The Legal Corner highlights GSA Schedule issues, trends, and legal questions and answers.

The site is periodically updated to provide the latest information on Multiple Award Schedule (MAS) regulations and associated guidance, General Accounting Office (GAO) bid protest decisions, and may touch on general areas of interest to the procurement community. In addition, the Legal Corner, from time to time, will entertain questions regarding the MAS Program from the procurement community. The "Legal Corner" is not intended to provide legal advice. Consult an attorney for resolution of specific questions or legal problems.

Items of Interest

• Discover the World of Services Updated Presentation by Roger D. Waldron, Senior Assistant General Counsel, held October 1999.
  
• A Survey of Recent Case Law Involving the Federal Supply Schedules Program.

This outline is an update of a presentation made by Roger D. Waldron, Senior Assistant General Counsel, at the Federal Supply Service's "Discover the World of Services" seminar held in October 1999. The outline presents general information regarding Federal Supply Schedules and related legal topics and is not intended to provide legal advice. Consult an attorney for resolution of specific questions or legal problems.

I. MAS STATUTORY AUTHORITY

A. 41 U.S.C 259(b)(3) and 10 U.S.C. 2302

"Competitive procedures" as defined in the Competition in Contracting Act, includes the procedures established for GSA's Multiple Award Schedules Program as long as the program is open to all responsible sources, and orders and contracts under these procedures result in the lowest cost alternative to meet the government's needs.

B. 40 U.S.C. 1501

1. Mandates that GSA establish a system for governmentwide online computer access to information on products and services that are available for order under the Multiple Award Schedules. GSA had already established "GSA Advantage!" prior to the enactment of this statutory mandate.

2. Authorizes the Office of Federal Procurement Policy to establish a pilot program for the procurement of online MAS information technology products and services. The purpose of this pilot is to principally test the following procedures:

a. A procedure whereby the negotiation of contracts is limited to terms and conditions other than price;

b. A procedure whereby the contractors establish the prices under contract and the price may be adjusted or updated at the discretion of the contractor.

II. ORDERING PROCEDURES

A. Federal Acquisition Regulations ( FAR)  SUBPART 8.4 - Key Aspects

1. Synopsis of individual orders not required. Survey GSA Advantage! and/or review pricelists. See FAR 8.404(a) and FAR 8.404(b)(2) and (3).

2. Orders placed with the contractor providing the best value and results in lowest cost alternative. See FAR 8.404(b)(2)

3. Maximum Order Threshold and Price Reductions. See FAR 8.404(b)(3).

4. Blanket Purchase Agreements (BPA). See FAR 8.404(b)(4).

B. SPECIAL ORDERING PROCEDURES FOR SERVICES

1. Issued pursuant to FAR 8.402.

2. Included in Federal Supply Schedule contracts.

3. Information Technology special ordering procedures for Services—Key Aspects:

a. Issue a Request for Quotes to at least three contractors.

b. Develop a performance-based statement of work.

c. Include evaluation criteria to determine the best value offer that results in the lowest cost alternative to meet the government's needs.

d. Firm-fixed price orders are placed unless it is determined that a labor hour contract is appropriate.

e. Single BPA versus Multiple BPAs.

III. SOME "DO'S AND DON'T'S" OR "NAVIGATING THE ORDERING PROCESS"

A. Protest Statistics - The Good News

From October 1, 1996 to the present, approximately 28 protests were decided on the merits by the General Accounting Office involving orders under the Federal Supply Service MAS Program. Of the 28, GAO sustained the protest in six cases. During this same period hundreds of thousands of orders were placed against Federal Supply Service MAS contracts.

