By
Eric
Ottinger on Wednesday, April 25, 2001 - 09:09
am:
There is a lively discussion in the archives regarding GSA
ordering instructions for FSS service contracts (“Dozing
Contracting Organizations or Fundamental Misunderstanding?”).
Take a look at this Court of Claims case. The interesting part
is right at the end. The court has taken the position that all
of the “shoulds” in the GSA instructions are “purely
advisory.”
http://www.contracts.ogc.doc.gov/fedcl/opinions/2001opin/00-768C.pdf
Eric
By
formerfed
on Wednesday, April 25, 2001 - 10:14 am:
Eric,
That's something. At first, it seemed surprising. Then it makes
sense after mulling it over.
By the way, I haven't seen your posting much. We miss your
insights. Don't stay away!
By
Anonymous
on Friday, April 27, 2001 - 09:07 am:
formerfed:
The case in question -- Cybertech Group, Inc. v. U.S. and
Intellidyne, L.L.C., a protest decision of the U.S. Court of
Federal Claims -- reinforced my belief that Government
contracting can be a very dirty business.
The protester's allegations rang true to me despite the fact
that its lawyer could not prove them in court. (In my opinion,
the protester's lawyer did not do a good job.) I can tell you
that there is more than one GSA schedule contractor who could
and would tell a similar story if you bought them enough beers
in a quiet corner of an out-of-the-way bar.
By
formerfed
on Friday, April 27, 2001 - 09:31 am:
Anon,
Funny you should mention that. I scanned over this lengthy
decision between phone calls, meetings, and lunch over the
course of a full day (nothing like trying to read 30 some pages
with adobe acrobat!). I admit I didn't catch many of the details
that way, but the issue you raised kept getting stuck in my mind
- serious allegations are made, but nothing happened.
This decision just reinforces the extreme ends of the spectrum
regarding GSA Schedules - they are a blessing to everyone,
including taxpayers, if used properly; if not, they are so
simple to abuse
By
Anonymous
on Friday, April 27, 2001 - 10:03 am:
The decision does not make sense to me, if only in the
practical application of the guidance. This decision tells us
that we need not follow the procedures GSA has set up for
ordering services because the word "should" rather
than "shall" is used. Thus, do not need to send out an
RFQ to at least three schedule holders when buying services
which require a written RFQ.
Basically, one could read this to say that since after all, GSA
buys are by definition "competive"), one can just go
to any contractor and order their services. Do not see how it is
competitive to pick a contractor off a list (which is subjective
in itself, as many of the GSA contracts have scores of
contractors) without even a semblance of offering opportinity to
quote to others.
For nit picks:
GSA tells us that sole source is not authorized.
And,the information in the decision (which may not be complete)
indicates that the Contracting Officer did not evalaute whether
the overall price was reasonable (labor mix and quantity of
hours).
By
Anonymous
on Friday, April 27, 2001 - 10:06 am:
The last post by "Anonymous" is not from the same
Anonymous who posted on April 27 at 09:07am.
By
formerfed
on Friday, April 27, 2001 - 10:31 am:
Anon - 10:03,
It makes sense only if one looks at the overall intent of GSA
Schedules. Agencies are provided multiple choices to buy
products and services that have common use throughout the
government. The idea is to provide alternatives to the old
"single-award" OFFS schedules. Guidance for the
multiple award ordering stated that agencies examine product
offerings of several sources (no number was picked, probably
indicating that varies depending on dollar amount), and select
the lowest price meeting the agencies minimum needs.
That worked until GSA broadened the concept to include
professional type services (consultant, IT, etc.). Then lots of
problems occurred using a shopping lists of fixed price hourly
rates. These include questions like how do agencies pick the
lowest price with just a listing of categories and rates
available, how does factors such as experience and
qualifications get factored in, how many companies get to
participate and which ones, etc.? some people, including
Congress, started getting critical.
