By: Bob Steger
From time to time I get a call where someone asks me what the big deal is about FAR 51 Deviation? My response is always the same, for those who know how to use it, it can be a real game changer. FAR 51 Deviation remains a relatively unknown feature of a GSA Schedule that provides some level of confusion. In simplest terms the FAR 51 Deviation is that it gives a federal vendor the ability to go look through GSA Schedules, and purchase off those schedule at the schedule pricing in order to achieve a total solutions to the federal government on a contract.
The motivation for FAR 51 Deviation is to level the playing field for small federal vendors that are trying to compete with large multinational corporations. This is because in general a multinational corporation with their large purchasing departments can procure the same widget, pencil, paperclip, 2×4 at a substantial discount over a small business due to buying power. The federal government has therefore stepped into the ring on behalf of small businesses and taken the position that small business can use the federal governments buying power for the items that the government already procures. Now if the larger businesses are not careful a smaller more nimble business who is more adept at performing search quarries in GSA Advantage can beat them at their own game.
Federal Acquisition Regulation (FAR) 51.1, Contractor Use of Government Supply Sources, prescribes policies and procedures under which contractors may use government supply sources. Currently, contracting officers may authorize contractors to use General Services Administration (GSA) sources of supply in the performance of cost-reimbursement contracts and under other limited scenarios when determined to be in the best interest of the Government.
In order to better meet the needs of GSA’s customer agencies, a deviation to FAR Part 51.1 has been approved to expand the authority of contractors to use GSA sources of supply. Specifically, Federal Government contracting officers are now authorized to give all GSA contractors access to the Federal Supply Schedule (FSS) and GSA Global Supply Programs when deemed appropriate for fulfillment of their agency requirements. Please note that the FSS Program is inclusive of those Schedules managed by the Department of Veterans Affairs. This authority is limited to contracts/orders:
The ability for GSA contractors to purchase from the FSS and Global Supply Programs benefits our customers and contractor community.
When utilizing the authority granted under the FAR Part 51 deviation, all of the following criteria must be met
Items on the contract/order issued to the buying contractor from the Federal Government must be T&M/LH. The overall contract/order can be fixed price, but the items to be purchased under the FAR Part 51 authority must be structured on a T&M/LH basis. Commonly, this is accomplished by including an optional line item in the Request for Quote (RFQ)/proposal and a corresponding line item on the subsequent contract/order.
When GSA contractors place orders with MAS and GSA Global Supply under the FAR Part 51 deviation authority, the buying contractor who is purchasing the items is not permitted to add a fee or markup to the items. Items must be invoiced at the price for which they were procured from the selling contractor.
Supplies and/or services procured under the FAR Part 51 deviation authority must be ancillary in nature. The supplies and services shall not be the primary purpose of the work ordered, but an integral part of the total solution that is offered. Please note that there are different and additional requirements associated with Special Item Numbers (SINs) on numerous Schedules that contain Ancillary Repair and Alternations (R&A).
Buying contractors must follow the procedures outlined in FAR 8.405-1 when purchasing items from a Schedule contract. The procedures are used when ordering supplies and services that are listed in the Schedule contract at a fixed price for the performance of a specific task, where a statement of work is not required (e.g., installation, maintenance, and repair)
The authority does not extend to state and local ordering activities and is intended for use only by Federal Government contracting officers.
The Federal Government Must:
Contractors Placing Orders Must:
Contractors Accepting Orders Must:
GSA Global Supply will:
There is a lot of information in the ordering guide on Schedule orders. Is it true that the deviation only applies to Schedule contractors?
No. The deviation permits ALL GSA contractors to purchase from Schedules or GSA Global Supply. The requisition process for GSA Global Supply is relatively simple. For Schedule orders, the guidance is more elaborative because there are more process steps and acquisition regulations to consider.
Is the deviation only available for T&M/LH contract types?
No. One of the primary purposes of the deviation itself is to expand the FAR Part 51 authority to fixed price contracts. Only the items procured under the FAR Part 51 deviation authority need to be structured as T&M/LH.
Can the Federal Government tailor the authorization?
