[Federal Register Volume 70, Number 161 (Monday, August 22, 2005)]
[Notices]
[Pages 48953-48961]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-16254]


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GENERAL SERVICES ADMINISTRATION

[GSAR 2005-N02]


General Services Administration Acquisition Regulation; White 
Paper--Adding Ancillary Repair and Alteration Services to the General 
Services Administration Schedules Program

AGENCIES: Office of the Chief Acquisition Officer, General Services 
Administration (GSA).

ACTION: Notice with a request for comments.

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SUMMARY: The General Services Administration (GSA) is considering 
adding ancillary Repair and Alteration (R&A) services to the GSA 
Schedules Program. The Federal Acquisition Regulation (FAR) describes 
R&A services as a subset of construction services. As such, the GSA 
Schedules Program has not been able to provide fully-integrated 
solutions that often involve R&A services. The GSA requests that 
interested parties provide comments.

DATES: Interested parties should submit written comments to the FAR 
Secretariat on or before October 21, 2005 to be considered in the 
formulation of a final rule.

ADDRESSES: Submit comments identified by GSAR notice 2005-N02 by any of 
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Agency Web Site: http://www.acqnet.gov/GSAM/gsamproposed.html. Click on Proposed Rules, and the GSAR Case number to 
submit comments.
     E-mail: [email protected]. Include GSAR notice 
2005-N02 in the subject line of the message.
     Fax: (202) 501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (VIR), 1800 F Street, NW., Room 4035, Attn: Laurieann 
Duarte, Washington, DC 20405.
    Instructions: Please submit comments only and cite GSAR notice 
2005-N02 in all correspondence related to this notice. All comments 
received will be posted without change to http://www.acqnet.gov/far/ProposedRules/proposed.htm, including any personal and/or business 
confidential information provided.

FOR FURTHER INFORMATION CONTACT: The Regulatory Secretariat (VIR), Room 
4035, GS Building, Washington, DC 20405, (202) 208-7312, for 
information pertaining to status or publication schedules. For 
clarification of content, contact Ms. Linda Nelson, Procurement 
Analyst, at (202) 501-1900 or by e-mail at [email protected]. Please 
cite GSAR notice 2005-N02.

SUPPLEMENTARY INFORMATION: 

A. Background

    GSA invites the general public and other Federal agencies to 
comment on the following White Paper that includes specific questions 
at the end. In particular, GSA encourages comments regarding its impact 
on small businesses.


[[Page 48954]]


    Dated: August 11, 2005.
Roger D. Waldron,
Acting Senior Procurement Executive, Office of the Chief Acquisition 
Officer, General Services Administration.

White Paper--Adding Ancillary Repair and Alteration Services to the GSA 
Schedules Program

