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Whynot

Price Based on Adequate Competition

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Would it be unreasonable for a contracting officer to make a determination that a ?price [for an item] is based on adequate competition? if the price of that item is at or below the price of a similar item on a GSA Schedule Contract? My question concerns 15.403-1©(1)(iii) where price can be determined to have been based on adequate competition if ?price analysis clearly demonstrates that the proposed price is reasonable in comparison with current or recent prices for the same or similar items, adjusted to reflect changes in market conditions, economic conditions, quantities, or terms and conditions under contracts that resulted from adequate price competition.? Does a current GSA Schedule contract meet the definition of a ?contract that resulted from adequate price competition? for this purpose? Is this unreasonable?

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While you can assume that GSA has determined its schedule prices to be fair and reasonable, I don't know what basis there is in the regulations to assume that the prices necessarily resulted from adequate price competition.

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From the GSA website:

As stated in the ATA Defense Industries case of June 27, 1997 GSA's procedures satisfy the requirement of CICA since the Federal Supply Schedule (FSS) contract prices have been competitively awarded based on price negotiations and evaluations prior to award of the FSS contract.

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Guest Vern Edwards

In re: the references to CICA and to 6.102(d)(3)--FAR Part 6 has nothing to do with determinations of adequate price competition. See FAR 6.000: "This part does not deal with the results of competition (e.g., adequate price competition) that are addressed in other parts (e.g., Part 15)."

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I am not sure that I follow.

Are you saying that the standard for adequate price competition is only at 15.403-1©(1)(i) and 15.403-1©(1)(ii), and that the standard for adequate price competition at 15.403-1©(1)(iii) is only referring back to the standard at 15.403-1©(1)(i) and 15.403-1©(1)(ii), and does not include the "competitive procedures" as stated in 6.102(d)(3)?

So, I should also assume that the GSA?s summarization of the ATA Defense Industries case that ?contract prices have been competitively awarded? is wrong, and in any event does not mean anything, because it does not meet the standards for adequate price competition at 15.403-1©(1)(i) or 15.403-1©(1)(ii).

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Guest Vern Edwards
I am not sure that I follow.

Are you saying that the standard for adequate price competition is only at 15.403-1?(1)(i) and 15.403-1?(1)(ii), and that the standard for adequate price competition at 15.403-1?(1)(iii) is only referring back to the standard at 15.403-1?(1)(i) and 15.403-1?(1)(ii), and does not include the "competitive procedures" as stated in 6.102(d)(3)?

So, I should also assume that the GSA's summarization of the ATA Defense Industries case that "contract prices have been competitively awarded" is wrong, and in any event does not mean anything, because it does not meet the standards for adequate price competition at 15.403-1?(1)(i) or 15.403-1?(1)(ii).

I didn't say anything remotely like that. I said that CICA and FAR Part 6 have no bearing on adequate price competition. Actually, FAR 6.000 says that.

But yes, the standard for adequate price competition is stated only at FAR 15.403-1?(1).

Just because GSA had full and open competition (CICA and FAR Part 6) does not mean that it had adequate price competition. So it would be unreasonable for a contracting officer to rely on FAR 15.403-1?(1)(iii) just because the price under consideration is at or below a GSA schedule price

As for any assumption you make about GSA's summarization of the "ATA Defense Industries case," I cannot speak to that, since you have not fully cited the case in question and I'm not sure what it says. But based on your quote of GSA it does not sound like it said that GSA had "adequate price competition," only that the contract was "competitively awarded," which is not necessarily the same thing.

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whynot,

CICA --> "full and open competition" --> FAR Part 6

TINA --> "adequate price competition" --> FAR Part 15

Two different (unrelated) things. You can have "full and open competition" and not have "adequate price competition." You can have "adequate price competition" without any competition at all (i.e., in a sole source acquisition).

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You may very well have "full and open competition" and not have "adequate price competition" - although I can't think how; but I think it would not be unreasonable to think that "full and open competition" could result in "adequate price competition".

What is unreasonable with saying that GSA prices are the same or equivalent to prices that resulted from adequate price competition.

Couldn?t a result of competition be a contract, and couldn?t that contract be the result of the ?competitive procedure? described in 6.102(d)(3), and couldn?t those competitive procedures be the same procedures that resulted in ?[GSA] contract prices [that] have been competitively awarded? as found in the ATA Defense Industries case, and couldn?t those resulting contract prices be the same prices found in ?contracts that resulted from adequate price competition? as referenced in 15.403-1©(1)(iii)?