Yes. FAR Part 51.102(4) permits the authorization to be tailored. The Federal Government may limit the scope and purchasing authority by customizing the authorization to limit the scope to specific supplies or services, specific schedules, dollar thresholds, socioeconomic requirements, etc.
Does the selling contractor have to accept an order placed by the buying contractor?
No. For Schedule orders, the selling contractor can reject the order from the buying contractor.
When the buying contractor is a Schedule contractor who is procuring Schedule items from another Schedule contractor, does the buying contractor have to report the sales to GSA and pay the IFF?
No. The selling contractor is responsible for reporting sales and remitting the IFF.
When acting under the authority granted by the FAR 51 deviation, the buying contractor is an authorized user of GSA’s FSS and Global Supply Programs. The products/services procured under this authority are not considered to be MAS sales because these items are not on the buying contractor’s Schedule contract and are therefore not subject to sales reporting and IFF remittance. To ensure that the sales are segregated appropriately, adjustments to the buying contractor’s sales tracking system may be necessary.
In the scenario above, the selling contractor is selling its Schedule items to another Schedule contractor. The sales are still considered to be Schedule sales?
Yes. Schedule contractors accepting orders report sales and remit IFF on items procured under FAR Part 51. When accepting orders from the buying contractor with a valid authorization, selling contractors are making MAS contract sales to an authorized user of the FSS Program pursuant to the FAR 51 deviation. As such, the products/services procured under the authority are considered to be MAS contract sales. All contract requirements for sales reporting and IFF remittance apply. To ensure that the sales are segregated appropriately, adjustments to the selling contractor’s sales tracking system may be necessary.
Does the Price Reduction clause apply to FAR Part 51 sales.
No. In the normal course of business, FSS contractors are contractually obligated to notify the GSA Contracting Officer of price reductions in accordance with GSAM clause 552.238-75 Price Reductions. However, GSA contractors purchasing from the FSS Program and/or Global Supply Program in accordance with FAR 51.101 are authorized users; therefore, pursuant to GSAM clause 552.238-75(d)(2) Price Reductions, there is no price reduction for sales to eligible ordering activities under a Schedule contract.
Does the Contractor Assistance Visit (CAV) cover the FAR 51 deviation?
The Industrial Operations Analyst (IOA) conducts Contractor Assistance Visits (CAVs) with Schedule contractors periodically throughout the contract term. The CAV is a review of the contractor’s processes to meet Federal Supply Schedule contract requirements. If the selling contractor has made sales to a buying contractor under the FAR Part 51 deviation authority, the IOA will verify that a written authorization(s) is in place for applicable sales. The IOA will report accordingly to the GSA Contracting Officer for the Schedule contract. Please note that compliance with the written authorization for orders and any necessary actions will remain the Federal Government’s responsibility.
Can the Federal Government modify an existing contract/order to incorporate the FAR 51 authority?
No. The authorization needs to be issued with the original contract/order.
Can the Federal Government modify an existing Blanket Purchase Agreement (BPA) to incorporate the FAR 51 authority?
No. The authorization needs to be incorporated when the BPA is
Can the buying contractor add any additional markup/fee onto the items procured under the FAR 51 authority, even if the fee is associated with a legitimate cost like a material handling charge?
No. The items procured under the authority must be passed through to the Federal Government at the price paid. No markup of any kind is permitted on this portion of the order.
Are there plans to modify the deviation in the future to allow for a markup?
GSA understands the concerns of its industry partners in regard to this particular restriction. However, the authority granted by the deviation is a significant change to current regulations and the way that we normally conduct fixed-price procurements. For the time being, restrictions and guidelines for use are necessary to ensure that the authority is used appropriately.
For Schedule orders, can the buying contractor use GSA e-Buy to satisfy the requirements of FAR 8.405-1?
Not yet. GSA intends to make the necessary modifications to e-Buy to permit use by contractors in the near future. It’s also possible that GSA will mandate e-Buy or other electronic tools; however, at the moment, these tools are not available for contractor use.
If the buying contractor chooses not to use the FAR 51 authority, what other options are available to satisfy the Federal Government’s overall requirement?
There are other options available. Refer to www.gsa.gov for more information. For example, if permitted by the order, Schedule contractors may use contractor team arrangements (www.gsa.gov/cta), subcontracts, and open market items in accordance with FAR 8.402(f).