    The General Services Administration (GSA) is considering the 
possibility of adding ancillary Repair and Alteration (R&A) services to 
the GSA Schedules Program. Over the past several years, we have become 
increasingly aware of a growing number of customer requirements that 
fall within the scope of the GSA Schedules but which require ancillary 
R&A services. Historically, the GSA Schedules have not provided an 
avenue by which a customer could obtain these combined requirements. 
Consideration of adding ancillary R&A services is an attempt to extend 
the benefits realized through the GSA Schedules Program and to offer 
one-stop, total solutions to our customers.
    The first step is to determine whether GSA should add ancillary R&A 
services to the GSA Schedules Program. Should GSA decide to proceed, 
the next step is to determine the best approach for implementation. The 
implementation options GSA is examining include: (a) Adding a new 
Special Item Number (SIN) to existing GSA Schedules, (b) create a new 
Schedule, or (c) utilizing any other viable alternative to incorporate 
R&A services to the GSA Schedules Program.
    The North American Classification System (NAICS) and the Federal 
Acquisition Regulation (FAR) describe R&A services as a subset of 
construction services. Contractors that are engaged in this industry 
are commonly known as general contractors (NAICS Subsector 236), or 
specialty trade contractors (NAICS Subsector 238). General contractor 
types may arrange the performance of separate parts of the project 
through subcontracts with other contractors. The specialty trade 
contractors perform a specific component (e.g., electrical work, 
painting) of the project. They often perform remodeling and repair type 
tasks associated with purchase of various other supplies or services 
(visit http://www.census.gov/epcd/www/naics.html for additional 
information on NAICS codes).
    The following is a sample of GSA schedules that include supplies or 
services whose purchase often requires the associated performance of 
ancillary R&A services: Furniture Schedules 71-I (Office Furniture), 
71-II (Household and Quarters Furniture), 71-II-H (Packaged Furniture), 
71-II-k (Comprehensive Furniture Management Services), 71-III (Special 
Use Furniture), 72-I-A (Floor Coverings) and 72-II (Furnishings); and 
Schedule 70 (Information Technology). A thorough analysis of the 
current Schedules to determine which require inclusion of ancillary R&A 
services will be conducted upon decision to proceed. A complete listing 
of current GSA Schedules is available on the Schedules e-Library 
(www.gsa.gov/e-library).
    Given the GSA Schedules identified above, the following scenario 
realistically describes the current challenge a customer faces when 
acquiring supplies and services covered by the GSA Schedules that 
require ancillary R&A services: An agency customer purchases new office 
furniture using GSA Schedule 71-I and new computers using Schedule 70. 
The customer's requirement also includes room alterations to 
accommodate the new furniture and installation of network cable for the 
new computers. Thus, the customer's total solution requires ancillary 
R&A type tasks associated with the purchase of office furniture and 
computers. The current GSA Schedule model fails to provide customers 
with the integrated program design necessary to achieve the total 
solution needed because the above-mentioned customer must procure 
additional R&A services to--
     Alter a wall to appropriate the new furniture: a general 
contractor, NAICS 236210 (Industrial Building Construction--Addition, 
Alteration and renovation, general contractors); and
     Install computer and network cable for the new computers: 
A specialty trade contractor, NAICS 238210 (Electrical Contractors--
Computer and network cable installation).
    Currently, when utilizing the GSA Schedule to procure the principal 
supplies and services, the customer must acquire the ancillary R&A 
services from another procurement vehicle. As a result of the need to 
conduct an additional procurement, the customer is subject to 
inefficiencies, increased costs, unnecessary complexities as well as 
delay in realizing the end results. Adding ancillary R&A services to 
the GSA Schedule would allow GSA to provide the customer with a one-
stop, total solution process.
    This document discusses the various relevant issues such as: 
Statutory/regulatory considerations, scope, pricing, competition, and 
clause applicability. Additionally, a primary GSA concern is the impact 
this initiative will have on small business.
    GSA seeks comments from all stakeholders, and in particular, from 
small businesses to determine both the feasibility of this effort and 
how best to achieve the desired results.

I. The GSA Schedules Program

Overview

    In a general sense, the role performed by the GSA under the GSA 
Schedules Program is that of a market maker, providing industry and 
customer agencies the necessary vehicles to come together and transact 
their business. Specifically, the GSA Schedules Program provides 
Federal agencies with a simplified process for obtaining commonly used 
commercial supplies and services at prices associated with volume 
buying. GSA awards indefinite delivery contracts to commercial firms to 
provide supplies and services at stated prices for given periods of 
time.
    GSA schedule contracts are firm fixed price or firm fixed price 
with economic price adjustment type. They are typically evergreen 
(awarded with a 5-year base period and three 5-year options) and 
include conditions under which a contractor may offer price discount to 
authorized users without triggering mandatory across-the-board price 
reduction.
    Prior to awarding a schedule contract, GSA determines the 
contractor to be responsible in accordance with FAR subpart 9.1, 
negotiates and approves an acceptable subcontracting plan for large 
businesses, and negotiates and awards fair and reasonable pricing based 
on the firm's Most Favored Customer rates. Because GSA performs much of 
the up-front work, agencies then benefit from a streamlined ordering 
process.
    Under the GSA Schedules Program's continuous open solicitation 
policy, offers for commercial supplies or services may be submitted at 
any time. Similarly, contractors may request to add supplies/services 
to their contracts at any time during the term of their contract.

