GSA Schedules – Goldmine or Landmine

1. GSA Schedules – Goldmine or Landmine James S. Phillips, Esq. jphillips@centreconsult.com

2. Centre Capabilities

3. Presenter Jim Phillips, jphillips@centreconsult.com Jim Phillips is a co-founder and principal of The Centre Law Group, LLC, based in Vienna, VA. He is also the co-founder and Executive Vice President of Centre Consulting, Inc., an advisory, consulting and training firm that assists federal contractors to effectively penetrate the federal market, acquire profitable contracts and execute core federal contract compliance obligations. Phillips has over 25 years of in-depth legal experience in the field of government contracts. Through his consulting practice, Phillips regularly advises and assists clients on virtually all matters confronting federal contractors, including: cost accounting issues, Federal Supply Schedule (FSS) and Multiple Award Schedule (MAS) contracting issues, intellectual property issues, small business contracting issues, terminations, teaming and subcontracting issues, and contract compliance and investigation issues.

4. Overview of the FSS Program • GSA Reported FY 2009 FSS Sales of Approximately $38 Billion spread over 42 Schedules. • $15.7 billion in sales under the IT Schedule alone. • Management consulting services (MOBIS), the next most popular schedule, experienced sales of nearly $4.3 billion in FY 2009 • Services accounted for > 60% of all FSS sales in FY 2008.

5. FSS Sales Growth

6. Federal Acquisition Regulations (FAR) Coverage • FAR (48 CFR) Part 8 Governs Federal Supply Schedules. • Additional Guidance on Commercial Practices Appears in FAR Part 12 & Part 38 of the FAR/GSAR

7. Getting Started with GSA Schedules: Overview of the FSS Program • Advantages of Schedule Contracts • Unlimited Size • Essential Contract Terms are Pre-Negotiated • Reduction in the Cost of Procurements • Low Funding Fees • The Schedule Contract Reflects the Contractor’s Commercial Practices

8. Getting Started with GSA Schedules: Overview of the FSS Program • Disadvantages of Schedule Contracts • Government Audit Rights over Sales Practices & Compliance Issues • Obtaining a Schedule Contract May Require Considerable Time and Effort • Diligent Administration is Required • Modifications Require Time • Inept Schedule Negotiations/Administration Can Be Costly

9. Types of GSA Schedules • GSA currently maintains 42 separate Schedule contracts. Examples are listed below. • Information Technology • Information Technology Products and Services, Schedule 70 • Management and Business Consulting • Management, Organizational and Business Improvement Services (MOBIS), Schedule 874 • Financial and Business Solutions, Schedule 520

10. How to Obtain a GSA Schedule • The Proposal Process • Open Season RFPs - Unlike traditional government contracts, GSA FSS solicitations are perpetually open for the submission of offers/proposals • GSA Goal: Obtain Most Favored Customer (MFC) Pricing • Legal Standard: Award Contract Based on “Reasonable Prices”

11. How to Obtain a GSA Schedule • How do you establish what is a “Reasonable Price?” • Option #1 – Commercial Sales Practices (CSP) Disclosure – Available for Products & Services Sold on the basis of standard commercial practices. • Key Elements – Discounts & Concessions Offered Non-Federal Government Customers. • Places premium on having actual “standards” for pricing product or services to different categories of customers • Can’t use if you never sold the product/service previously. • Recognize that when you base GSA price on pricing offered distinct customers those customers will become “the basis of award” (See Negotiations infra.)

12. How to Obtain a GSA Schedule • How do you establish what is a “Reasonable Price?” • Option 2 – Services Only – Cost Build Up. • Key Elements – Mapping Personnel into Distinct Labor Categories. • Establishing Indirect Costs. • Profit rate becomes an object of negotiations.

13. How to Obtain a GSA Schedule • Additional Proposal Elements • Identifying the Applicable SINs • The Completed Solicitation Document • Past Performance Information • Subcontracting Plan (large businesses only) • Financial Integrity Information • Delivery & Warranty Terms – Products • Labor Qualification Descriptions - Services

14. How to Obtain a GSA Schedule • Schedule Negotiation Process • Prices must be reasonable • GSA will ask for copies of invoices and contracts to substantial proposed pricing • The “basis of award” customer is very important because the Government’s right to future discounts is triggered by future discounts given to that “basis of award customer” – Negotiate This! • Escalating negotiation issues

15. Nuts & Bolts

16. The Ordering Process Authorized Ordering Agencies Ordering Issues GSA Ordering Procedures Cooperative Purchasing

17. Ordering Process for Products and Fixed Price Services

18. Orders Not Exceeding the Micro- Purchase Threshold ($3,000) No Best Value Determination is Required.

19. Orders Above the Micro-Purchase Threshold but Not Exceeding the Maximum Ordering Threshold Review three (3) Schedule prices on GSA Advantage! Select the Best Value

20. Orders Exceeding the Maximum Order Threshold Review an additional number of Schedule contractors’ catalogs/price lists. Seek price reductions. Place the order that provides the best value. If further price reductions are not offered, an order may still be placed.

