Reducing Contract Duplication

Melissa Hudak King

On February 28th, the Government Accountability Office (GAO) released its second annual report identifying federal programs, agencies, offices and initiatives, either within departments or governmentwide, which have duplicative goals or activities. GAO identified 51 areas where government programs may be able to achieve greater efficiencies or become more effective in providing mission services. The GAO report provides yet another opportunity to highlight the costs and burdens associated with unnecessary contract duplication. The title of GAO’s 2012 Annual Report says it all, “Opportunities to Reduce Duplication, Overlap and Fragmentation, Achieve Savings, and Enhance Revenue.”

Although the GAO report does not focus directly on the federal procurement system, the report’s title is an apt description of the current federal marketplace. Too many contracts for the same or similar services and products are reducing maximum efficiency and increasing total government and industry costs, costs that are ultimately borne by the taxpayer. At a time of significant budget challenges, reducing duplicative contracts will increase the efficiency and effectiveness of the procurement system saving money for government, industry and the taxpayer. GSA’s governmentwide contracting programs, including the Multiple Award Schedules (MAS), IT GWACs, fleet management services and credit card programs, among others, provide a foundation for addressing contract duplication.

GSA has a wonderful opportunity to leverage its acquisition portfolio to reduce duplication, overlap and fragmentation in the federal marketplace. The key will be the effectiveness of GSA’s contracting programs in bringing sound, cost effective solutions to customer agencies. GSA’s $40 billion and the VA’s $10 billion MAS programs are the lynchpin. They are the most successful commercial item contracting programs in government, period.

Yet, enormous potential still remains for both programs to provide greater value to customer agencies and increased opportunities to contractors. In particular, the lack of Other Direct Costs (ODCs) on MAS contracts unnecessarily restricts the ability of contractors in offering complete solutions in response to customer agency requirements. As a result, new duplicative contracts for commercial services (services that are already on MAS contracts) are created in order to provide customer agencies with complete solutions. Providing an accountable and efficient contract framework for the inclusion of ODCs on MAS contracts and orders is an essential tactical and strategic step in addressing contract duplication.

The MAS program is positioned to accomplish this step. First, the Administrator of GSA has the statutory authority for developing the policies and procedures governing the MAS program. Second, the Federal Acquisition Regulation (FAR) commercial item clauses provide an effective, efficient and accountable framework for including materials and ODCs on MAS contracts and orders. The Coalition has addressed ODCs in previous Friday Flashes.

The Office of Federal Procurement Policy (OFPP) could take another step in reducing contract duplication. Last fall, OFPP issued a governmentwide memorandum entitled “Development, Review and Approval of Business Cases for Certain Interagency and Agency-Specific Acquisitions.” The Coalition applauded the memorandum as a good first step. Among other things the memorandum directs agencies to develop a business case when an agency specific contract or BPA would create significant overlap between the scope of the proposed acquisition and the scope of existing contracts or agreements established under FSSI, SmartBUY or an existing GWAC. However, the memorandum does not require that a business case for a new agency specific contract address overlap with pre-existing MAS contracts. The omission misses a real opportunity to reduce contract duplication. If the services or products are available via MAS contracts, agencies should use them and if not, their business case analysis should address why not. Which leads back to ODCs—well you get the point.

This month the Coalition will be sending out a survey to its members seeking feedback on the costs associated with contract duplication as part of the development of a white paper. I hope you all will participate.

Finally, I would like to take this opportunity to welcome L-3 STRATIS as our newest Keystone member!

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Bob Carnie
Via Obama’s blessings and initiative, GSA is incrementally shutting down all competition & destroying small businesses via each schedule. A total of $50 Billion Dollars which will cost tax payers additional billions.