Couldn?t adequate price competition result from 6.102(d)(3)?

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whynot,

Yes, it's possible (and likely) that adequate price competition could result from FAR 6.102(d)(3), but that is not necessarily so. There's nothing in the regulations that support the assertion that GSA prices resulted from adequate price competition, per se.

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Guest Vern Edwards

"You may very well have 'full and open competition' and not have 'adequate price competition' - although I can't think how... ."

Here's how: You receive only one proposal and the offeror did not expect competition or the price is not fair and reasonable.

You have gotten full and open competition when you have permitted all responsible offerors to compete. See the definition of full and open competition at FAR 2.101. They don't actually have to compete, and if only one chooses to do so you have had full and open competition (assuming that the solicitation was not unduly restrictive), but you might not have had adequate price competition. In order to have adequate price competition when you have received only one proposal three things must happen: (1) the CO must determine that the offeror expected competition, and (2) the CO must determine that there was adequate price competition, and (3) the determination that there was adequate price competition must be approved at a higher level.

You cannot establish adequate price competition by price analysis unless you compare the price you have "with [1] current or recent prices [2] for the same or similar items, [3] adjusted to reflect changes in market conditions, economic conditions, quantities, or terms and conditions [4] under contracts that resulted from adequate price competition." Did the GSA prices result from adequate price competition? Have you made adjustments for market conditions, economic conditions, quantities, and terms and conditions? (Do you have the information that you need to make such adjustments?)

To the best of my knowledge, GSA has not asserted that it has received "adequate price competiton" in the award of its federal supply contracts. It probably doesn't care about adequate price competition because it uses the commercial items exception to the requirement for cost or pricing data. To the best of my knowledge, GSA has not even asserted that it has received more than one proposal in each of its awards. What it asserts is that use of the GSA FSS program is a competitive procedure under CICA. Which is true, because CICA says so. GSA also says that it has determined schedule prices to be fair and reasonable, but to the best of my knowledge it has not said how it has made that determination.

Since GSA does not have to get adequate price competition in its schedule awards, and since it has not asserted that it has actually received adequate price competition or even two or more proposals for each of its SINs, I don't see how you can establish adequate price competition pursuant to FAR 14.403-1?(1)(iii) based on comparison of the price you received with GSA schedule prices.

You ask: "What is unreasonable with saying that GSA prices are the same or equivalent to prices that resulted from adequate price competition[?]" What the heck does "the same or equivalent to" mean? In any case, anyone who thinks that GSA prices are across-the-board "fair and reasonable" because GSA says so needs to have his head examined. :lol: Why do you think there is a Multiple Award Schedule Advisory Panel looking into GSA schedule pricing? http://acquisition.gov/comp/masap/index.html

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GSA asserts that "contract prices have been competitively awarded". I believe that this assertion was made by the courts as well in the ATA case - based upon the GSA website. This assertion made by the courts along with FAR 6.102(d)(3) Other Competitive Procedures statement that the "MAS program of the GSA is a competitive procedure" led me to think that these contract prices along with the required price analysis could be used to help meet the third standard of "adequate price competition" at FAR 15.403-1©(1)(iii).

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GSA asserts that "contract prices have been competitively awarded". I believe that this assertion was made by the courts as well in the ATA case - based upon the GSA website. This assertion made by the courts along with FAR 6.102(d)(3) Other Competitive Procedures statement that the "MAS program of the GSA is a competitive procedure" led me to think that these contract prices along with the required price analysis could be used to help meet the third standard of "adequate price competition" at FAR 15.403-1?(1)(iii).

I just read throught the ATA case and didn't see that. I think the GSA website is wrong. It should say "GSA's procedures satisfy the requirement of CICA since the Federal Supply Schedule (FSS) contract have been competitively awarded and the prices are based on price negotiations and evaluations prior to award of the FSS contract."

GSA procedures comply with CICA because the contracts are competitively awarded - they are publicized and any qualified and responsible source is eligible for award. GSA negotiates prices with offerors after evaluation of the offered prices to the government with other customers.

But it is wrong to infer "contract prices are competitively awarded."

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Guest Vern Edwards

Where, exactly, does GSA say that its schedule contracts have been competitively awarded?

