Sharpen Your Pencils: DoD Drives Down Prices on GSA Schedule Buys
August 24, 2015
By: Eric Whytsell
Claire M. Grady, Director of Defense Procurement and Acquisition Policy, recently issued a Memorandum encouraging the proper use of General Services Administration (GSA) Federal Supply Schedule contracts and offering “focus points and policy clarifications” to Department of Defense (DoD) activities attempting to achieve that goal in the waning months of FY2015. As the Memorandum notes, historically the bulk of GSA Schedule buys occurs in the last two months of the fiscal year – and “Fiscal Year 2015 will be no different.”
An attachment to the Memorandum contains numerous items of guidance relating to GSA Schedule purchasing – ranging from the importance of ensuring all applicable DFARS requirements are included in all orders and blanket purchase agreements to making sure that items ordered are actually on the Schedule. But the two main points of emphasis identified in the document both relate to pricing. Both were identified during a recent DoD / GSA review of DoD orders placed on FSS Schedules that identified potential shortfalls in the DoD’s Schedule usage.
According to Grady, “There are two specific aspects of Schedule use that we can improve on: 1) seeking discounts; and 2) determining and documenting that the prices obtained are fair and reasonable for all items purchased through the Federal Supply Schedules Program, including ‘Open Market Items.’” More specifically, the Memorandum directs DoD contracting officers to seek discounts on all purchases of whatever size, not just those in excess of the simplified acquisition threshold as required by FAR 8.405-4.
In addition, Grady reminds DoD ordering activities that they “cannot rely on GSA’s price reasonable determination alone,” citing a class deviation issued by DPAP in March 2014 (DARS Tracking Number 2014-00011). That class deviation substitutes a new DoD policy for FAR 8.404(d) that makes clear “ordering activity contracting of?cers are responsible for making a determination of fair and reasonable pricing when using Federal Supply Schedules.” The text of FAR 8.404(d) Pricing. (DEVIATION) provides: “Supplies Offered on the schedule are listed at ?xed prices. Services offered on the schedule are priced either at hourly rates, or at a ?xed price for performance of a speci?c task (e.g., installation, maintenance, and repair). GSA has determined the prices of supplies and ?xed-price services, and rates for services offered at hourly rates, to be fair and reasonable for the purpose of establishing the schedule contract. GSA’S determination does not relieve the ordering activity contracting Of?cer from the responsibility of making a determination of fair and reasonable pricing for individual orders, BPAS, and orders under BPAS, using the proposal analysis techniques at 15.404-1. The complexity and circumstances of each acquisition should determine the level of detail of the analysis required.”
Between the requirement to always seeks discounts and the reiteration of the need to make a separate determination that the prices are fair and reasonable, GSA Schedule holders should expect to see increased downward pressure on prices from DoD contracting officers. Get ready and good luck.
Eric Whytsell is responsible for the contents of this Article.
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