GSA Schedule Pricing Policies

    Because GSA Schedule contracts are awarded under commercial terms 
and conditions, GSA uses a price-based approach to negotiate contract 
pricing. This approach relies on the prices of the supplies/services 
that are the same or similar to those in the commercial marketplace. 
Under this approach, submission of cost or pricing data is not 
required.
    GSA's negotiation objective is to receive prices that are equal or 
better than a company's ``Most Favored Customer'' pricing. To arrive at 
a price

[[Page 48955]]

that the Government considers fair and reasonable, offerors are 
required to submit information pertaining to their commercial sales and 
discounting practices using the Commercial Sales Practices Format (see 
Attachment) that is included in each GSA Schedule solicitation.
    Under the Economic Price Adjustment clause, Schedule contractors 
may increase or decrease prices according to their commercial practice. 
Price decreases may be submitted at any time during the contract 
period. Price increases, resulting from a reissue or modification of 
the contractor's commercial catalog that formed the basis for award, 
can only be made effective on or after the initial 12 months of the 
contract period, and then periodically thereafter for the remainder of 
the contract term.

The Ordering Process

    The GSA Schedules Program provides a streamlined ordering process 
for customer agencies. The specific ordering requirements that a 
customer must follow are governed by whether the requirement is for 
supplies or for services and the dollar value of the order. The 
ordering procedures are contained in FAR subpart 8.405-1 and 8.405-2 
and may be accessed via the following Web site: http://www.acqnet.gov/far/.
    A unique feature of the GSA Schedules Program is the Maximum Order 
Threshold (MOT). The MOT represents the level above which customers 
should seek additional price reductions from Schedule contractors. 
Contractors are not required to accept orders above the MOT, but they 
may elect to accept any size order.
    The GSA Schedules Program also affords contractors an opportunity 
to join with other Schedule contractors in teaming arrangements to fill 
specific customer orders. Not only does this increase a contractor's 
opportunities for business, but it also enables customers to achieve a 
``total solution'' to meet their needs.

II. Issues, Questions, and Alternatives for Consideration

Statutory/Regulatory Requirements for R&A Services

    There are statutory and regulatory considerations associated with 
the addition of R&A services to GSA Schedules Program.
    A primary issue is the fact that GSA Schedule contracts are 
typically awarded using the procedures outlined in FAR part 12, which 
governs the acquisition of commercial supplies and services. In a July 
2003 memorandum entitled ``Applicability of FAR part 12 to Construction 
Acquisitions,'' Angela Styles, former Office of Federal Procurement 
Policy Administrator, indicated that routine alteration and repair 
services are considered commercial and may be acquired using FAR part 
12 procedures (this memorandum may be accessed at the following Web 
site under ``Memos'': http://www.acqnet.gov/AcqNet/Notes/). Consistent 
with the memorandum, it is not GSA's intent to circumvent the unique 
construction-related requirements contained within FAR part 36 when 
incorporating ancillary R&A services to the GSA Schedules. The 
following excerpt from the memorandum describes the scope of the 
ancillary R&A services envisioned by this initiative:

* * * routine painting or carpeting, simple hanging of drywall, 
everyday electrical or plumbing work, and similar noncomplex 
services, as well as for purchases of commercial construction 
material and associated ancillary services.