Remember, GSA has a vested stake in the Schedules. They get a
dollar piece of the value of each order placed as their means of
funding. So, faced with losing a major portion of their business
and to satisfy concerns, they developed the current guidance -
agencies should select three (don't ask why 3) from all the
potential vendors and solicit price quotes, ideally on a
performance based SOW. Notice how they don't want to step on
anyone's (customers) toes and use all the current favorite words
- "best value" and "performance based"?
I don't mean to be overly critical here because I believe the
Schedules - if used properly - are one of the best things going.
But what you see is a series of compromises to keep a business
(GSA) running. So in light of using "should" in their
ordering provision rather than "shall", the court
decision makes sense. How else court the court rule?
By
Eric
Ottinger on Friday, April 27, 2001 - 06:34 pm:
All,
Three points -
* Going back to the IG report which started the earlier thread,
the PCOs who didn't obtain competition argued that they had
correctly chosen the lowest cost alternative. In each case the
incumbent was in the middle of some project. The cost and risk
to bring another contractor onboard, and to get the new
contractor up to speed, would be such that it would invariably
make more sense to stick with the incumbent.
The IG simply dismissed these arguments. I suspect that the
PCO's were usually correct. The lowest cost alternative was to
stick with the incumbent.
Of course, the problem with this logic is that it can be used to
justify never doing competition. We can't go that far. If we are
realistic (and may I say "businesslike") we have to
acknowledge that there is always a short-term cost to the
technical customer when we drop an incumbent and bring in a new
contractor. Since there are long-term advantages to competition
(including, keeping the incumbent sharp) we should be willing to
accept these short-term transition costs to obtain the long-term
benefits of competition.
If we use these vehicles for services which come in the big
white box with the simple black letters (i.e. truly generic)
there is no problem. When specialized knowledge and experience
are required to do the task at hand, we get into some
uncomfortable situations.
* A friend of mine who is highly intelligent and well placed
told me that he had studied the legal basis for the GSA schedule
contracts and reached the conclusion that CICA was not satisfied
until there is a competition between several schedule
contractors for a particular task. The amazing thing is, of
course, that NOBODY ELSE SEEMS TO KNOW THIS! (I have no idea
whether he is correct or not.)
A couple of very smart, knowledgeable people that I know have
studied the GSA schedule contracts, and they have told me that
the GSA lawyers have it all figured out. I take this on faith.
If you asked me to explain exactly how CICA and TINA are
satisfied, I couldn't.
As I said in the earlier thread, if I am using some other PCO's
contract vehicle, I should be a polite guest and follow all
directions in the contract.
* The court doesn't see any issues regarding the reasonableness
of the price because there are discounts ranging from zero to
33%.
Let me see if I have this right. All of the schedule prices are
fair and reasonable prices. And all of the discounted prices are
fair and reasonable prices, including the 33% discount. Does
this give you a warm feeling? It doesn't give me a warm feeling.
The PCO's "analysis" stated that the technical people
were happy and there were a bunch of discounts, ranging from
zero to 33%. The PCO did not make any comparison to past history
for the same requirement or any comparison to other contracts
for similar work. The court was satisfied. I think most of us
would expect a bit more analytical meat and less arm waving in
the "analysis".
Eric
By
Anonymous
III on Saturday, April 28, 2001 - 10:20 am:
What’s surprising to me about this case is not the results
of it, but that the protester pursued it at all. This case
pretty much describes a typical day in Government
contracting--this stuff happens all the time! The only winners
here are the Plaintiff’s attorneys, as they probably got paid
handsomely for presenting a case that they never had a chance of
winning.
This case reaffirms that customers do have alternatives
available to them to get their work done and fulfill their
missions. They can choose which contracting office services
them. They can choose from numerous contracting types and
vehicles. And, they have thousands of contractors to choose
from. All of which is a good thing--it keeps us all on our toes
(or it should).
Note to the Plaintiff: If you’re an incumbent on an $8M task
order and you’re not included in the “competition” (wink,
wink) for the follow-on work—-this is what we call in the
detective industry “a clue.”