B. Protests can still happen--A few helpful hints on what to do to ensure smooth sailing.

1. Communication is the key. Keep it simple and straightforward. The MAS Program is a streamlined process; do not use complex FAR Part 15 procedures for an MAS order. The United States Court of Claims has specifically held that FAR Part 15 is not applicable to MAS orders. See Ellsworth Associates, Inc. v United States, 45 Fed. Cl. 388 (1999). The General Accounting Office (GAO) has also stated that FAR Part 15 does not apply to MAS orders. See Computer Products, Inc., B-284702, May 24, 2000. Generally, GAO will review an agency's actions to ensure that the evaluation was reasonable and consistent with the terms of the "solicitation" or RFQ. Agencies can use "best value" criteria for the placement of orders. However, if you utilize a formal FAR Part 15 negotiation process or something akin to it, GAO may use FAR Part 15 as guidance in reviewing an agency's actions. See ACS Government Solutions Group, Inc., B-282098.2, B-282098.3, June 2, 1999, 99-1 CPD 106.

2. Tell the contractors what theplan to do and do it. Information regarding the plans is critical. There is no need to identify detailed evaluation criteria but, at a minimum, identify the basis on which the selection is to be made. Evaluate in accordance with stated selection methodology and/or criteria. GAO will review an agency's actions to ensure that the evaluation was reasonable and consistent with the terms of the "solicitation." See COMARK Federal Systems, B-278343.2, January 20, 1998, 98-1 CPD 34; See Amdahl Corporation, B-281255, December 28, 1998, 98-2 CPD 161.

3. A performance-based statement of work (SOW) should be used for IT professional services. When using a performance-based SOW, allow the contractor(s) to propose the labor skill mix and associated hours. Do not dictate the number of hours or labor skill mix. See Computer Products, Inc., supra. In selecting the contractor representing the best value and resulting the lowest cost alternative to meet the agency's need, the agency should evaluate the proposed hours and labor skill mixes.

4. Avoid open market or incidental items. See Pyxis Corporation, B-282469.2, July 15, 1999, 99-2 CPD 18; See also ATA Indus., Inc. v. United States, 38 Fed. Cl. 489 (1997).

5. Avoid unnecessary contractual language in a request for quotes that may confuse or frustrate a contractor. See Intelligent Decisions, Inc., B-274626.2, December 23, 1996, 97-1 CPD 19. Remember, in the case of a conflict between a delivery order and the underlying MAS contract, the contract controls.

6. Discussions with the contractors are not required. In the context of an MAS purchase the individual can seek additional information regarding a request for quotes without triggering the discussion rules. See Intelligent Decisions, Inc., supra; See also VION Corporation, B-283804.2, January 24, 2000 CPD 22. However, again, if  a formal negotiation process is established akin to FAR Part 15, GAO will look to FAR 15 for guidance in resolving protest issues. See ACS Government Solutions Group, Inc., supra.

IV. PROCUREMENT REFORM AND THE FEDERAL SUPPLY SCHEDULE

In the 1997 House Report 104-874, the House Committee on Government Reform and Oversight stated the following:

The efficiency and effectiveness of the MAS program has been debated since its inception. After many studies by GAO, reviews by Congress, and input from industry, GSA made many significant changes to the MAS program. These changes will allow the MAS program to meet a broader range of customer requirements at a time when agencies are looking for easy to use, low cost procurement solutions. Among these are:  eliminating the contract-wide price reduction clause; changing the price reduction clause to enable contractors to offer reduced prices to federal agencies on a spot basis; and removing the "maximum order limitation" to permit agencies to place large-scale orders through the schedules program. The committee supported and urged changes like these to increase the use of the MAS program as a governmentwide vehicle for the acquisition of commercial products and services.

See H.R. Rep. 104-874.

Procurement Reform has given all of us an opportunity to make a difference. Effective use of the Federal Supply Service MAS Program depends on customers who are willing to use the new tools that have been created to shop and buy smart, saving the taxpayers' money.

A SURVEY OF RECENT CASE LAW
INVOLVING
THE FEDERAL SUPPLY SCHEDULES PROGRAM

 

I. Procedural Matters - Interested Party Status

Sales Resources Consultants, Inc., B-284943, B-284943.2, June 9, 2000, 2000 CPD 102. (In deciding whether to place an order under the Federal Supply Schedule (FSS), an agency is not required to consider unsolicited offer of an alternative product from a non-FSS vendor. A protester that does not have a FSS contract is not an interested party to challenge an agency's determination as to its minimum needs and its decision to conduct a limited competition among FSS vendors for a particular brand name.)

