Scheduling a service fix

The General Services Administration's Federal Supply Service schedule program has become a popular source of information technology services for agencies coping with budget constraints and skilled workforce shortages. Organizations are using the schedule to obtain critical IT skills for urgent short-term needs without having to go through the time-consuming process of crafting and awarding indefinite- delivery, indefinite-quantity (IDIQ) contracts.

GSA studies have shown that schedule orders can be processed in about a quarter of the time needed to process an open- market acquisition, said Carolyn Alston, assistant commissioner for the Office of Acquisition Management at FSS.

"It is nice to have them for the quick turnaround," said Daryl White, chief information officer at the Interior Department and co-chairman of the CIO Council's Capital Planning and IT Management Committee.

But along with customers, the use of the schedule to buy services has also attracted critics. On Capitol Hill, lawmakers have raised questions about the program's oversight and, in come cases, even the legitimacy of offering services on the schedule at all.

Stoking those concerns, the General Accounting Office concluded in a report released in November that many Defense Department organizations have not followed procedures designed to promote necessary competition when ordering services off the schedule.

GSA is now hammering out rules covering professional services to be included in the Federal Acquisition Regulation (FAR) and increasing outreach to its customers. However, the trick will be to find rule language to assuage congressional concerns while maintaining the convenient and speedy access to services that has made the program so popular.

Response Time Is Key

The Interior Department uses schedule services to address immediate needs, such as the independent validation and verification of a test, when time and staff limitations do not permit a request for proposals and the whole drawn-out contracting process, White said.

Although advance planning is preferable, government budget uncertainties often make that difficult, he said.

"It has allowed us to improve the responsiveness to our customers," said Tom Wells, director of Contracting for the Electronic Systems Center (ESC) at Hanscom Air Force Base, Mass.

ESC is relying heavily on the schedule to support its $700 million Information Technology Services Program, Wells said. The schedule provides flexibility not afforded by standard IDIQ contracts, which would provide four or five support contractors. "Under the schedule, we have 30 to 40 different contractors delivering services for us, so it has really broadened the competitive base and resources available to support," he said.

Contractors can provide services based on a fixed price for a whole job or by the cost of time and materials needed to do the work.

The popularity of the schedule has boosted IT service revenue from $1.2 billion in 1998 to $5.5 billion last year. For the first half of fiscal 2001, FSS had already recorded more than $3.4 billion in sales. And for the first time, services revenue exceeds that of products on the schedule. Professional services now account for 53 percent of schedule revenue, Alston said.

But in its November report, GAO said that an audit of service acquisitions made at separate Army, Air Force, Navy and Defense Logistics Agency installations found that proper procedures had not been followed in 17 of the 22 cases studied. Specifically, contracting officers had not sought competitive rates from three contractors, as required by the program. Instead, they compared labor rates of various contractors listed on the schedule — a practice that did not ensure that they got "the best services at the best prices," according to GAO.

Most of the contracting officers involved were unaware that they had to seek additional rates because there was not sufficient clear and accessible guidance for the program, according to GAO. The root cause of this shortcoming was the fact that GSA's special rules for ordering services are in the FAR.

To remedy this situation, GAO recommended that GSA and the Office of Federal Procurement Policy spell out the rules in the FAR and contact contracting agencies to ensure that they are aware of the ordering procedures for services.

GSA agreed to the recommendations and has begun acting on them, Alston said. In fact, the agency has been working to develop rule language covering services for the FAR for about a year, Alston said, noting that the complex and lengthy procedure has been further drawn out by the transition to the Bush administration.

FAR revisions must be approved by two rulemaking bodies — the Defense Acquisition Regulatory Council and the Civilian Agency Acquisition Council — and then published in the Federal Register to solicit comments.

In the meantime, FSS stepped up its customer outreach, beginning March 7 with the GSA/FSS Wheel of Services seminar in Virginia, attended by about 600 federal employees. It plans similar efforts at events such as the GSA International Products and Services Expo in Orlando, Fla., in May, Alston said.

Those kinds of initiatives are not new but are now more keenly focused on the procedures for ordering services, she said.

The response from industry and schedule customers to the criticisms and changes has been generally upbeat.

The GAO report and GSA's response are on the mark, said Chip Mather, senior vice president of Acquisition Solutions Inc., Chantilly, Va.

"We see a lot of confusion and misunderstanding out in the field about what the rules are," and the only answer is to "get the rules into the FAR and make them clear and consistent," Mather said.

Lauding the Wheel of Services seminars as "a good example of FSS reaching out to its customer base," William Gormley maintained that customer training was critical.

"I think the change to FAR will be for the good overall, and I don't see it as a significant change but more of a clarification," said Gormley, who retired late last year as assistant commissioner at the Office of Acquisition at FSS to become senior vice president in charge of consulting operations at the Washington Management Group Inc.

Some observers are not so sanguine.

"The rules aren't very clear," said Wells, whose own organization was the only one audited by GAO and found to be following the rules. For example, the FAR now directs contractors "to consider three sources when ordering off the schedule," and the meaning of "consider could be open to some interpretation," he said.

However, Wells worries about overreaction.

"I hate to go to the days when every time someone made a mistake, we changed the rules and made it harder and harder and left discretion out of the process," he said.

"It is questionable what oversight GSA should have with respect to agencies purchasing using their schedule contracts," said Walt O'Neill, president of O'Neill Associates and chairman of the Federal Supply Service task group of the procurement policy committee at the Information Technology Association of America.

At least some of the responsibility for the breaches in procedures should be ascribed to contract managers in the field.

O'Neill said FSS had taken steps to communicate the rules, such as amending its service contract to include the rules, posting procedures on its Web site and at least beginning the process of revising the FAR.

"I didn't understand why the GAO auditor didn't acknowledge that the GSA had been trying to [revise the FAR] for some period of time," he said.

Finally, he asked, if the Air Force ESC found out what the rules were, why didn't the Army, the Navy and DLA?

On another level, it remains unclear whether GSA actions will or can satisfy the more fundamental congressional concerns about the policy of selling services off the schedule. There are concerns, for example, that agencies using the schedule contracts for services are not doing sufficient capital planning and analysis.

In addition, some people on Capitol Hill are skeptical about whether IT services can be classified as commercial items and sold off the schedule at all.

Noting the program's traditional role of offering commercial items at firm, fixed prices, one congressional source wondered, "If you are buying services on a time and materials and hourly basis, you have to start out with the question, "Are these commercial items, and are they appropriate to be sold off the schedule at all?' "

Most lawmakers have not spoken publicly about this issue, so it is difficult to gauge how widespread these opinions are. However, some industry observers fear that GSA may bow to those critics and produce FAR language that not only codifies current rules but also ends up tightening procedures in ways that will make it more cumbersome for agencies to use the schedule — or even eliminate services from the schedule altogether.

"There may be pressure [for GSA] to do more self-examination, but I don't know at this point whether they would be under pressure to remove services," said a congressional official.

McKenna is a freelance writer based in the San Francisco Bay area.