The fact that an incumbent contractor (or contracting office,
for that matter) has supported a particular customer/activity
for 3, 5, 10, or 20 years does not guarantee their presence
tomorrow or thereafter. Customers are constantly asking “what
have you done for me lately?” If you don’t have a good
answer, re-read this case, as it’s a script for what’s to
come.
By
Clue
on Saturday, April 28, 2001 - 10:43 am:
Anonymous III:
Well, you're right about the "clue," but did you read
the plaintiff's allegations? It alleged that the government
employee who had run the operation retired and that the new
government manager insisted that the plaintiff hire the former
government employee as a condition of keeping the work. The
plaintiff further alleged that the former government employee
made excessive demands and that the government hired a different
contractor when the plaintiff refused to meet those demands. The
plaintiff also alleged that government personnel met with its
employees and encouraged them to go to work for the new
contractor.
The court said that the plaintiff's allegations were disturbing,
but the plaintiff did not prove its claims to the satisfaction
of the court. That may be because the allegations weren't true
or because its lawyers were incompetent. I have seen enough in
government contracting to believe that the allegations are at
least credible and, based on other factors in the decision, I
suspect that lawyer incompetence may have had something to do
with the plaintiff's inability to prove them.
In any event, if the allegations were true, even in part, then
it doesn't surprise me that the plaintiff pursued the matter.
Of course, none of us will ever know the truth.
By
formerfed
on Monday, April 30, 2001 - 08:17 am:
Eric,
Your friends are complicating the issue if they look too deeply
on such matters as CICA. GSA's philosophy for awards hasn't
changed in 25 years. This is:
All contracts are for commercial items. These are items
(products and services) sold to the public. Prices are
determined fair and reasonable based on the marketplace.
Companies must have a published commercial pricelist, and must
show the ratio of commercial to government sales to indicate
commerciality. In addition, they must show the percent discounts
offered to various categories of customers and the government
offer must be as good as their most favored customer.
So, if everyone meeting these criteria gets an award, how does
this violate CICA? (I'm saying this with "tongue in
cheek", because this is the argument GSA uses). Now that
GSA has made several awards for the same or similar items,
agencies are free to pick which one offers the best value or
lowest cost in meeting their needs. This doesn't have to be
competition among sources; just comparison.
By
Anonymous
2 on Monday, April 30, 2001 - 09:42 am:
Whoever says that CICA requires competition between several
schedule contractors for a particular task should re-read CICA.
41 U.S.C. 259(b) says:
"(b) The term 'competitive procedures' means procedures
under which an executive agency enters into a contract pursuant
to full and open competition. Such term also includes -
(1) procurement of architectural or engineering services
conducted in accordance with title IX of this Act (40 U.S.C. 541
et seq.);
(2) the competitive selection of basic research proposals
resulting from a general solicitation and the peer review or
scientific review (as appropriate) of such proposals;
(3) the procedures established by the Administrator for the
multiple awards schedule program of the General Services
Administration if -
(A) participation in the program has been open to all
responsible sources; and
(B) orders and contracts under such procedures result in the
lowest overall cost alternative to meet the needs of the
Government;
(4) procurements conducted in furtherance of section 644 of
title 15 as long as all responsible business concerns that are
entitled to submit offers for such procurements are permitted to
compete; and
(5) a competitive selection of research proposals resulting from
a general solicitation and peer review or scientific review (as
appropriate) solicited pursuant to section 638 of title
15."
The statute "also includes" (i.e., in addition to
procedures in which agencies obtain full and open competition)
the MAS/FSS procedures established by the GSA Administrator, whatever
they may be, as long as (A) every potential contractor has a
chance to play and (B) the Government chooses the "lowest
overall cost" alternative.
GSA has made sure that every potential contractor has a chance
to play, and all but the laziest and most incompetent COs have
every opportunity to obtain lowest overall cost, which does not
necessarily mean lowest price or lowest rates.
There is no basis in the statute for a conclusion that CICA is
not satisfied until there is a "competition between several
schedule contractors for a particular task." The statute
not only does not mention any such requirement, it expressly
disclaims any such requirement.
