[Federal Register Volume 85, Number 161 (Wednesday, August 19, 2020)]
[Proposed Rules]
[Pages 50989-50991]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16681]



48 CFR Parts 8 and 38

[GSAR Case 2020-G502; Docket No. GSA-GSAR-2020-0014; Sequence No. 1]
RIN 3090-AK15

General Services Administration Acquisition Regulation (GSAR); 
Increasing Order Level Competition for Federal Supply Schedules

AGENCY: Office of Acquisition Policy, General Services Administration 

ACTION: Advance notice of proposed rulemaking.


SUMMARY: The General Services Administration (GSA) is issuing this 
advance notice of proposed rulemaking (ANPR) to seek public comments 
that can be used to assist in the implementation of Section 876 of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 for 
the Federal Supply Schedule (FSS) program. Section 876 amended the 
United States Code by providing an exception to the requirement to 
consider price as an evaluation factor for the award of certain 
indefinite-delivery, indefinite-quantity contracts and Federal Supply 
Schedule contracts.

DATES: Interested parties should submit written comments at the address 
shown below on or before September 18, 2020 to be considered in the 
formulation of a proposed rule.

ADDRESSES: Submit comments in response to GSAR Case 2020-G502 to 
https://www.regulations.gov. Submit comments via the Federal 
eRulemaking portal by searching for ``GSAR Case 2020-G502''. Select the 
link ``Comment Now'' that corresponds with GSAR Case 2020-G502. Follow 
the instructions provided at the ``Comment Now'' screen. Please include 
your name, company name (if any), and ``GSAR Case 2020-G502'' on your 
attached document.
    Instructions: Please submit comments only and cite GSAR Case 2020-
G502 in all correspondence related to this case. Comments received 
generally will be posted without change to https://www.regulations.gov, 
including any personal and/or business confidential information 
provided. To confirm receipt of your comment(s), please check https://www.regulations.gov approximately two to three days after submission to 
verify posting.

Analyst, at 202-445-0390 or [email protected] for clarification of 
content. For information pertaining to status or publication schedules, 
contact the Regulatory Secretariat Division at 202-501-4755 or 
[email protected]. Please cite GSAR Case 2020-G502.


I. Background

    The Federal Supply Schedule (FSS) program provides the Government 
with a simplified process of acquiring commercial supplies and services 
in varying quantities while obtaining volume discounts. Federal 
Acquisition Regulation (FAR) subpart 8.4 and part 38, along with 
various parts of the GSA Acquisition Regulation (GSAR) provide 
direction to customers, offerors, contractors, and GSA contracting 
officers as it relates to the FSS program. GSA is seeking public 
comment for purposes of assisting GSA in effectively implementing 
Section 876 of the NDAA for FY 2019 (Pub. L. 115-232) as it relates to 
the FSS program.
    Section 876 amended 41 U.S.C. 3306(c) to modify the requirement to 
consider cost or price as an evaluation factor for the award of certain 
indefinite-delivery, indefinite-quantity multiple-award contracts and 
certain FSS contracts to qualifying offerors. Currently, offerors 
responding to solicitations for award of FSS contracts are required to 
submit commercial sales practice data, or other cost or price 
information with their proposals. Section 876 gives GSA the discretion 
to not include price as an evaluation factor in certain FSS contracts 
and other Indefinite Delivery Indefinite Quantity (IDIQ) contracts 
provided that (1) the agency intends to make a contract award to each 
qualifying offeror, (2) task or delivery orders will be based on hourly 
rates, and (3) competition takes place at the order level. To be 
eligible for award a ``qualifying offeror'' must be a responsible 
source; submit a proposal that conforms to the requirements of the 
solicitation; meet all technical requirements; and be otherwise 
eligible for award.
    The Federal Acquisition Regulatory Council has opened FAR case 
2018-014, Increasing Task-order Level for purposes of implementing 41 
U.S.C. 3306(c), which provides an exception to the requirement to 
consider price as an evaluation factor for the award of certain 
indefinite-delivery, indefinite-quantity contracts and FSS contracts. 
Since the FAR case is still in development, GSA is issuing this ANPR to 
aid in thinking through a series of questions related to applying this 
authority to the FSS program.
    GSA will consider comments received in response to this ANPR in 
future rulemaking: (i) To proceed with rulemaking through the 
publication of a proposed rule to amend the GSAR, (ii) to inform the 
Federal Acquisition Regulatory Council on its implementation of this 
authority within the FAR (i.e., FAR case 2018-014), and (iii) to revise 
other GSA policies, procedures, and guidance that support the FSS 

II. Expected Impact

    Because of the length of the contracts, reach of the program, and 
unique statutory environment, GSA anticipates