To clarify a GSA Schedule can be compared to a department in a store (in this case the store is GSA). Imagine if each store department one by one decided to buy from only 10 or 20 vendors rather than 10,000’s and they gave these vendors a 4yr – 6yr contract. And the store did this one department at a time, not all it once but over a couple yrs. Just imagine if Walmart decided to do this. Well it doesn’t take a genius to figure out that they wouldn’t be paying the lowest vendor prices for very long. This is exactly what GSA is doing. Via this socialistic procurement program GSA will definitely pay more in the future for products & services, while simultaneously destroying small businesses, disabled veteran owned companies, ect. Over 17,000 companies will feel GSA’s wrath and 100,000’s of jobs will be lost.
This socialistic procurement program is called Federal Strategic Sourcing Initiative or FSSI. GSA is eliminating competition via this FSSI Program. The first to feel this FSSI wrath has been the GSA Schedule 75 which has shut down all competition via this socialistic FSSI program. This schedule is for office supplies. (Schedule 75) From a selection of 525 Schedule 75 GSA Contractors, orders are given to only 15 companies, including 2 “Big Box” retailers, namely Staples and Office Depot, both of whom have been brought up on fraud charges under 31 USC 3729 and SEC charges and were fined and penalized for millions of dollars already. Office Depot & Staples are currently obtaining 65% of all GSA Schedule 75 Sales. GSA Schedules 70, 36, 67 are the next victims for eliminating free competition, destroying 1000’s of small businesses and 100,000’s of jobs. Hence small business vendors are being kicked out of GSA.
There are ongoing SBA and congressional hearings going on ( http://smbiz.house.gov/UploadedFiles/Tucker_Testimony.pdf ) Rep. Mick Mulvaney, R-S.C last week read ( http://www.govexec.com/contracting/2012/06/small-businesses-may-get-left-out-gsa-procurement-modernization-lawmakers-fear/56181/ ) And many more hearings have been held.
This is the irony, Obama supported The 2010 Small Business Jobs Act giving small businesses a chance to fairly and equally compete for government business. Obama then in 2010 gave the go ahead for GSA to eliminate free competition via the above Federal Strategic Sourcing Initiative. Schedule 75 was the first victim to lose free competition and all other GSA Schedules a total of $70 Billion are next. Keep in mind GSA is the largest and sometimes only way for small businesses to sell to the government. GSA claims by using this socialistic procurement method they will save billions of dollars. They claim GSA employees are overworked and cannot keep up with numerous vendors, auditing and price control, hence eliminating free competition is GSA’s answer. GSA is full of crap & they currently have the ability to audit and control prices GSA and DoD both currently utilize very sophisticated web sites for buyers to use which currently have very sophisticated audit, price control abilities and 1,000’s of interacting programs.
I will prove it:
1) Go to gsaadvantage.gov…
2) In the search box put in: Q5950A Remanufactured Toner & Click the Go Button…
3) Now you will see the Sort By Most Relevant Drop Down Box, Hence select Price – Low to High…
4) Then you will notice all the different companies that offer this item hence to drill down if they are a small business, woman owned, 8A, veteran owned ect. Then click the very top description line that is underlined for given company, hence you will go into another page, hence go to the bottom of that page and see Socio, hence that tells you if it is a small business, vet owned, ect…
5) If they have questions go to mid part of page you will see: $Price EA sold and shipped by ABC Company, LLC Hence click the company name for their phone #, address, email address, phone #, and fax #
6) Also you will notice via gsaadvantage.gov there are symbols for environmental friendly products, Ability One, ect. Everything you need is here
7) DoD EMALL is exactly the same but you need a secure token to enter web site. Only vendors and buyers have a security token…
8) ALL GOVERNMENT BUYERS ARE TRAINED HOW TO NAVIGATE THESE SITES.
These are my thoughts Why is GSA slapping competition in the face. Instead they should be slapping buyers hands if they make unnecessary and dumb over cost purchases. What is required is a very strict government buyer purchase program with very strict disciplinary action if purchases are made outside of given web sites allowing free and open competition within these web sites. Also, disciplinary action would occur if the government buyer does not buy the best quality & lowest priced item(s) per SBA small business requirements, goals, regulations, laws & rules. I know it is not Congress Job to Micro Manage.
With that said I wanted to add this very vital additional information for Congressional general understanding. A software company should definitely give testimony to Congress on how GSA & DoD can wisely use their vast amounts of computerized GSA/DoD information & data to control buyers. No need to reinvent the wheel. Via creating various programs both GSA & DoD can both save much more money monitoring buyers versus using the FSSI BPA which is a 20th century old fashion approach. This can be done without additional funding. If our nation goes to war of course the military dedicates its main resources to that cause. GSA & DoD can prioritize this software project via existing employed Software Engineers with no additional funds. It takes the will and priority to make this happen. Case and point look at Amazon.com. If they can handle 1,000,000s of orders via 100,000s of vendors then GSA with their existing data should be able to do the same. I know the government is not a company but GSA has incredible amounts of data and very smart software engineers. Via new created programs they can easily identify buyers overspending and notify given superiors and agencies. A big problem I have noticed via E-Buy many government buyers are purchasing OEM & New items when they are mandated & required to purchase recycled items. We can go on and on but GSA & DoD has more than enough data to really control budgets and cost via the buyer. They can also create programs to control vendor issues currently being done via GSA & DoD employees hence automating given tasks humans are currently performing.
Reduce the number of schedule solicitations. Currently GSA claims it costs $3,000 per year, per contract to maintain each contract and numerous GSA employees. There are 40 solicitations (GSA and VA). The solicitations should be consolidated down to a handful—with a goal of a single solicitation (contractors could then choose to consolidate their contracts or maintain separate contracts depending on their business models). The current structure of the schedules often forces companies to submit multiple offers for multiple contracts when a single contract would be more efficient. Consolidating solicitations allows companies to efficiently and effectively consolidate contracts rather than having multiple contracts across schedules and business lines. This approach would provide the opportunity for contractors and GSA to reduce costs associated with seeking, obtaining and managing multiple schedule contracts. It is an opportunity to leverage contractor and GSA resources through a more efficient structure. Consolidating schedules would lead to a more efficient and effective platform for market research by customer agencies.
Reform the outdated schedule pricing policies. The current schedule pricing policies in the General Services Acquisition Regulation essentially date from the early 1980’s. The 1982 policies were written to address commercial pricing practices for products which made good business sense at a time when the majority of GSA schedule purchases by the federal government were for products. However, today the majority of purchases through the GSA schedules are for services. As a result, preparing, submitting, evaluating, negotiating and awarding a services schedule contract using the current pricing policies is like putting a square peg in a round hole. Moreover, for both services and products, schedule pricing for customer agencies is driven by the second level competition for task orders based on individual agency requirements. The new task and delivery order competition requirements for schedules are the result of statute and regulation. The current pricing policies do not reflect this new dynamic. The current regulations increase the complexity and cost of price negotiations and contract compliance for government and industry. It is time to bring the schedule pricing policies into the 21st century.
Also, GSA is trying to compare FSSI to large corporate volume purchasing to
save money. FSSI is nothing like large corporate volume purchasing. I
believe several famous professors and large corporations should testify
in front of Congress to prove my point.