TINA does not have to be satisfied because the items on GSA
schedules are commercial items and TINA does not apply to the
acquisition of commercial items.
By
Anonymous
on Monday, April 30, 2001 - 11:23 am:
The problem is that every pooirtntial contractor does not get
a chance to play They may get a shot at obtaining a schedule but
only a very few get to offer on task orders. It is and always
has been essentially non competitive as opossed to all other
methods of procurement.
By
Anonymous
2 on Monday, April 30, 2001 - 11:48 am:
Anonymous:
I disagree with you.
Being on schedule gives contractors a chance to sell their
products and services. The schedule markets are highly
competitive, but sellers have to sell, just like other business
people in a competitive market. Selling is an active process of
telling people that you exist and persuading them that your
products or services are better than your competitors'. If you
sit on your butt and wait for the business to come to you all
you'll get is a sore butt.
If there is anything wrong with the schedules it is that there
are so many schedule holders -- so much competition -- that
buyers are overwhelmed with information. That is all the more
reason why schedule contractors have to be aggressively
proactive.
Although the MAS/FSS program contemplates a different
contracting procedure than a FAR Part 14 sealed bid procurement
or a FAR Part 15 source selection, it is competitive by
statutory definition. The FAR Part 14 and Part 15 contest-style
competition models are not the only legitimately ones, and the
MAS/FSS procedure more closely resembles commercial competition
than either of those.
It's up to contractors and contracting officers to make the MAS/FSS
program work well for particular orders.
By
formerfed
on Monday, April 30, 2001 - 01:03 pm:
Anon 2,
I can tell you have worked extensively in the operational end of
procurement. I couldn't agree more. The problem is many people
think the Government's role is keeping companies in business
that wouldn't exist on their own. No one can deny the benefits
of competition, but our main job is keeping the taxpayers and
country's interest first and foremost. Often, promoting the
welfare of small and disadvantaged business is as important as
saving a few dollars. However that doesn't mean every small
business should get every opportunity to bid on every single
opportunity as some suggest. Rather procurement is a balancing
is between doing what makes the most sense from a business
perspective (good, practical competition) and savings through
administrative time and expense. GSA Schedules, if used
properly, do both, and that is where the real payoff to
taxpayers is.
By
anon
11-23 on Monday, April 30, 2001 - 01:59 pm:
Actually there is no payoff to taxpayers. If, for instance,
prices on schedule were truly fair and reasonable why is it so
easy to obtain significant reductions when negotiating with
schedule holders? Or ,if you subscribe to the theory that small
business should enjoy a preferential status as a taxpayer payoff
why then do schedules not have to comply with the small business
rule of two? Or if you believe that competition is a payoff to
taxpayers why is the competition so limited?
This schedule stuff was ok when it was limited to supplies but
services? Not now and not ever.And even when it was supplies I
could always do better than schedule prices. Frankly I find FSS
and MAS the most unfair procurement method used today.No wonder
others love it---it is absolutely the best way to avoid all
acquisition rules and restrictions. And I suppose its a lot
easier to be an ordering officer than a contracting officer.
By
Anonymous
2 on Monday, April 30, 2001 - 02:33 pm:
The use of schedules does not "avoid"
compliance with the acquisition rules and restrictions. In fact,
according to FAR 8.001(a), COs "shall" use Federal
Supply Schedules before resorting to any other method of
contracting. Didn't you know that?
Statute says that the placement of an order against a Federal
Supply Schedule is a competitive procedure. The FAR requires the
placement of such orders before the use of any other method of
contracting. What is "unfair" about complying with the
rules? You must be operating on the basis of some personal set
of rules.
Whether or not a CO gets a good deal when placing an order is up
to that CO. COs get paid to get good deals using the various
methods of contracting, as appropriate, and anyone who can't do
it shouldn't be a CO.
It's OK to say that you don't like GSA's MAS/FSS program or that
you think it could be better. But it makes no sense for you to
say that using the program "avoids" the rules and
restrictions and is unfair.
