As discussed previously in this FAR and Beyond blog, the General Services Administration (GSA) has proposed to amend the Competition in Contracting Act (CICA) of 1984 to adjust the statutory authority for the Federal Supply Schedule (Schedule) program by clarifying what constitutes “competitive procedures” under the law. Currently, the Schedule program is deemed a competitive procedure if participation is open to all responsible sources and orders and contracts under the program result in the lowest overall cost alternative to meet the government’s needs. Under GSA’s proposed legislation, the Schedule program authority would retain the requirement that it be open to all responsible sources, but would change the requirement that awards result in the “lowest cost alternative” to a requirement that awards result in “best value” for the Federal Government. The proposed change will benefit both businesses and customer agencies, and will be particularly beneficial to small businesses and new entrants, including small disadvantaged, service-disabled veteran-owned, women-owned, and HUBZone small business concerns.
The number of small businesses participating in the Federal market has plummeted in the last decade, and this downward trend continued in 2023. There are many factors: e.g., unintended consequences of category management, increased regulatory compliance, and instability in the market due to continuing resolutions and recurring threats of government shutdowns. In addition, the one governmentwide contracting program created to attract commercial firms to the Federal market, which also represents the single, largest contracting program for small businesses, the Schedule, is not reflecting commercial practices due to recent policy changes. Unfortunately, Schedule contractors now face a long, painful slog negotiating contract pricing at the contract level, instead of relying on competition at the task or delivery order level to provide fair and reasonable pricing. The Schedule solicitation asks offerors to provide pricing that is lower than the price offered to their best commercial customer, in exchange for a paltry minimum guarantee of only $2,500, with the expressed intent to push for additional discounts at the order level. The price reduction clause, which requires contractors to monitor commercial pricing to ensure that the government is not being charged more than an agreed upon reference pricing for a good or service, is not a commercial practice and exposes prospective contractors to burdensome record-keeping requirements and potential criminal and civil liability.
There is also a lack of consistency in how laws, regulations, and policies are applied to Schedule offerors and contractors by individual contracting officers. For example, in contract negotiation some contracting officers request invoices for every item, requiring offerors to provide invoices for millions of products. Providing invoices for thousands or millions of items to establish pricing defies logic when it is highly unlikely the contracting officer will have the time or expertise to review them. Further, the invoice requirement is a roadblock for small businesses offering new technologies and products, as those businesses may not have the resources necessary to monitor pricing effectively.