    In order to safeguard the government's interests and to comply with 
applicable labor laws, GSA proposes including all of the required 
statutory/regulatory requirements pertaining to ancillary R&A services. 
Some of the major statutory requirements applicable to R&A services 
include:
     Davis Bacon Act
     Copeland Act (Anti-Kickback)
     Contract Work Hours and Safety Standards Act
     Miller Act (bonds)
    Matrices detailing all of the required clauses for both 
construction and commercial item contracts may be found at http://www.arnet.gov/far/current/matrix/Matrix_01.html and at http://www.arnet.gov/GSAM/gsam.html.
    A second issue is the consideration of whether to implement the 
above-mentioned requirements at the contract level or at the task order 
level. Currently, when an agency customer uses the GSA Schedules to 
procure a requirement to which additional agency-specific restrictions 
are applicable, the agency-unique provisions may be incorporated at the 
task order level as long as they do not conflict with the underlying 
Schedule terms and conditions. Security clearances are an example of 
such a requirement.
    Just as agency-unique provisions are addressed at the task order 
level, it appears that the Miller Act requirements should be dealt with 
in a similar fashion, for similar reasons. The FAR contains thresholds 
and differing provisions for bonding at various thresholds. 
Acknowledgement of the Miller Act and other FAR mandated payment/
performance protection requirements should take place at the contract 
level. However, the implementation of the actual requirement would be 
enacted at the task order level as appropriate.

Contract Scope and Its Impact on Competition

    GSA ensures that the GSA Schedules afford ordering agencies the 
maximum opportunity to compete requirements under the program (as of 
June 2004, there are 15,546 Schedule contracts in effect). 
Additionally, increasing procurement opportunities for small businesses 
is and has been a major GSA initiative. GSA works hard to ensure that 
small, veteran-owned small, service-disabled veteran-owned small, 
HUBZone small, small disadvantaged, and women-owned small business 
sources have every opportunity possible to participate in the Federal 
procurement process.
    GSA is fully committed to strengthening the sustainability of the 
25 million small businesses in America. Under the Schedules Program, 
GSA actually exceeds the expectations of the Small Business 
Administration. The governmentwide goal for contracting with small 
businesses is 23 percent. In FY 2002, small businesses received 34.8 
percent of the total $21.1 billion in Schedule sales and in FY 2003, 
small businesses received 35.6 percent of the total $25.6 billion in 
sales. As of Q3 FY 2004, small businesses received 35.7 percent of the 
total Schedule sales; and approximately 80 percent or 12,414 of 15,546 
GSA Schedule contracts awarded is with small businesses.
    Many existing GSA Schedule contracts are worldwide in scope in the 
sense that firms may elect to offer delivery of supplies and services 
domestically, overseas, or internationally. It is possible that the 
inclusion of ancillary R&A services in contracts having worldwide scope 
may have an adverse impact on certain businesses. While some R&A firms 
are national in scope, most are regional or locally based and they must 
be duly licensed under local jurisdictions. Therefore, GSA may consider 
narrowing the scope of a resultant R&A Schedule to designated regional 
areas.
    As indicated previously, the scope of the R&A services being 
contemplated is ancillary in nature to existing Schedule supplies/
services and represent minor repairs and alterations. The GSA Schedules 
containing ancillary R&A services must be consistent with all

[[Page 48956]]

rules and regulations and the SOW must be well-defined.