By
formerfed
on Monday, April 30, 2001 - 02:43 pm:
Anon 11-23,
Ordering the proper way (and that includes obtaining a good
price) under GSA takes a few days to a few weeks, depending on
the dollar value and complexity. Many agencies conduct market
research, identify the best candidates, invite them in for an
agency briefing, obtain capability/qual/past perf info, down
select to three, (optionally have oral presentations) and obtain
price quotes. This gets the best solution in a very short time.
Contrast this to an open market, competitive RFP, that is
synopsized in the CBD that takes 4 months to award. Think about
all the staff resources commitment to a competitive award -
legal review, internal procurement review, tech evaluation, SEB,
etc. I bet everyone also has more pressing things to work on as
well.
One other point - it's easy to obtain concessions on any deal.
Sure, GSA prices are high but the contractor must honor those
prices for just about any quantity ordered anywhere in the
country. If you have a requirement of substance, a price
reduction is given for the asking.
By
ANON
11-23 on Monday, April 30, 2001 - 02:56 pm:
Of course I know the rules ..and just because they are rules
does not make them right. CICA states that GSA and their
schedules comply with CICA.....in reality nothing could be
furthur from the truth. That is if we accept CICAS preamble that
full and open competition is desirable. Its "CICA
compliant" because the law says it is....the fact that its
use is anything but competitive is the reality. (Why do you
suppose CICA gives it a work around?. The problem with its CICA
exemption is that all the benefits that were to accrue to the
government from competiution are lost. Period.When Congress gave
GSA a pass on CICA GSA was primarily providing supply type
items...they have changed their role..perhaps it is time that
CICA be revisited as well.
By
anon
1123 on Monday, April 30, 2001 - 03:05 pm:
FF
Yes I know. It kills me that GSA can do this and the rest of us
cannot. They,by law, do not have to set aside, consider all the
socio economic programs or perform all the work the rest of us
do. This,in my opinion, is talking from both sides of your
mouth. (I mean the Federal mouth). If all the other FAR stuff
were really as important as its cracked up to be GSA would not
have gotton such a hugh pass from the regulators.
By
Loki
on Monday, April 30, 2001 - 03:15 pm:
Anon 1123, 4/30/2001/ 3:05...the schedules are empty buckets,
as are most GWACs. I feel your frustration, but remember the
history...it was and is GSAs mission to serve other agencies.
Each ordering activity typically still has to meet their socio-ec.
goals....you can do this on schedules by targeting (typically 3)
firms of the precise socio-ec. status you need and ordering from
the one that makes the most sense.
With regard to the purist viewpoint on CICA and its bearing on
the schedules...philosophically I empathize w/ that stance, but
the law is clear.
No one ever said the line in streamlined was straight.
By
Anonymous
2 on Monday, April 30, 2001 - 03:45 pm:
Anon 11-23:
Just because they are rules does not make them right? We are not
discussing the death penalty. There is no universal standard for
what is the "right" procedure in public procurement,
except compliance with law and regulation.
What is right is what the rule-maker says is right, and the rule
maker in this case is Congress, which (1) created the GSA, (2)
gave the GSA Administrator the authority to design MAS/FSS
procedures, and (3) said that as long as those procedures
satisfy two criteria they are competitive procedures under the
law. The current MAS/FSS procedures comply with the law in every
respect.
You may think that you know a better procedure, and maybe you
do, but it is not the "right" one, it's just the one
you prefer. I think that full and open competition is an
inefficient and wasteful policy, but full and open competition
is the law.
The benefits that accrue to the taxpayer through competition are
not lost under MAS/FSS orders if COs use the schedules
effectively.
By
Anonymous
on Monday, April 30, 2001 - 03:45 pm:
LOKI
Yup...you are right
By
Hieronymous
on Monday, April 30, 2001 - 04:28 pm:
Hey Loki:
"The schedules are empty buckets"? That's interesting
talk, coming from a GSA contracting officer.
What does it mean?