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I found this on the GSA page - it doesn't directly say "competitively awarded" -- that specific phrase.

http://www.gsa.gov/Portal/gsa/ep/contentVi...;contentId=8106

Ordering From Schedules

Orders placed against GSA Multiple Award Schedule (MAS) contracts, using the procedures in Federal Acquisition Regulation (FAR) 8.4, are considered to be issued using full and open competition (see FAR 6.102(d)(3)). Ordering activities shall not seek competition outside of GSA Schedules or synopsize the requirement. In addition, ordering activities are not required to make a separate determination of fair and reasonable pricing, except for the price evaluation required by FAR 8.405-2(d) when ordering services requiring a statement of work. By placing an order against a GSA Schedule contract using the procedures in this section, the ordering activity has concluded that the order represents the best value and results in the lowest overall cost alternative to meet the government's needs.

Although GSA has already negotiated fair and reasonable pricing, ordering activities may seek additional discounts before placing an order.

While the mandatory small business preference programs in FAR Part 19 do not apply to orders placed against GSA Schedule contracts, such orders may be credited toward an ordering activity's small business goals. Ordering activities may consider socioeconomic status when identifying contractors for consideration of an order (see FAR 8.405-5).

Further information regarding Schedule ordering procedures is available under Basic Schedule Ordering Guidelines.

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But then I found this - that's as close as I see and I believe was previously stated by whynot. I did some searching and couldn't see where GSA ever said "competitively awarded". Is there a link anywhere to the case cited in the other posts -- the ATA case?

http://www.gsa.gov/Portal/gsa/ep/contentVi...pe=GSA_OVERVIEW

14. When I place an order under a GSA Schedule contract, does it meet the Competition in Contracting Act of 1984 (CICA) requirements?

In accordance with FAR 6.102(d)(3), use of the GSA Schedules Program is considered a "competitive procedure" under CICA when the GSA Schedule ordering procedures are followed?i.e., the Ordering Procedures for Supplies, and Services Not Requiring a Statement of Work (FAR 8.405-1) or the Ordering Procedures for Services Requiring a Statement of Work (FAR 8.405-2).

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Where, exactly, does GSA say that its schedule contracts have been competitively awarded?

This is from FAQ on GSA Group 70

http://www.gsa.gov/Portal/gsa/ep/contentVi...q=yes&noc=T

"11. What is GSAs policy regarding adding supplies/services to MAS delivery orders, where those supplies/services are not under MAS contract?

As stated in the ATA Defense Industries case of June 27, 1997 GSA's procedures satisfy the requirement of CICA since the Federal Supply Schedule (FSS) contract prices have been competitively awarded based on price negotiations and evaluations prior to award of the FSS contract. However, GSA has not negotiated or evaluated prices for products and services that are not listed in the FSS contract. Therefore, customers must purchase "incidental" open market items using appropriate competitive procedures. After a customer complies with requirement of full and open competition for the incidental item it may be placed on the delivery order for administrative convenience.

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Guest carl r culham

From GSA Website at http://www.gsa.gov/Portal/gsa/ep/contentVi...pe=GSA_OVERVIEW

What is GSAs policy regarding adding supplies/services to MAS delivery orders, where those supplies/services are not under MAS contract?

As stated in the ATA Defense Industries case of June 27, 1997 GSA's procedures satisfy the requirement of CICA since the Federal Supply Schedule (FSS) contract prices have been competitively awarded based on price negotiations and evaluations prior to award of the FSS contract. However, GSA has not negotiated or evaluated prices for products and services that are not listed in the FSS contract. Therefore, customers must purchase "incidental" open market items using appropriate competitive procedures. After a customer complies with requirement of full and open competition for the incidental item it may be placed on the delivery order for administrative convenience.

and from http://www.gsa.gov/Portal/gsa/ep/contentVi...23013&noc=T

GSA establishes national term contracts for multiple lines of general and executive office furniture, dorm and quarters furniture and some industrial furniture. The contracts are competitively awarded and no further market research or competition is needed before ordering. The products covered by these contracts are available for ordering through the GSA Advantage!? on-line catalog.

along with other references that can be found at GSA.gov. The question is whether these references are the most current view.

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Guest Vern Edwards

The original question was whether you can use GSA schedule prices as a basis for price analysis in order to use the adequate price competition exception to the requirement to obtain cost or pricing data. The exception language in question is at FAR 15403-1©(1)(iii), which reads as follows:

(iii) Price analysis clearly demonstrates that the proposed price is reasonable in comparison
with current or recent prices for the same or similar items
, adjusted to reflect changes in market conditions, economic conditions, quantities, or terms and conditions
under contracts that resulted from adequate price competition
.