What is the difference between subcontracting, contractor team arrangements, and the authority granted by the FAR 51 deviation?
For formal definitions, refer to the links provided above. When the buying contractor is a Schedule contractor, the primary drawback of subcontracting is that the subcontractor is limited to providing only those items on the prime contractor’s Schedule contract. This doesn’t usually solve the need for ancillary items. Team arrangements as defined is FAR Part 8 only apply when both contractors are Schedule contractors. Although teaming arrangements are valuable tools, customers sometimes prefer other solutions due to administration costs. The authority granted by the deviation allows GSA contractors to procure ancillary items to provide the customer with a total solution, but it has drawbacks as well. Subcontracting, teaming, and the deviation authority should be thought of as tools that can be used depending on a variety of factors.
By: Bob Steger
The bill President Obama has passed into law to avert the fiscal cliff dealt mostly with tax rate increases as the Bush era tax breaks came to an end. Those making more than $400,000 per year will now see their tax rates move from 35% to 39.6%, as tax rates for those with incomes less than that have been locked in for the foreseeable future. The temporary payroll tax break for individuals was not renewed taking those rates from 4.2% to their previous levels of 6.2%. These two moves are anticipated by the administration to add an additional 180 billion dollars per year in tax revenue.
Discretionary non-security spending changes:
361 billion dollars 2011
359 billion dollars 2013
2 Billion dollars in spending decrease, which is under a 1% change in the budget.
Military Budget spending changes:
838 billion dollars 2011
633 billion dollars 2013
205 billion dollars in spending decrease.
Any major savings is coming out of the military and mostly related to the reduction in ground forces in Iraq and Afghanistan. For 2013 88.5 billion dollars will be spend in overseas operations compared with 159 billion in 2011. Overseas spending reductions will account for 34% of the overall military spending decrease from the 2011 figures.
Because most of GSA schedule spending is derived from federal discretionary non-security spending, we think there will be little effect on GSA Schedule holders, and due to the GSA Schedule. The fear of a decrease in federal spending often times reduces the number of firms looking to participate in the federal marketplace increasing the overall level of opportunity
by Bob Steger
According to market survey, there are a number of products, which have been advanced by either federal or military applications. Below mentioned are some of the essential requirements to aid a firm get its particular invention on GSA Schedule. Make sure that along with these requirements, the products of the firms should meet the present GSA schedule.
1. The particular product of the company must display sales. The GSA in respect to sales on schedules uses only USD 25000 as the last limit.
2. The reseller or the producer of the goods should be able to display at least 1 year of financial declarations.
Few other additional considerations by the GSA may include:
1. The firm must have a business plan for the particular product that includes financial projections.
2. The firm may need to acquire a Certificate of Competency by the SBA to enlist the product on a GSA Schedule. Such legal certificates may include information about the financial performance and cash flow of the firm.
• Acquiring a patent or a provisional one is highly recommended if the particular good is patentable, before selling it to the federal government. The government acknowledges patent and gives its consent to pay for premium goods which are novel.
• Discarding a new product just to acquire sales is not advised at all. However, the GSA needs you to make the government your ideal customer. Hence selling your particular invention at a nominal price to fulfill the USD 25000 income edge, which will help your company acquire pricing margins in the near future.
by Bob Steger
The GSA Primary Contractor Directory includes contact information for big business concerns, which are needed by law to build strategies and objectives for subcontracting with small firms.
It is generally issued for the small businesses that are looking for subcontracting options, with the prime contractors of GSA. The directory includes big business prime contractors, who according to law; need to build plans and objectives to conduct subcontracting with the small companies.
The large prime contractors who have acquired the federal contracts, except for the construction, value more than USD 650,000. Big prime contractors who have accepted government contracts related to construction, which are valued more than USD 1.5million.
The qualified GSA contractors are enlisted alphabetically in every eleven GSA region. Each and every listing comprises of
• Performance place
• NAICS code
• Action obligation
• NAICS description
• Anticipated completion date
• Name of the company and address
• Product code
• Signed date
• Vendor phone
• P/S Description
• Effective Date
Small business concerns are advised to get in touch with the prime contractors directly for better subcontracting options.
by Bob Steger
Few federal agencies utilize the reverse auction facilities to buy goods and services. A number of companies offer hosting services for the federal services. You can utilize the GSA Advantage website to look for GSA Schedule contractors who provide reverse auction facilities to various firms.