By
Loki
on Monday, April 30, 2001 - 05:34 pm:
Hieronymous - you made the connection from the other thread
re. me (training w/ you know who?), or was it something else?
+++
Empty buckets is jargon for an IDIQ type contract. I've heard a
number of commercial firms call it that. I also like the term
fishing permit.
By
Hieronymous
on Monday, April 30, 2001 - 05:37 pm:
Thanks, Loki. I get it now.
Yes, they can be empty buckets for contractors who sit by and
wait for rain. You gotta irrigate or dig a well.
By
Loki
on Tuesday, May 01, 2001 - 12:57 pm:
Now, here's something that sheds some light on it, and
appeals to CICA purists.
Exclusion of FSS Vendors Must Have "Reasonable Basis"
In a ruling that could have far-reaching implications for the
Federal Supply Schedule (FSS) in particular and
"acquisition streamlining" in general, the General
Accounting Office (GAO) has decided that an agency must have a
"reasonable basis" for concluding that a vendor's
items do not meet its needs if the agency excludes the vendor's
items from consideration for an FSS order.
GAO's decision, Delta International, Inc., B-284364.2 (May 11,
2000), involved a Federal Bureau of Investigation (FBI) purchase
made for its Bomb Data Center, which was to identify and procure
appropriate counter-terrorism equipment for local and state bomb
technicians. The Bomb Data Center decided that a fully digital
system was required because "full digitization would allow
greater compatible technological improvements, faster exchange
of data information, and significant quality control of
resolutions" and such a system "will allow the Bomb
Technician on the scene of an incident to digitally transmit
images to other locations anywhere in the country for real-time
assistance from other experts." The Bomb Data Center
selected the Science Applications International Corporation (SAIC)
RTR-4 Real Time Imaging Systems as the only "fully
digital" portable X-ray system available, and the FBI
issued a purchase order to SAIC under its FSS contract worth
approximately $9.8 million for 424 RTR-4 systems and associated
equipment.
Delta International, Inc., which also had an FSS contract for
portable X-ray inspection systems, protested the award of the
purchase order, arguing that the FBI improperly determined that
Delta's equipment would not meet its needs. Delta's equipment,
the foXray II, is essentially digital in nature even though it
employs a hybrid analog/digital technology to transmit data.
Delta argued that its foXray II does not use an analog filter,
coaxial cables, or have other features characteristic of the
analog format, so it does not have the problems that the FBI
associates with those features. In addition, Delta contended
that the foXray II transmits data faster than the RTR-4, that it
achieves better quality images than the RTR-4 ("with
quality being measured in quantitative forms, such as
resolution, penetration and dynamic range"), and that it is
wireless. "Each of the products is fully compatible with
other digital equipment, and there is absolutely no difference
between them in this regard," asserted Delta.
The FBI contended that the protester was arguing that it
"should have been given an opportunity to compete for award
of the FSS order," and that the protest should be denied
because paragraph (a) of FAR 8.404, Using Schedules, states
"when placing orders under Federal Supply Schedules,
ordering offices need not seek further competition..."
GAO says "if the protest were contending that the agency
was required to conduct a competition, it would be dismissed for
failure to state a valid basis of protest...however, the
question is not whether the agency was required to compete the
buy, but rather whether the agency had a reasonable basis for
determining that only the RTR-4 met its needs." GAO cites
the language in FAR 8.404(b)(7), which states "if an
agency's requirement in excess of the micro-purchase threshold
is defined so as to require a particular brand name, product, or
a feature of a product peculiar to one manufacturer, thereby
precluding consideration of a product manufactured by another
company, the ordering office shall include an explanation in the
file as to why the particular brand name, product, or feature is
essential to satisfy the agency's needs." Then, GAO
declares its policy: "Where, in connection with an FSS
purchase in excess of the micro-purchase threshold, a bid
protest challenges an agency's definition of its needs that
excludes consideration of supplies or services offered by the
protesting FSS vendor, we will review the agency's
documentation, including its report to our Office, in order to
determine whether the agency's definition of its needs has a
reasonable basis."