II. Open Market or Incidental Items

Pyxis Corp., B-282469, B-282469.2, July 15, 1999, 99-2 CPD 18. (The General Accounting Office (GAO) reverses the "incidentals" test previously used to justify the purchase of non-FSS items in conjunction with FSS items. Agencies must follow applicable regulations when purchasing non-FSS items.)

SMS Systems Maintenance Services, Inc., B-284550.2, August 4, 2000, 2000 CPD 127. (Protester's quote for services, some of them non-FSS items, could not be selected for award in an acquisition under the FSS program, where the total price of the services not included in its FSS contract, considering both base and option periods, exceeded the micro-purchase threshold.)

T-L-C Systems, B-285687.2, September 29, 2000, 2000 CPD 166. (GAO concluded that where items ordered as part of an integrated system were not on the awardee's FSS contract, the order was invalid. GAO further concluded that the agency's proposed corrective action, the deletion of the items from the order, was inadequate since the agency's stated need was for an integrated system and no FSS contractor offered such a system.)

III. Selection of Federal Supply Schedule Contractors for Orders

Design Contempo, Inc., B-270483, March 12, 1996, 96-1 CPD 146. (Under FSS purchase, agency met its responsibility to select the best value item at the lowest overall cost by issuing a request for quotations to gather additional information on competing products, comparing features of the protester's offered items with those of another FSS vendor, and selecting that vendor after reasonably determining that the protester's items did not possess certain required special features.)

National Office Systems, Inc., B-274785, January 6, 1997, 97-1 CPD 12. (Under regulations governing FSS use, procuring agency met its responsibility to select best value items at the lowest overall price after reviewing the General Services Administration's automated pricing and product information system and reasonably determining that the selected FSS contractor's product meets the agency's needs.)

Delta International, Inc., B-284364.2, May 11, 2000, 2000 CPD 78. (When an agency, in making a purchase under the FSS, decides not to consider some items because the agency concludes that those items do not meet its needs, the vendor whose items are excluded from consideration may protest the exclusion. GAO will determine whether the agency has a reasonable basis for determining that the excluded items did not meet its needs.)

REEP Inc., B290665, September 17, 2002.  An agency placing an order under the FSS program is required to consider reasonably available information, typically by reviewing the pricelists of at least three Schedule vendors. When an agency knows that its requirements can be met under either Schedule A or B, it is not reasonable to issue an MAS order to the sole vendor capable of performing under Schedule A  without also reviewing the prices offered by several vendors capable of performing under Schedule B.

IV. Request for Quotes and Best Value

COMARK Federal Systems, B-278343, B-278343.2, January 20, 1998, 98-1 CPD 34. (Under request for quotations asking vendors to identify a configuration of computer systems and related hardware and services on the FSS, where agency intended to conduct a technical evaluation and cost/technical tradeoff, the agency improperly failed to advise vendors of the basis for selection.)

Amdahl Corporation, B-281255, December 28, 1998, 98-2 CPD 161. (In evaluating system-life cost under the an FSS RFQ procurement for a 36 month lease, the agency properly used the vendors' catalog prices for maintenance for years beyond the lease period, where the solicitation advised the vendors of this evaluation scheme. The agency's technical evaluation of vendor quotations on computer systems was reasonable when performed in accordance with the stated evaluation criteria and based on valid assessments of the proposed systems.)

ACS Government Solutions Group, Inc., B-282098, B-282098.2, June 2, 1999, 99-1 CPD 106. (GAO sustained the protest where the agency improperly failed to evaluate offers consistent with the instructions to offerors in the solicitation. The agency prohibited offerors from proposing a solution that assumed that the agency would permit the use of an electronic interface between the agency's and the awardee's data systems, and the record shows that the awardee's proposal relied heavily on the use of such an interface to perform the requirement. In addition, the agency's evaluation of past performance was improper where the solicitation called for a separate evaluation of each offeror's corporate past performance experience and of their key employee's experience but the agency's evaluation was based almost entirely on the awardee's key personnel.)