[[Page 50990]]

that implementing this authority will be more complex for the FSS 
program than for other IDIQs. GSA expects that complete implementation 
will require substantial retraining and communication efforts and may 
require a number of changes to both the FAR and the GSAR. GSA expects 
that successful implementation will decrease the costs of entry into 
the FSS program thus increasing competition, increasing opportunity for 
small business, and possibly reducing price. A successful 
implementation will also increase the ability for ordering agencies to 
purchase a total solution under the FSS program.
    GSA may choose to exempt some or all of the hourly rate services 
within the FSS program from the requirement to submit commercial sales 
practice or other cost or pricing data. By removing the requirement to 
establish priced hourly labor rates, GSA acquisition officials involved 
in the award of FSS contracts will be able to focus their energy on 
establishing and evaluating the non-price factors that will result in 
more meaningful distinctions among offerors for purposes of making an 
award, becoming better experts in the services they acquire, and will 
enable a stronger focus on contract administration.
    However, there may be additional complexity that needs to be 
considered for purposes of implementing this authority. For example, 
the statute only applies to services procured based on hourly rates. 
Not all offerors propose strictly services priced on hourly rates FSS 
solicitations. This ANPR poses a number of questions to help GSA think 
through the authority.

III. Anticipated Savings

    Not having to demonstrate price reasonableness for hourly rates at 
the Schedule contract level should reduce costs for offerors to enter 
into the FSS program. Not having to track sales under the price 
reduction clause should reduce the administrative cost of contract 
compliance. Not having to justify price changes under the economic 
price adjustments clause should reduce costs of administrative 
    Therefore, GSA anticipates that the net result of this authority 
will be to reduce total administrative cost.
    However, within that overall reduction, offerors may see greater 
burdens in some areas such as more detailed proposals at the task or 
delivery order level, and the need to submit data under the 
transactional data reporting. The time and effort expended to develop 
and prepare cost or price information for purposes of responding to a 
solicitation or other requests varies according to numerous factors, 
such as the source selection approach, the contract type, the offeror's 
proposal (e.g., services only, or a mix of supplies and services), or 
the offeror's internal processes and resources. GSA is interested in 
understanding the potential for cost savings both pre-award and post-
award and is seeking to attempt to monetize any such costs or savings 
that offerors and resultant awardees may see as a result of the 
implementation of this authority for the FSS program.

IV. Public Comment

    In order to develop the best implementation strategy, GSA welcomes 
feedback on all the known or anticipated benefits and concerns 
associated with such a fundamental change to the FSS pricing model. GSA 
is especially interested in seeking comment in seven major topic areas:
 Implementing the Authority
 Contract Type
 Mixed-Use Contracts
 FAR Changes Necessary
 GSAR Changes Necessary
 Updated GSA Guidance
 Regulatory Impacts-Costs/Savings
    These topics are further detailed below. When commenting, please 
include citations, as appropriate, to relevant sources of information 
that may be used to substantiate the basis for the response provided.

1. Implementing the Authority

    Inclusive of options, FSS contracts last up to 20 years and are 
continuously open. In addition, GSA is in the midst of migrating to a 
single Schedule platform. With these facts in mind, should GSA look at 
beginning with the entire FSS program or just a portion (e.g., one or 
more category, subcategory, or SIN)? If the latter, which portion? 
Should GSA strip hourly rate pricing out of current Schedule contracts 
or permit a two tier approach in which older Schedule contracts have 
established hourly rates and newer Schedule contracts do not?

2. Contract Type

    The following are two specific elements of the Section 876 
authority that GSA is particularly interested in seeking comments:
    (a) Section 876 states, ``. . . a solicitation for one or more 
contracts for services to be acquired on an hourly rate basis . . .''
    (i) Does this language restrict use of the exception to labor-hour 
or time-and-material type contracts?
    (ii) Does this language support the use of fixed price contracts 
wherein the services being offered can be converted into hourly rate 
calculations through a labor mix provided by the offeror?
    (b) Section 876 states, ``. . . feature individually competed task 
or delivery orders based on hourly rates . . .''
    (i) Does this language restrict the use of the exception to full 
and open competition set-forth in FAR subpart 6.3?
    (ii) Does this language support the authority provided in FAR 
8.405-6 Limiting Sources?
    (iii) Does this language limit the types of services that can be 
ordered to only those that are performed on an hourly-rate basis?

3. Mixed-Use Contracts

    Many FSS contracts include both products and services, and not all 
pricing for services are based on hourly rates. Should GSA establish 
separate FSS contracts for priced and unpriced items? Or should GSA 
combine them into one contract in which some items are priced and other 
items are not priced?