Regarding the protest itself, the contracting officer's
technical representative (COTR) explained in a declaration
submitted to the GAO that "the RTR-4, because it transmits
only digital data, can alter its speed of transmission, and that
the ability to transmit more slowly is in fact an advantage
because it allows for the transmission of a more detailed
image." GAO concluded that "the FBI lacked a
reasonable basis for its determination that the protester's
system did not meet the agency's needs" because "the
agency originally argued that one advantage of a fully digital
system is its higher speed in transmitting data, [but] the
agency now argues that it is the ability of a digital system to
transmit data more slowly that is an advantage."
This decision could have a big effect on the popularity of the
FSS! One of the FSS' allures is that FAR 8.404(a) said that
ordering offices "need not seek further competition,
synopsize the requirement, make a separate determination of fair
and reasonable pricing, or consider small business programs. GSA
[General Services Administration, which operates the FSS
program] has already determined the prices of items under
schedule contracts to be fair and reasonable." This is
interpreted by many as "find a suitable product in an FSS
catalog, examine two other FSS catalogs, then buy it."
However, GAO points out that Title 41 of the U.S. Code, Section
259(b)(3) provides that the FSS program satisfies the
requirement to obtain competition if "(A) participation in
the program has been open to all responsible sources; and (B)
orders and contracts under such procedures result in the lowest
overall cost alternative to meet the needs of the
government." To GAO, this means "use of the
streamlined procedures of the FSS in lieu of conducting a
competition is thus premised on a determination regarding what
the agency's needs are and which FSS supply or service meets
those needs at the lowest overall cost." This mean more
justifications and paperwork!
By
Loki
on Tuesday, May 01, 2001 - 01:09 pm:
Now, here's something that sheds some light on it, and
appeals to CICA purists.
Exclusion of FSS Vendors Must Have "Reasonable Basis"
In a ruling that could have far-reaching implications for the
Federal Supply Schedule (FSS) in particular and
"acquisition streamlining" in general, the General
Accounting Office (GAO) has decided that an agency must have a
"reasonable basis" for concluding that a vendor's
items do not meet its needs if the agency excludes the vendor's
items from consideration for an FSS order.
GAO's decision, Delta International, Inc., B-284364.2 (May 11,
2000), involved a Federal Bureau of Investigation (FBI) purchase
made for its Bomb Data Center, which was to identify and procure
appropriate counter-terrorism equipment for local and state bomb
technicians. The Bomb Data Center decided that a fully digital
system was required because "full digitization would allow
greater compatible technological improvements, faster exchange
of data information, and significant quality control of
resolutions" and such a system "will allow the Bomb
Technician on the scene of an incident to digitally transmit
images to other locations anywhere in the country for real-time
assistance from other experts." The Bomb Data Center
selected the Science Applications International Corporation (SAIC)
RTR-4 Real Time Imaging Systems as the only "fully
digital" portable X-ray system available, and the FBI
issued a purchase order to SAIC under its FSS contract worth
approximately $9.8 million for 424 RTR-4 systems and associated
equipment.
Delta International, Inc., which also had an FSS contract for
portable X-ray inspection systems, protested the award of the
purchase order, arguing that the FBI improperly determined that
Delta's equipment would not meet its needs. Delta's equipment,
the foXray II, is essentially digital in nature even though it
employs a hybrid analog/digital technology to transmit data.
Delta argued that its foXray II does not use an analog filter,
coaxial cables, or have other features characteristic of the
analog format, so it does not have the problems that the FBI
associates with those features. In addition, Delta contended
that the foXray II transmits data faster than the RTR-4, that it
achieves better quality images than the RTR-4 ("with
quality being measured in quantitative forms, such as
resolution, penetration and dynamic range"), and that it is
wireless. "Each of the products is fully compatible with
other digital equipment, and there is absolutely no difference
between them in this regard," asserted Delta.
The FBI contended that the protester was arguing that it
"should have been given an opportunity to compete for award
of the FSS order," and that the protest should be denied
because paragraph (a) of FAR 8.404, Using Schedules, states
"when placing orders under Federal Supply Schedules,
ordering offices need not seek further competition..."