21. Ordering Process for Services Requiring Statements of Work

22. Content of Statements of Work The Work to be Performed Location of the Work Period of Performance Deliverable Schedule Applicable Standards Special Requirements

23. Preference for Performance-Based SOWs Describe the requirement in terms of results rather than the methods of performance; Rely on measurable performance standards and financial incentives; and Rely on a quality assurance surveillance plan that will be used to monitor performance.

24. Transmittal of Statements of Work The Ordering Agency shall transmit the RFQ and SOW and the contractor selection criteria to at least three schedule contractors, and request that they provide firm, fixed prices.

25. Section 803 Requirements Imposes additional ordering obligations on Department of Defense Ordering Agencies before placing orders for services exceeding $100,000 in value.

26. Requirements The Ordering Agency must contact as many Schedule holders as is “practicable” to ensure that responses are received from at least three contractors. Alternatively, all Schedule holders must be contacted.

27. E-Buy Fulfills Section 803 Requirements “E-Buy” is a component of “GSAAdvantage!,” GSA’s online catalog of Schedule items.

28. Open Market Items • Incidental items are products or services which are not available on a particular Schedule contract, but which an ordering agency may wish to obtain in conjunction with or as a part of a Schedule order. Incidental items are also referred to as “open market items” or “non-contract items.”

29. Open Market Items • FAR says they may be included with Schedule orders but GAO disfavors practice. Limit to very small dollar items.

30. Open Market Items • Before including a non-Schedule or incidental item in an order placed under a Schedule contract ordering Agencies are required to accomplish the following: • Synopsize the requirement for the non-Schedule item in accordance with FAR Part 5.101. • Seek competition for the non-Schedule item in accordance with FAR Part 6. • Fulfill FAR Part 13 procedures for requirements over $3,000 in value and under $100,000. • Reserve requirements for small business concerns under FAR Part 19. • Determine that pricing is fair and reasonable in accordance with FAR Part 13, 14 or 15. See FAR 8.401. • Clearly label the items on the schedule order as items not on the Federal Supply Schedule. • Include all clauses applicable to items not on the Federal Supply Schedule in the order.

31. Modifications • Modifications: Increases, Decreases, Adds & Deletes – Proactive management is required! • Modifications are undertaken to Schedule contracts in the following situations: • Addition of Items/SINs • Deletions • Price Reduction • Price Increases

32. Nuts & Bolts • Additions and deletions to the items/SINs offered on a Schedule contract are accomplished under the Modifications Clause (GSAR 552.243-72). • In order to add items or SINs to a Schedule contract, the Schedule contractor submits to GSA for each new item/SIN the same information submitted to GSA to establish the original Schedule contract (i.e., Commercial Sales Practice Format documentation, discounting information, descriptive information, delivery information). This information will then become the subject of negotiations leading to the addition of the item or SIN to the contract. • GSA reserves the right not to add the item/SIN if it determines that it has been unable to obtain the best customer pricing for the new item/SIN.

33. Nuts & Bolts • In order to delete an item or SIN from the Schedule contract, the contractor must provide an explanation for the deletion. (i.e., the item has been discontinued or is obsolete).

34. Renewals • On fifth year anniversary date you must re-establish that your prices are reasonable. Repeat CSP/pricing analysis.

35. Renewals Information Considered in the Renewal Process New Terms and Conditions Updated Catalog Prices Small Certification CSP and Price Reductions IFF Payments

36. Certified Schedules Contract Manger (CSCM) Partner with NCMA and the Federal Contracting Institute

37. Certified Schedules Contract Manger (CSCM) With our certificate program, Certified Schedules Contract Manager (CSCM), you will: • Become an expert in Federal Supply and Multiple Award Schedule contracting • Learn to navigate the complex system of creating and maintaining Schedules • Master all elements of Schedule audits This certificate program requires the completion of five required courses, two audio seminars, and two electives, as well as a passing grade on a standardized test conducted by NCMA.

38. Certified Schedules Contract Manger (CSCM) Required Courses: • Federal Contracting Basics • Boot Camp for GSA & VA Contracting • GSA & VA Schedule Audit Issues • Task/Delivery Order Contracting • Interagency Contracting (online self-paced) • GSA/VA Contract Management Skills Audio Seminar • Non-GSA Vehicles OR Bid Protests Audio Seminar

39. Certified Schedules Contract Manger (CSCM) Elective Courses: • Annual Review • How to Manage Federal Contracts • FAR “Less Complicated” • Federal Contract Law for Non-Lawyers • Choose two.

40. Certified Schedules Contract Manger (CSCM) For More information on the CSCM certificate program contact Wendy Murrah 703.288.2800 ext. 234 wmurrah@centreconsult.com

41. Questions?