Spacesaver Systems, Inc., B-284924, B-284924.2, June 20, 2000, 2000 CPD 107. (GAO denied protester's allegation that the agency improperly performed a cost/technical tradeoff under a best value selection approach without advising the vendors the evaluation method. The record showed that the agency did not conduct a best value evaluation or perform a tradeoff. Rather, the agency rejected the protester's lower-priced product as unacceptable for failing to meet the delivery terms and made award to the FSS vendor offering to meet all requirements at the lowest overall cost to the government.)

Draeger Safety, Inc., B-285366, B-285366.2, August 23, 2000, 2000 CPD 139. (Where an agency requests competition among FSS vendors and decides to shift to the vendors the burden of selecting items on which to quote, the vendors must be given sufficient detail to allow them to compete intelligently and fairly. The agency's description of its needs must be free from ambiguity and state the agency's needs accurately.)

OSI Collection Services, Inc., B-286597, B-286597.2, January 17, 2001. (GAO sustained the protest where the agency's evaluation of past performance, which largely relied on a mechanical comparison of past performance scores for incumbent contractors, was unsupported and unreasonable.)

V. Request for Quotes and the Evaluation of Services

Computer Products, Inc., B-284702, May 24, 2000, 2000 CPD 95. (GAO sustained the protest in a competitive procurement under the FSS program where the solicitation announced that award would be made on a best value basis with technical factors more important than price because the agency improperly made award to the lowest price, technically acceptable proposal. More importantly, GAO found that the agency's RFQ was fundamentally flawed because it dictated a level of effort of 11,955 hours while allowing vendors to propose different labor mixes. The RFQ failed to evaluate the labor mix or whether the proposed solution met the agency's needs. GAO recommended that the agency revise the RFQ to allow the submission of different numbers of labor hours and different labor mixes for evaluation.)

VI. Communications with Vendors

Intelligent Decisions, Inc., B-274626, B-274626.2, December 23, 1996, 97-1 CPD 19. (Where an agency is making a purchase from the FSS program, it is not required to engage in "equal discussions" with FSS vendors; rather, it may solicit information from only one vendor without affording another FSS vendor a similar opportunity to clarify the terms of that vendor's FSS contract.)

Cotton & Company, LLP, B-282808, August 30, 1999, 99-2 CPD 48. (GAO sustained the protest where the contracting agency did not conduct meaningful discussions with the protester. The agency failed to clearly identify deficiencies in the protester's proposal in either written or oral discussions and failed to respond when during oral presentations it became clear that the protester had misunderstood the agency's concerns.)

Williams Communications Solutions, LLC, B-283900, January 18, 2000, 2000 CPD 57. (GAO denied a protester's allegations that discussions were not meaningful where the record reflects that the agency led the protester into the area of its proposal in need of revision.)

Vion Corporation, B-283804.2, January 24, 2000, 2000 CPD 22. (GAO held that where an agency is making an FSS purchase, it is not required to equalize the information gathering process among potential FSS vendors. An agency may obtain information from one vendor concerning purchase from the FSS without seeking similar information from other vendors.)

VII. Recent Court of Claims Case cites the Special Ordering Procedures for Services

On February 14, 2001, the United States Court of Claims issued its decision in Cybertech Group, Inc. v United States, ___ Fed. Cl. ___, 2001 U.S. Claims Lexis 18. The Court cites the special ordering procedures for services in denying the protester's allegations that the agency improperly failed to solicit the protester, conducted an unlawful sole source procurement and failed to conduct a best value evaluation. The Court concluded that the agency had properly followed the special ordering procedures for services.

Ellsworth Associates, Inc. v United States, 45 Fed. Cl. (1999). The United States Court of Federal Claims specifically held that FAR Part 15 does not apply to FSS orders.