GSA preps next award-term pact

The General Services Administration has stepped into uncharted procurement territory by planning to issue the first multiple-award contract using a relatively new form of incentive contracting.

GSA is considering award-term contracting as a way to enforce performance much the way award- or incentive-fee contracting does. Under an award-term contract, an agency each year evaluates how well a vendor is performing on a base contract. If the vendor's performance meets expectations, the length of the contract is extended. If it does not, the contract expires after the base years or can be cut off sooner.

So far, all federal contracts using award-term contracting have been single-award contracts. But GSA wants to use the strategy for a huge multiple-award contract called Millennia Lite, a $20 billion IT services contract.

"We're trying to put more teeth into performance-based contracting," said Manny DeVera, director of the GSA Federal Technology Service's IT Solutions Regional Service Center, which is developing Millennia Lite. GSA anticipates releasing the final request for proposals for Millennia Lite Sept. 8.

But procurement experts have expressed concern that performance measurements and evaluations for award-term contracting on multiple-award contracts could be too subjective and open to protest. Vendors may protest the most about how to measure performance for myriad tasks that can be performed on an IT services contract, said Eben Townes, senior vice president at consulting firm Acquisition Solutions Inc.

The primary reason the Air Force, which pioneered the award-term contracting method, chose not to use award-term contracting for multiple-award contracts was concern about protests when one vendor received an extension and another did not, said Col. Darryl Scott, director of contracting at the Air Force Materiel Command at Wright-Patterson Air Force Base, Ohio.

"The multiple awardees are not performing on the same base, so there will be questions when one vendor's contract is extended and not another," he said.

But because award-term contracting is still a relatively new procurement method, it is possible that another agency such as GSA will be able to come up with a solution, Scott said.

As envisioned by GSA, the master Millennia Lite contract will have award-term contracting built in, and it will be up to individual agencies to decide if the task orders on Millennia Lite also are award-term contracts. It should be possible to manage the multiple evaluations and situations created by a multiple-award, task-order contract, DeVera said.

"There's no set way or one way to do the award-term contracting," DeVera said. "I don't know if this will work, but I think we're going to give it a good, honest try because we know what our objectives are."GSA believes that it will be able to measure performance for multiple vendors on multiple task orders as long as there is a procedure for contracting officers to follow.

"We can come up with an algorithm of taking the performance of companies on different task orders and, while each project is different, come up with a way to measure performance in each functional area," DeVera said.

The Air Force originally developed the award-term structure in 1995 as a way to establish a long-term relationship with vendors while using commercial practices that emphasize contractor performance.The longer contracts, which in some cases within the Air Force extend to 15 years, allow vendors to put in place the capital investment necessary to realize high cost savings for a contractor and agency, Scott said. At the same time, the possibility of the contract being extended or cut off early if the vendor is not meeting performance levels agreed to in the contract offers a tangible incentive.

Scott's office, via the undersecretary of Defense for acquisition and technology, is creating a guide using the contracting method within the Defense Department. GSA may look at developing a similar guide for civilian agencies in the future, but for now a lot of learning and experimenting needs to take place, DeVera said.