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GSA ORDERING INSTRUCTIONS, INTERESTING CASE REGARDING

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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