Such auctions need the vendors to reduce their cost, while competing with their competitors, in order to win a contract, unlike the normal auctions where bidders escalate the price to win easily. A reverse auction generally consists of four parts namely:
• Accept the prospective bidders
• Hold the specific auctions
• Enhance the auction parameters
• Give proper training to the bidders to bid properly
Any Federal firm can use such contracts. Such federal firms must get approval from RA Procuring Contracting Officer (PCO), which offers the Federal Agency Direct Order Direct Bill right. The Interagency Agreement along with the transfer of authority should be officially signed by the client as well as RA PCO, before utilizing the RA contracts.
For GSA Schedule contracts, it generates around 12% savings on an average basis, while for Open source contracts the average savings is 13.5%.
According to experts, reverse auction will have a restricted application and position in the government procurement. Utilizing them for bidding on natural gas is one such application.
One of the most affirmative expansions is that the FEMA now is more involved with the determinations of the trusted agencies and synchronize with such firms in the reconstructing process. It displays the true power of America and it has turned out to be one of the most useful strategies of FEMA. In this regard, FEMA needs numerous products and services in the reconstruction process
As suggested by FEMA, the below mentioned ways can enhance individual ability to get contracts:
by Bob Steger
FPL is the fresh new pilot program for the Schedule 599-Solicitations and Publications and Schedules 520- Financial and Business Solutions. FPL means formatted price list and it is generally an excel spreadsheet, given by the GSA with a set format. The vendor inputs the data in the provided cells of the excel as suggested by GSA. This differs from the other schedules in terms of offerings and pricing matrixes and is quite flexible.
The benefits of such a rigid structure are mentioned below:
• Reduced forth and back communication required presently
• Acquires the total pricing information after reducing the SIP
• Mechanical publishing of the price list on the GSA Advantage
Below mentioned is an instance of a TAB from the FPL Excel Spreadsheet.
It openly shows that such an approach is not for all the schedules, but since GSA is consistently searching for options to enhance the speed, which can conduct the comparison between apples to apples, can be done to help the federal agency customers. We anticipate to see such roll outs in the near future
An additional alteration to such a process is that any person, willing to get such schedules must endeavor the online training and get a score of not less than 70% in the quiz, to get the FPL template. Although, such a training is very simple for everyone which comprises of the primary excel and computer proficiency
Link to training for FPL:
by Bob Steger
OASIS- The primary RFP expected release time- 1 October 2012. The Contract, termed as Integrations is in the course of being altered to One Acquisition Solution for Integration Services- OASIS. The services included in OASIS are program management, engineering, management counseling financial services and scientific services. Although OASIS is not considered as an IT contract, the maintenance and IT services are conducted as a subsidiary element on OASIS to a skilled service based necessity. The cause for the change is due to the limitations that the government buyers have an absolute solution to critical issues by utilizing the present contracting tools available. The previous Integrations schedule is dependent on a GSA Schedule, whichis previously designed for buying the products and not the critical services by the government. For the last 15 years, GSA has been directed by professional aid and hence a system, which works quite efficiently to procure the services, is required. It is presently anticipated that around USD 10-12 billion will be acquired via OASIS.
The OASIS contracts have a set of characteristics namely:
Include crucial IT elements, however they are not IT necessities
Are critical to state before awarding and generate an environment which creates risk because of their unexpected nature
Duration of numerous skilled service disciplines
Need flexibility for all the task orders and other expenses at the task order level.
It is crucial to take into consideration that OASIS has a key role in set asides for small businesses. Hence, small businesses, which do not accomplish all the services for contracts, will not be stopped to take part in the OASIS.
GSA Schedule is a podium where the federal procurement officials look for solutions. OASIS is a nice example of how to take part in the GSA Schedule Contracts and give a boost to business exposure for government contract awards. Feel free to consult with us about the feasible opportunities of your firm and call us at 303-810-4580.