Emphasis added. As you can see, in order to use that exception, the prices used for comparison must have resulted from adequate price competition and must have been adjusted as described and as appropriate. Do GSA schedule prices result from adequate price competition?

Keep in mind that "full and open competition" and "adequate price competition" are fundamentally different concepts. Full and open competition is a matter of who is permitted to compete. It is not about how many competitors actually showed up or how vigorously they go at it. Adequate price competition is about the presumed effect of competition on prices, i.e., the presumed result of competition. One can have full and open competition without necessarily having adequate price competition. This is Contracting 101.

Some of the references provided by others above address whether placing an order against a GSA schedule contract satisfies the requirement for full and open competition. The answer is yes, because FAR says so. But that has no bearing on the question, because the question, as I understood it, is not about the prices that result from competitions for orders, but the prices in the schedule contracts themselves. What matters is whether the prices in the schedule contracts were the result of adequate price competition.

GSA apparently asserts that its schedule contracts were awarded competitively. I don't know what that means, exactly, but it does not appear that they were awarded pursuant to the procedures in FAR Part 15, because the solicitations are open-ended and proposals do not appear to be submitted in direct competition with other firms. It is my impression that any firm that qualifies can get a GSA schedule contract and that it need not contend directly against any other firm in order to do so. I do not believe that a firm seeking a GSA contract feels compelled to keep its prices low because it fears that if it doesn't someone will beat it out for the contract. Someone might beat it out for an order because its schedule prices were too high, but not for the underlying contract. Let me know if I'm wrong about that.

If I'm right, then it is hard to see how GSA schedule prices are the result of adequate price competition. And if they aren't, then they cannot be used as the bases for price analysis pursuant to FAR 15.403-1©(1)(iii). All the same, policy clearly favors not getting cost or pricing data. Personnally, I have never believed in the efficacy of the Truth in Negotiations Act. So I sympathize with anyone looking for a way around the requirement. If you do not believe in strict compliance with FAR, and are willing to stretch the truth in order to get around a rule that you do not like, then do what you want to do. But don't insult our intelligence by coming here looking for support. Anyone who thinks that GSA schedule prices are across-the-board "fair and reasonable" because GSA says so is awfully gullible in my view. Why do you think that GSA urges you to seek discounts. Why do you think that there is so much emphasis on competition in the placement of orders.

GSA is about convenience, not sound purchasing practice.

However, if we are talking about using the prices obtained in competitions for orders against GSA schedule contracts, then it seems more than likely to me that those prices could be said to have resulted from adequate price competition and could be used as a basis for taking advantage of the exception. The question, however, did not mention such prices.

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Vern,

You wrote:

"GSA apparently asserts that its schedule contracts were awarded competitively. I don't know what that means, exactly, but it does not appear that they were awarded pursuant to the procedures in FAR Part 15, because the solicitations are open-ended and proposals do not appear to be submitted in direct competition with other firms. It is my impression that any firm that qualifies can get a GSA schedule contract and that it need not contend directly against any other firm in order to do so. I do not believe that a firm seeking a GSA contract feels compelled to keep its prices low because it fears that if it doesn't someone will beat it out for the contract. Someone might beat it out for an order because its schedule prices were too high, but not for the underlying contract. Let me know if I'm wrong about that."

You are entirely correct. Firms do not compete for GSA Schedule contract awards. Each offeror submits a published commercial pricelist annotaed with all the items they wish to offer. In some instances, that literally is hundreds of items. Along with that, they complete a chart that shows proposed discounts off that price list to the government (GSA) as well as all their other classes of customers. GSA seeks to obtain discounts equal or better than the most favored customer. That's it. GSA doesn't compare even offered items with prices other other contract prices.

There is some incentive with companies to offer low prices initially for contract award of products. Often agencies will look at prices on Schedule for such things as office copiers or laptops and not issue RFQs. However, services are usually done via solicitations. There's little incentive for firms to come in with their best prices at time of submission of their contract offer.

