Tuesday Insight – May 16th, 2023: An Unnecessary, Counter-Productive GSA Schedule Marketplace Hurdle

Jul 17, 2023

The General Services Administration’s Acquisition Letter MV-22-02, Temporary Moratorium of Certain Limitations Contained in Certain GSA Economic Price Adjustment Contract Clauses, is a thoughtful effort to support stakeholders struggling to respond to the impact of inflation on the pricing and availability of commercial products and services via the Multiple Award Schedule (MAS) program.  The acquisition letter streamlines processes and eliminates unnecessary “hurdles” in the economic price adjustment (EPA) process. The acquisition letter supports customer agencies, GSA, and MAS contractors in addressing the inflation-driven impracticality of performance and the resulting cancellation of tens of thousands of MAS orders over the last year.

The requirements for determining fair and reasonable pricing are clearly set forth in the Federal Acquisition Regulation (FAR) and the General Services Acquisition Regulation (GSAR). There is no reference to, or guidance in, statute or regulation regarding the use of a “highly competitive” standard in determining fair and reasonable pricing.  There is, however, guidance on determining fair and reasonable pricing based on adequate competition.  See FAR 15.404-1, generally. The above solicitation statement introduces an unfounded, arbitrary evaluation standard for determination of fair and reasonable pricing under the MAS program.

This “highly competitive” evaluation standard is undefined. There has been no formal, public rule-making establishing this new standard. Further, to the best of our knowledge, there is no FAS guidance to contracting officers or MAS contractors establishing the evaluation considerations and/or factors in determining whether a price is highly competitive or not. So, not only does the solicitation language lack a regulatory basis, but it is also void of any guidance to the procurement community on what it means. As such, the term constitutes a bald, new price analysis requirement that only sews confusion among stakeholders in the system, as evidenced by the lack of analytical consistency among acquisition centers in GSA. Indeed, one FAS interpretation of the solicitation language provides that GSA policy requires the comparison of more than just commercial pricing as contracting officers are to determine the pricing not only fair and reasonable but also “highly competitive” per the solicitation. What GSA policy? And what does “not only fair and reasonable but also highly competitive per the solicitation” mean?

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