off-schedule," she said. "We pretty much interpret it that if it's on schedule, we can buy it, and if it's not on schedule, we can't."