Pricing

    One of the most difficult questions to address in this area is how 
to negotiate pricing for ancillary R&A services under the GSA Schedules 
Program. As noted above, Schedule contracts are predicated on the 
Government's negotiation of most favored customer discounts from 
contractors' established prices for commercial supplies/services.
    On a typical Schedule contracts providing services, pricing is 
negotiated based on fully-loaded hourly rates for the type of service 
to be provided. Ordering agencies seeking services would provide the 
SOW and ask Schedule contractors to quote fixed rates and the level of 
effort/mix of labor for such services. However, it has been suggested 
that ancillary R&A services do not readily lend themselves to such a 
pricing methodology due to the numerous labor categories generally 
involved in an R&A project and all of the variables that come into play 
at the work site.
    Listed below are some alternatives for pricing ancillary R&A 
services under a GSA Schedule contract:
    a. Award the R&A Schedule contracts without pricing, allowing 
customers to compete and negotiate pricing for individual requirements 
among the various Schedule contractors. This is similar to the method 
that GSA's Public Buildings Service (PBS) currently utilizes in the 
award of multiple award indefinite delivery/indefinite quantity 
construction contracts. Although customers would still need to 
negotiate prices under this alternative, they would still benefit from 
GSA having completed much of the up-front work in awarding the Schedule 
contract.
    The Schedule contract would provide them with a source of 
contractors already deemed responsible in accordance with FAR Subpart 
9.1. In addition, GSA would negotiate subcontracting plans and 
incorporate basic terms and conditions into the contract.
    b. Negotiate pricing based on labor rates for specific geographic 
areas at the contract level (including utilization of techniques such 
as fixed price multiplier, applied to the locality-specific Davis Bacon 
base rates) and allow the customer to seek price quotes for individual 
orders based on the negotiated labor rates.
    c. Negotiate pricing based on the commercially-accepted Means Cost 
Data (e.g., RSMeans Cost Data). The Means Cost Data is a series of 
publication that cover general construction costs in such categories as 
labor, materials, equipment, as well as pricing for subcontracting 
specialties such as mechanical, concrete/masonry, plumbing, electrical, 
and repair and remodeling. The Means Cost Data also contain adjustment 
factors covering various cities in the United States. If this approach 
were adopted, GSA would need to ensure that the costs contained in the 
Means Cost Data are reflective of and include wage rates that are in 
compliance with the Davis Bacon Act. It may be possible for GSA to 
negotiate an agreement with the publishers of the Means Cost Data to 
publish an electronic GSA-unique version of the publication.
    d. Allow firms to propose various pricing strategies depending upon 
their commercial practice. This may take the form of labor rates, fixed 
unit prices, overhead adjustors, markups, share-in-savings, etc.

Award Considerations

    The following are three suggested methods to include ancillary R&A 
services into the GSA Schedules Program:
    Alternative One--Add an R&A services SIN to those GSA Schedules 
where the purchase of the supply/service often requires ancillary R&A 
services be performed. An issue associated with this alternative is 
whether to restrict award of such a SIN to only contractors who provide 
the primary supply/service or to allow all responsible offerors to be 
considered for award under the ancillary R&A SIN regardless of whether 
they are under contract to provide the related supplies and services. 
This decision may impact access to small businesses and it may also 
require customers to deal with multiple contractors under teaming 
arrangements.
    Alternative Two--Establish a new Schedule specifically for minor 
R&A services. An independent schedule for these services would 
highlight R&A's unique requirements, allowing for a clear definition of 
the types of minor services applicable, identification of the 
specialized clauses, unique pricing instructions if required, different 
scope requirements, etc. Existing Schedule contractors could team with 
the R&A Schedule firms to provide a total solution to customers.
    Alternative Three--Combine Alternative One and Two. This 
alternative provides maximum flexibility to the customers.

Other Considerations

    The Public Buildings Act of 1959, as amended, provides that only 
GSA and those agencies having a delegation from GSA or having their own 
independent authority may enter into construction contracts. The 
Department of Defense (DoD), National Aeronautics and Space 
Administration (NASA), and GSA's Public Buildings Service (PBS) 
represent three dominant procurers of construction services. Language 
will be added to the Schedule and any associated user-related brochures 
to stipulate clearly that only warranted construction Contracting 
Officers representing authorized agencies may use this Schedule to 
procure R&A services.
    GSA will need to address how tenants residing in Government-owned/
leased buildings that are managed by other authorized Federal agencies 
(e.g. PBS) will coordinate the purchase of Schedule R&A services with 
the appropriate building owner/manager. Agencies that fail to 
coordinate R&A services with the appropriate building owner/manager may 
find themselves monetarily responsible for restoring the space to its 
original condition. For example, any alteration of PBS-controlled real 
property requires approval/oversight by the PBS Building Manager. This 
should be the policy of all building owner/managers. Concerned parties 
have also suggested that drilling a simple hole in a wall may interrupt 
an entire building's HVAC system. Therefore, GSA believes it may be 
necessary to add requirements for customers to coordinate all Schedule 
R&A services with, and receive approval from, the appropriate building 
owner/manager prior to placing an order against the R&A Schedule. These 
instructions will be included in unique ordering procedures for 
Schedule R&A services and should include:
    a. Discussion of the project scope in detail with the building 
owner/manager.
    b. Proposed work shall not exceed basic alteration of stud walls of 
non-structural gauge hollow metal framing and will not impact 
structural assemblies or load bearing walls. The work does not preclude 
utility work within the basic alteration.
    c. All work shall be in strict accordance with ``Building 
Standards.'
    d. Work shall have no impact on historical preservation elements or 
historic zones.
    e. Work shall meet all applicable building codes, including but not 
limited to egress and fire safety standards.
    f. All contractors must comply with existing policies involving 
security requirements for working in federally owned/leased buildings.