4. FAR Changes Necessary

    Although GSA is looking at implementing the IDIQ price evaluation 
exception authority through the GSAR, GSA welcomes the public's insight 
into the potential impact to the FAR as well, which portions of the FAR 
should be amended and why.
    (a) FAR 8.404(d) states, ``Services offered on the schedule are 
priced either at hourly rates, or at a fixed price for performance of a 
specific task (e.g., installation, maintenance, and repair).''
    (i) Is the FAR language still sufficient in light of the statutory 
language using ``an hourly rate basis''? If not please provide 
suggested language.
    (ii) Would it be reasonable to read Section 876 as allowing for 
pricing for services offered on a Schedule not to be established at the 
FSS contract-level, but at the order-level? If so, what, if any, 
mechanisms could be established at the FSS contract-level concerning 
    (iii) If pricing is not established at the FSS contract-level, is 
the FAR language still accurate or even necessary?
    (iv) Are separate ordering procedures necessary for services not 
priced on an hourly basis, such as fixed unit rates?
    (b) FAR 8.405(d) provides that GSA has already determined the 
prices of supplies and fixed-price services, and rates for services 
offered at hourly rates, under schedule contracts to be fair and 
reasonable. Ordering activities do not have to make a separate 
determination of fair and reasonable pricing, except for a price 
evaluation as required by 8.405-2(d).

[[Page 50991]]

    (i) If pricing for services is no longer evaluated as part of the 
contract award, can a fair and reasonable determination still be made 
for other items? If not, then how would the lack of determination of 
price reasonableness at the FSS contract-level still support FAR 
    (ii) Would it be possible for FSS contractors submitting offers 
involving services to submit price or cost information in response to 
solicitation for award of a task or delivery order in order to support 
a fair and reasonable determination being made by the ordering 
activity? What if there ends up being no other competition on the 
agency order?
    (c) FAR 8.401 states, ``Multiple Award Schedule (MAS) means 
contracts awarded by GSA . . . for similar or comparable supplies, or 
services, established with more than one supplier, at varying prices . 
. .''
    (i) If pricing is no longer established at the FSS contract-level 
since it is no longer being evaluated, then would the language ``at 
varying prices'' still be accurate or even necessary?
    (ii) Since similar language concerning `pricing' can be found 
throughout FAR subpart 8.4 (e.g., FAR 8.402), are other changes to the 
FAR necessary?
    (d) FAR 12.207(c)(1) provides that indefinite-delivery contracts 
(see subpart 16.5) may be used when--1) The prices are established 
based on a firm-fixed-price or fixed-price with economic price 
adjustment; or (2) are established for commercial services acquired on 
a time-and-materials or labor-hour basis.
    (i) Is the language in either paragraph still sufficient in light 
of the statutory language using ``an hourly rate basis''? If not, 
please provide suggested language.

5. GSAR Changes Necessary

    GSA welcomes the public's insight into the potential impact to the 
GSAR in relation to the FSS program as a result of implementation of 
this authority. The following are areas of particular interest in terms 
of impact: (a) Price reductions, (b) transactional data reporting, (c) 
evaluation and use of options, (d) economic price adjustment, (e) price 
list, and (f) others.

6. Updated GSA Guidance

    GSA would appreciate any thoughts about the potential impact to FSS 
solicitation and ordering requirements and what changes should be made 
in FSS solicitations, instructions, ordering guidance, and training. 
What, if any type, of pricing information for services should be 
requested as part of an offeror's response to a FSS solicitation? Even 
though pricing would not be evaluated at the contract-level for hourly 
rate services, should GSA still ask for pricing as part of the 

7. Regulatory Cost Impacts

    GSA would appreciate any thoughts about how GSA should think about 
the regulatory cost increase or decrease associated with moving to 
unpriced hourly rate Schedule contracts. GSA is particularly interested 
in the following:
    (a) Confirmation of GSA's belief that this change will result in a 
net burden reduction;
    (b) The type of (e.g., accountants or program managers) and number 
of employees used to develop and prepare cost or price information in 
response to a solicitation seeking to award a FSS contract, a 
solicitation seeking to award a task/delivery order under a FSS 
contract, and requests where cost or pricing information is required/
requested under the FSS program;
    (c) The number of hours (in a range) that would be spent by each 
type of employee to develop and prepare the cost or price information;
    (d) The average hourly rate for each type of employee used to 
develop and prepare the cost or price information, or the total average 
amount spent for each type of employee to develop and prepare the cost 
or price information for such a proposal;
    (e) The types of services organizations typically submit responses 
for and whether or not efforts/costs to provide cost or price 
information vary depending on different factors such as the 
solicitation (e.g., contract type, type of service), the mix and type 
of supplies and services being offered, or request/requirement (e.g., 
complying with GSAR clause, 552.238-81 Price Reductions);
    (f) To the extent possible, a description of any variations in 
efforts and costs; and
    (g) Other possible areas of savings that an offeror or FSS awardee 
may see as a result of implementation of this authority for the FSS 

Jeffrey A. Koses,
Senior Procurement Executive, Office of Acquisition Policy, Office of 
Governmentwide Policy, General Services Administration.
[FR Doc. 2020-16681 Filed 8-18-20; 8:45 am]