Richard Beutel, a senior researcher at the George Mason Baroni Center for Government Contracting, offers some highlights from GSA’s recent industry day.
In a tour de force of transparency, and just a few short weeks after announcing a major reorganization, the General Services Administration’s Federal Acquisition Service’s (FAS) day-long industry day outlined several dominant themes such as procurement consolidation, commercial-first acquisition, schedule flexibility, reduced regulatory burden, stronger pricing discipline, supply-chain risk controls and expanded transactional data reporting.
With key notes by GSA leaders Larry Allen and Laura Stanton, GSA is positioning FAS as the operational center for a more centralized, data-driven federal buying model. It will include more use of mandatory or common contract vehicles, more reliance on existing government-wide vehicles, more flexible multiple award schedule (MAS) ordering, more transparent pricing analytics and more supply-chain scrutiny.
For industry, the practical message was, focus your federal market strategy, understand the new Federal Acquisition Regulation framework, use MAS flexibilities intelligently, prepare for more data reporting and expect greater attention to pricing, Trade Agreements Act and Buy American Act (TAA/BAA) status, supply-chain provenance and contract compliance.
Several of themes will resonate throughout the industry for some time to come.
Specifically, there was significant discussion of the new value-added reseller guidelines. FAS provided new clarity on how VARs/resellers will be judged. Specifically, following the Jan. 22 request for information, FAS clarified what the term “value” meant for value-added resellers.
GSA says 136 companies responded to the RFI. Industry urged the adoption of standard commercial understanding of the terms “resellers” and “VARs.” FAS was receptive to using these standard terms. FAS acknowledged that dealing with government entailed additional costs associated with mandatory security compliance, audit documentation and specialized contract management. They emphasized that “value” meant value in the services provided, not just product markups. From now on, FAS will take a total value focus, scrutinize line-item pricing, but not focus upon markup disclosures. Going forward, VARs will be required to provide detailed descriptions of value-added services and encourage VARS to propose separate line-item pricing for value-added services.
Another key discussion focused upon a description of procurement consolidation workstreams — governmentwide indefinite delivery vehicles and shared services/centralized acquisition services. Moving forward with the wind down of NITAAC and the migration of NASA SEWP to GSA are well underway.
One of the most surprising discussions from a go-to-market perspective was the discussions of the new GSA acquisition manual (GSAM) and order placement rules that allow schedule vendors to bid special item numbers (SINS) from other vendor schedule contractors’ contracts — this will have a very interesting impact on the current reseller ecosystem.
The basis for this procedure is the FAR requiring contractors to fulfill specific supply or services needs through designated government sources rather than in the open market. GSA’s Schedule guidance partners with that FAR clause in the internal GSA procurement rules called the “GSAR.” The GSAR governs how orders can be placed under the GSA Schedule contracting framework. In practical terms, it now says that Contractor A can quote a total solution to an agency and source a needed component from Contractor B’s schedule, instead of treating that component as open-market procurement (specific citation to this GSAR provision is GSAR 538.7102-1(e) for those procurement nerds who find this kind of thing interesting).
How will this work? Contractor B — the selling MAS contractor — reports the schedule sale and remits the industrial funding fee (IFF) for the product or service sold under contractor B’s MAS contract. GSA’s guidance says there is “no double reporting” and “no double charging and remitting IFF (Industrial Funding Fee which is the “GSA tax” for using the schedule).” The selling contractor, i.e., the contractor holding the MAS contract under which the item is sold, reports the sale and remits the IFF.
Contractor A — the procuring/quoting contractor — does not report or remit IFF on contractor B’s item. Contractor A also may not add a second IFF when billing the agency for contractor B’s item; the amount billed for B’s schedule item must be the exact amount paid and must not exceed B’s final GSA Schedule contract price.
How will this impact the operation of major resellers, like Carahsoft or Immix? Only time will tell. The new GSAM ordering procedure does not require that the holder of the quoted SIN must accept the incorporation of its contract vehicle into the submitting offeror’s bid. But if the reseller adopts a pattern of refusing access of its GSA schedule paper to other offerors who wish to ride upon it, how will GSA react? Only time will tell!
Richard Beutel is a senior researcher at the George Mason University Baroni Center for Government Contracting and the founder of Cyrrus Analytics LLC. As a congressional staffer, Rich was the original author of the Federal IT Acquisition Reform Act (FITARA) and is a nationally recognized expert in IT acquisition management and cloud policy with 25 years of private sector experience and more than a decade on Capitol Hill working on IT acquisition issues.
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