Most large corporate volume purchasing models emulate Walmart, Target,
Cosco, ect. “COMPUTERIZED” business models. Again each dept within a
large corporation will normally purchase from 1’000’s of vendors (NOT 15
VENDORS per schedule – WITH A LOCKED IN LONG TERM CONTRACT). These
businesses analyze sales by the minute “VIA COMPUTER SYSTEMS” to verify
if each product purchased from given vendor(s) meets their profit/sales
expectations. These corporations will not give a second thought about
yanking a product off the shelf and replacing it with another vendor(s)
lower priced / more profitable like item. And if a buyer makes wild
purchases within a corporation “Buyers Gone Wild”, guaranteed his/her
superiors will be reading him/her the riot act that same day. AGAIN THIS
IS A QUESTION NO ONE HAS ASKED GSA : Does GSA currently posses programs
to monitor Government Buyers? IF not I am totally confident GSA
possesses enough data to tweak existing programs to strictly monitor
buyer purchases without additional funding. This would be the true
corporate solution.
This is the other issue the government should be asking : Does your
business model emulate for example : amazon.com (Internet purchases) or
does it emulate a brick and mortar store such as Walmart or does it
emulate a little of both. Are purchases being made via numerous buyers /
small orders under $3,000 or $25,000? This question should be asked
for each schedule. The solutions will vary schedule to schedule.

More Information…
Go to Google.com and in the Google search box enter ( Congressional FSSI Hearing ) there you will find additional information. Currently there are proposed rules to enhance The Small Business Jobs Act of 2010 regarding unfair FSSI agreements implemented by GSA, DoD & NASA. To see rules simply go to Google.com and via search box enter ( Federal Register / Vol. 77, No. 95 / Wednesday, May 16, 2012 / Proposed Rules ).
You may also submit comments, identified by RIN: 3245-AG20, or contact Dean Koppel, Assistant Director, Office of Policy and Research, Office of Government Contracting, U.S. Small Business Administration, 409 Third Street SW., Washington, DC 20416, (202) 205-7322.
Samuel D. Bornstein is preparing a study Professor of Accounting and Taxation Kean University, School of Business, Union, NJ Partner-Bornstein & Song, CPA’s & Consultants, Oakhurst, NJ email: [email protected] http://www.bornsteinsong.com Tel: (732) 493 – 4799 Fax: (732) 493 – 3399
For more information contact stopFSSI.org
4949 St. Elmo Ave., Suite 221, Bethesda, MD 20814-6067
(301) 652-7410 – [email protected]– http://www.stopFSSI.org