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Guest Vern Edwards
Vern,

You wrote:

"GSA apparently asserts that its schedule contracts were awarded competitively. I don't know what that means, exactly, but it does not appear that they were awarded pursuant to the procedures in FAR Part 15, because the solicitations are open-ended and proposals do not appear to be submitted in direct competition with other firms. It is my impression that any firm that qualifies can get a GSA schedule contract and that it need not contend directly against any other firm in order to do so. I do not believe that a firm seeking a GSA contract feels compelled to keep its prices low because it fears that if it doesn't someone will beat it out for the contract. Someone might beat it out for an order because its schedule prices were too high, but not for the underlying contract. Let me know if I'm wrong about that."

You are entirely correct. Firms do not compete for GSA Schedule contract awards. Each offeror submits a published commercial pricelist annotaed with all the items they wish to offer. In some instances, that literally is hundreds of items. Along with that, they complete a chart that shows proposed discounts off that price list to the government (GSA) as well as all their other classes of customers. GSA seeks to obtain discounts equal or better than the most favored customer. That's it. GSA doesn't compare even offered items with prices other other contract prices.

There is some incentive with companies to offer low prices initially for contract award of products. Often agencies will look at prices on Schedule for such things as office copiers or laptops and not issue RFQs. However, services are usually done via solicitations. There's little incentive for firms to come in with their best prices at time of submission of their contract offer.

Thanks, formerfed. Then I'd say that GSA schedule contract prices are not the result of adequate price competition.

Vern

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Back in the 1970s and early 1980s, GAO referred to the Multiple Award Schedules (MAS) as noncompetitive. GAO also claimed that there was little or no price competition for commercial products under MAS. Over and over again, GAO claimed that MAS prices were lousy. Reports stating so were issued to the House Committee on Government Operations (now the Committee on Oversight and Government Reform) whose Chairman was Jack Brooks.

In 1984, under the Competition in Contracting Act, Jack Brooks declared MAS contracts as "competitive procedures" and inserted a provision into CICA, which is now at 41 USC 259( b )(3)

The original language, as I remember it, required both GSA and the using agency to participate in determining whether an MAS order was a "competitive procedure." Currently, the "B" part of the provision is different than the original legislation. Apparently, it has been changed over the last 25 years.

Does "B" require the determination of a "fair and reasonable" price? If so, who does it--GSA or user agency? If you know that, I think you will have your answer.

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Another aspect of this making the determination of "fair and reasonable prices" for task order awards involves than just cvonsidering the GSA contract unit pricing. While GSA has determined their contract award unit pricing for services (usually hourly rates) are fair and reasonable, that's only part of the effort. Offerors usually propose multiple labor categories and various levels of effort to perform the services. The user agency CO must examine all of that.

Also there's the possibility that the offeror for the task order with "the lowest overall cost alternative to meet the needs of the Government" may not be fair and reasonable

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whynot,

CICA --> "full and open competition" --> FAR Part 6

TINA --> "adequate price competition" --> FAR Part 15

Two different (unrelated) things. You can have "full and open competition" and not have "adequate price competition." You can have "adequate price competition" without any competition at all (i.e., in a sole source acquisition).

Don,

Would you please explain how you can have "adequate price competition" when you don't have competition in the first place? I understand how you can have a fair and reasonable price without competition, but I don't see at all how you have adequate price competition in, to use your example, a sole source acquisition.

Thanks,

Mike

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Don,

Would you please explain how you can have "adequate price competition" when you don't have competition in the first place? I understand how you can have a fair and reasonable price without competition, but I don't see at all how you have adequate price competition in, to use your example, a sole source acquisition.

Thanks,

Mike

Sure, let me give you an example. Let's say last year I had a competitive procurement for the purchase of 1000 widgets. Three responsible offerors, competing independently, submitted priced offers that satisfied the Government?s expressed requirement, award was made to the offeror whose proposal represented the best value, price was a substantial factor in source selection, and there was no finding that the price of the otherwise successful offeror was unreasonable. In other words, I had adequate price competition pursuant to FAR 15.403-1©(1)(i). The contract price was $700,000 ($700/widget).

This year I have the same requirement for 1000 widgets. Instead of having a competition, I'm going to do a HUBZone sole source to Contractor A in order to help meet my agency's small business goals. I receive a price from contractor A and price analysis clearly demonstrates that the proposed price is reasonable in comparison with the contract price for last year's contract, adjusted to reflect changes in market conditions, economic conditions, quantities, and terms and conditions. In other words, I have adequate price competition pursuant to FAR 15.403-1©(1)(iii).

Make sense?

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