The General Services Administration (GSA)’s Office of Inspector General (OIG) published a report on March 21, 2017, titled “Audit of Price Evaluations and Negotiations for the Professional Services Schedule Contracts.” According to the IG audit, GSA’s process to consolidate eight pre-existing schedules into the Professional Services Schedule (PSS) resulted in the award of new contracts without establishing price reasonableness. Contracting officers also used a combined “Pre and Price Negotiation Memorandum” template that does not conform to Federal Acquisition Regulations (FAR) and Federal Acquisition Service (FAS) policy. Finally, contract files lack sufficient documentation to determine fair and reasonable pricing. In February 2017, GSA’s FAS initiated price reevaluations for all 322 migrated contracts to ensure prices awarded were fair and reasonable.
GSA has suspended its online RFQ/RFP system eBuy for the following schedules, due to the transition of the below GSA schedule contracts to the Professional Services Schedule, to occur on or about October 1.
A September 24th GSA Interact blog post contains the following alternative ordering procedures:
On September 14, the General Services Administration (GSA) announced a temporary suspension of the eOffer/eMod system for its Region 10 office. Region 10 handles the MOBIS, PES, FABS, AIMS, Logworld, Environmental, and Language Schedule contracts. These contracts are being transitioned over to the Professional Services Schedule (PSS), effective October 1. For more information on this process and important caveats for certain existing contract holders, please see our previous Fed Point blog and Q&A.
This temporary suspension will impact new awards, contract modifications, and contract options. Kathy Jocoy, GSA’s Project Manager for the Professional Services Schedule, confirmed to Aronson that affected contractors may still submit modifications through GSA’s eMod system and the modification will still be reviewed and evaluated. The suspension only affects GSA personnel’s ability to upload into the system in order to process modification, offer and option awards.
In part one of our three-part series on the evolution of pricing on the GSA Schedules, we discussed the shift away from pricing support being based upon the contractor’s commercial sales practices to a much broader basis. This change is encapsulated by the addition of the following language to Schedule solicitations in the last year: “To determine fair and reasonable pricing, the GSA Contracting Officer may consider many factors, including pricing on competitor contracts, historical pricing, and currently available pricing in other venues. Offers which provide Most Favored Customer pricing, but which are not highly competitive will not be found fair and reasonable and will not be accepted.” So COs are essentially free to consider any source they consider relevant. And, as we explained in the series, GSA has essentially taken the stance that a CO (who has probably never worked in your world and may only have the barest understanding of how your industry operates) can compare what they consider comparable products or services and determine that another company’s rates are more “fair and reasonable” than those you have mountains of evidence to support.
Well, this practice now has a name: “Horizontal Pricing.” The “Horizontal Pricing” model was described as their new direction in a recent blog post from Tom Sharpe, Commissioner, Federal Acquisition Service (FAS). This is the definition he gave: “Horizontal price analysis means GSA will be moving toward a new model that analyzes prices in comparison to market prices, including Schedule prices, for the same items. We’ll be looking at pricing on current contracts as well as new offerors with the pre-award automation of pricing data. In an effort to help suppliers be as competitive as possible, GSA will be sharing information with them on how their prices compare with other vendors offering the same items. Vendors can take this information into consideration in setting or adjusting prices.” It is interesting that this is framed in a manner of “an effort to help suppliers” so they “can take this information into consideration.” The reality is that GSA will use this information to tell you what rates they will accept as “fair and reasonable” and the Contractor will be forced to consider whether they can live with those rates and get (or keep) the goods/services on Schedule, or decide they cannot, thus forget about getting them or keeping them on their contract. As others have questioned, how is the Price Reductions clause even relevant anymore when individual contract pricing will be driven by externally-defined forces?
The blog post that contained this information is titled “Collaborating with Industry and Customers to Transform the Multiple Award Schedules” and referenced a letter to GSA from the Coalition for Government Procurement (CGP) containing suggestions for “Quick Fix” changes to the MAS program. A related Interact Post contained links to separate letters from GSA Administrator Dan Tangherlini and Tom Sharpe addressing the CGP’s suggestions and offering several interesting details on the future of the MAS program. Interested contractors should read the full letters at the Interact link but here a few significant points:
These details and the announcement of the “Horizontal Pricing” model all point to the need for the contractor to fully understand their government and commercial industry landscapes. We described this requirement— especially in relation to pricing— in the Aronson blog Post: “What is “Fair and Reasonable” When It Comes to GSA Schedule Pricing – Part 3: There is No Knowledge That is Not Power”. The contractor’s objective is to be able to meet any GSA pricing review with a factual justification that outlines the uniqueness of their labor categories, rates and/or market and is supported by reasonable documentation. The justification should also address any differences between how they do business and the sales practices of contractors that would seem to be their most likely competitors on Schedule. Essentially, it bolsters the argument that a review based on SINs, NAICS, Labor Category descriptions or keywords will not give the true picture of the relevant pricing landscape. It appears the new year will require GSA Schedule holders to manage their contracts and strategize for success more than ever. Aronson helps companies <RETHINK> their strategies and approaches to contract management not just in the GSA Schedules world but across the entire government contracting landscape, as well. Contact Aronson’s Government Contract Services Group at 301.231.6200 to find out how we can help you.
Related Aronson Blog Posts:
-“What Is “Fair and Reasonable” When It Comes To GSA Schedule Pricing? Part 1- GSA trusts other companies more than yours… http://blogs.aronsonllc.com/fedpoint/2013/12/23/what-is-fair-and-reasonable-when-it-comes-to-gsa-schedule-pricing/
– GSA is <RETHINKING> “Fair and Reasonable” When It Comes to GSA Schedule Pricing Part 2 – Why are they doing this now? http://blogs.aronsonllc.com/fedpoint/2014/04/23/gsa-rethinking-fair-reasonable-comes-gsa-schedule-pricing/
-What is “Fair and Reasonable” When It Comes to GSA Schedule Pricing – Part 3: There is No Knowledge That is Not Power” http://blogs.aronsonllc.com/fedpoint/2014/08/14/gsa-fair-reasonable-comes-gsa-schedule-pricing-part-3/
GSA announced in early September their plans to consolidate seven services schedules into the Professional Services Schedule (PSS). This initiative is intended to provide government customers with the ability to engage contractors that can provide total solutions to complex professional services requirements using a single GSA Schedule contract. It is also expected to increase federal use of the MAS program, improve program efficiency through fewer contracts and fewer solicitations to manage, and reduce costs for contractors associated with the management of multiple schedules/contracts. (See our blog post on the background and announcement of this initiative)
As we approach and move through GSA’s numerous milestones for consolidation, they are releasing new guidance regarding the various actions that must take place. The latest is on Contract Migrations. Recent communications have announced these details: