Flow-down requirements are a unique, yet ubiquitous, feature of the federal acquisition system. Flow-down requirements impact prime contractors, subcontractors, customer agencies, contracting activities, and contracting officers.
The Federal Acquisition Regulation (FAR) includes a host of contract clauses that must be flowed down to subcontractors. Moreover, given the procurement system’s focus on regulatory and performance compliance, prime contractors are incentivized to flow down as many clauses as possible beyond those mandatory flow-downs. Some of these additional flow-downs can be central to contract performance, like the Trade Agreement Act (TAA). The government expects, in the normal course of business, that prime contractors and subcontractors effectively address flow-down requirements to ensure contract compliance.
Similarly, procurement policies and procedures flow down to the acquisition workforce through the FAR, General Services Acquisition Regulation (GSAR), acquisition letters, and other management guidance. These regulations and associated guidance address a host of contracting officer responsibilities, including but not limited to, proposal evaluation, negotiations, price and/or cost analysis, data rights, and foreign acquisition (e.g., TAA).
For this reason, procurement policy flow-downs cannot be one-sided. The government rightly expects compliance from its industry partners regarding contract clause flow-down requirements. Likewise, industry partners and the public have a right to expect sound, effective flow down of acquisition policies to the federal acquisition workforce. Unfortunately, the record is this regard is mixed, at best, and the General Service Administration’s (GSA’s) Multiple Award Schedule (MAS) program serves as a case in point.
MAS contractors continue to experience challenges regarding the negotiation and administration of MAS contracts. These challenges often reflect unsound, ineffective flow-down of key policy guidance to the workforce. Many MAS contract negotiations are premised on positions and analysis that are inconsistent with the GSAR and FAR. As a result, contractors and offerors are being asked to make untenable business decisions in order to receive a MAS contract or have an option exercised. This result is especially problematic for small business concerns and, ironically, occurs at a time when the Administration and Administrator Carnahan are focused on supporting small business concerns entering the federal market.
Investments in training, in-person and virtual, can help address the gap in knowledge (contractors report some contracting officers are unfamiliar with the MAS pricing policies.) This training should include a focus on commercial business practices and incorporate reverse industry days. Additionally, sound procurement management, consistent with the Senior Procurement Executive’s memorandum on the appropriate role of management in the GSA acquisition process (See SPE Memo SPE-2022-03), is vital to consistent, balanced application of the rules. The memo should be included in any GSA-specific acquisition training. Finally, FAS Policy and Procedure Memorandum 2021-05 (the PAP) should be rescinded, so as to allow contracting officers to rely on the guidance contained in the GSAR and the FAR when conducting MAS contract negotiations.
The PAP and a new Request for Information
The PAP includes guidance that is inconsistent with the underlying GSAR pricing policies and the FAR. Some of this inconsistent guidance is punitive in nature (e.g., “all commercial customers” as the Basis of Award (BOA) tracking customer), especially negatively impacting small businesses. It also imposes, for all intents and purposes, new data collection requirements on contractors and offerors that are not in the GSAR. The (hopefully) unintended consequence of the PAP is to establish a new and different negotiation regulatory framework for contracting officers and contractors without the benefit of public notice and the opportunity to comment.