GAO says "if the protest were contending that the agency
was required to conduct a competition, it would be dismissed for
failure to state a valid basis of protest...however, the
question is not whether the agency was required to compete the
buy, but rather whether the agency had a reasonable basis for
determining that only the RTR-4 met its needs." GAO cites
the language in FAR 8.404(b)(7), which states "if an
agency's requirement in excess of the micro-purchase threshold
is defined so as to require a particular brand name, product, or
a feature of a product peculiar to one manufacturer, thereby
precluding consideration of a product manufactured by another
company, the ordering office shall include an explanation in the
file as to why the particular brand name, product, or feature is
essential to satisfy the agency's needs." Then, GAO
declares its policy: "Where, in connection with an FSS
purchase in excess of the micro-purchase threshold, a bid
protest challenges an agency's definition of its needs that
excludes consideration of supplies or services offered by the
protesting FSS vendor, we will review the agency's
documentation, including its report to our Office, in order to
determine whether the agency's definition of its needs has a
reasonable basis."
Regarding the protest itself, the contracting officer's
technical representative (COTR) explained in a declaration
submitted to the GAO that "the RTR-4, because it transmits
only digital data, can alter its speed of transmission, and that
the ability to transmit more slowly is in fact an advantage
because it allows for the transmission of a more detailed
image." GAO concluded that "the FBI lacked a
reasonable basis for its determination that the protester's
system did not meet the agency's needs" because "the
agency originally argued that one advantage of a fully digital
system is its higher speed in transmitting data, [but] the
agency now argues that it is the ability of a digital system to
transmit data more slowly that is an advantage."
This decision could have a big effect on the popularity of the
FSS! One of the FSS' allures is that FAR 8.404(a) said that
ordering offices "need not seek further competition,
synopsize the requirement, make a separate determination of fair
and reasonable pricing, or consider small business programs. GSA
[General Services Administration, which operates the FSS
program] has already determined the prices of items under
schedule contracts to be fair and reasonable." This is
interpreted by many as "find a suitable product in an FSS
catalog, examine two other FSS catalogs, then buy it."
However, GAO points out that Title 41 of the U.S. Code, Section
259(b)(3) provides that the FSS program satisfies the
requirement to obtain competition if "(A) participation in
the program has been open to all responsible sources; and (B)
orders and contracts under such procedures result in the lowest
overall cost alternative to meet the needs of the
government." To GAO, this means "use of the
streamlined procedures of the FSS in lieu of conducting a
competition is thus premised on a determination regarding what
the agency's needs are and which FSS supply or service meets
those needs at the lowest overall cost." This mean more
justifications and paperwork!
By
Eric
Ottinger on Tuesday, May 01, 2001 - 01:15 pm:
Loki,
That is a (relatively) old case.
My understanding (I will defer to a real expert) is that the
protestor has to meet a very high standard, to establish that
something was very arbitrary and capricious to prevail in Court.
(It does appear that the lawyers led their client down the
garden path in this case.)
I agree the Comp. Gen. will be the most likely to take the lead
in setting limits for these vehicles. I believe the Comp. Gen.
has indicated that they intend to rein in some of the more
abusive and out of scope actions under FSS.
Eric
By
formerfed
on Tuesday, May 01, 2001 - 01:34 pm:
Loki,
I don't see any more justifications and paperwork - agencies
just need to follow the process. For most products, I see
compliance and documentation in a day or so. Any good technical
person that knows something about the marketplace could narrow
down the list of schedule holders to a reasonable number in a
couple hours. Then the agency could access the schedule
contracts and product info via Advantage or another site for
contracts, vendor sites, or call and ask for info to be faxed.
The evaluation and documentation for most items can be condensed
into a page or so.
My guess is the FBI in this case was already sold on SAIC and
just took a shortcut. In the tight vendor/tech community of law
enforcement, they were foolish to think a $9 million order could
be processed without the only other competitor knowing.
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