[[Page 48957]]

    g. All contractors must possess all required credentials of the 
trade(s) which are to be employed.
    h. Work planned should not exceed $25,000 in construction value.

III. Conclusion

    Many issues must be carefully analyzed and addressed if GSA is to 
successfully add ancillary R&A services under the GSA Schedules 
Program. Prior to moving forward, GSA seeks comments on the entirety of 
this white paper and responses to the specific questions identified 
below. For reference, the questions below pertain to the discussions 
contained within the associated subheadings as stipulated above.

Statutory/Regulatory Requirements

    1. Would it be more advantageous to incorporate and apply the 
Davis-Bacon Act requirement at the contract level or order level?
    2. To comply with the Miller Act, should contractors be required to 
obtain the necessary bonds as a condition for contract award or should 
this be a requirement imposed only at the time of order placement?
    3. Other than those addressed above, are there other significant 
statutory or regulatory requirements that apply to R&A services 
contracts?

Contract Scope and Its Impact on Competition

    4. Do construction firms typically conduct their business within a 
specific geographic area? If so, what is the usual scope of that 
geographic area?
    5. What impact would retaining a worldwide scope when adding R&A 
services to the Schedules have on the construction industry and on 
competition among contractors interested in participating in the 
program? In particular, what would be the impact on current GSA 
Schedule contractors that are small businesses?
    6. Would changing the contract scope specifically for R&A services 
from worldwide to regional (covering major metropolitan areas) afford 
small firms a better opportunity to compete for business under the GSA 
Schedules Program?
    7. R&A services can include various types of work on a particular 
building or site that is dedicated to and deemed a part of the 
worksite. Should limitations be included in the SOW contained within 
the Schedule solicitation? If so, please provide suggested language.

Pricing

    8. Can GSA apply the same pricing methodology of negotiating Most 
Favored Customer pricing to R&A service contracts? Does the 
construction industry have different categories of customer for pricing 
purpose, such as a Most Favored Customer category?
    9. Will the construction industry be able to provide standard 
commercial pricing, terms and conditions under the Commercial Sales 
Practices Format so that GSA can determine the price reasonableness of 
a firm's proposal?
    10. How many different labor categories would typically be involved 
in a contract for construction services and how are commercial R&A 
tasks typically priced?
    11. Please comment on the usefulness and applicability of the 
proposed pricing methods. What pricing alternatives, other than those 
discussed in the Pricing section above, should be considered?
    12. Is there any reason why customers would be unable to use a Firm 
Fixed Price, Time and Materials type order to procure these services 
from an R&A Schedule?

Award Considerations

    13. Which of the three alternatives set forth previously do you 
believe offers maximum benefit and why?
    14. Please suggest any other alternatives.

Other Considerations

    15. Generally, are the GSA Schedule ordering procedures in FAR 
Subpart 8.4 suitable for R&A services contracts?
    16. Should a maximum order limitation/threshold be established for 
R&A services?
    17. Are the items addressed in Section II, a-h appropriate 
conditions for inclusion in the ordering procedures for Schedule R&A 
services?
    18. What unique criteria, if any, should be established for a buyer 
of R&A services?

General

    19. What other issues or concerns need to be addressed?

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[FR Doc. 05-16254 Filed 8-19-05; 8:45 am]
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