70 FR 161 pgs. 48953-48961 - General Services Administration Acquisition Regulation; White Paper—Adding Ancillary Repair and Alteration Services to the General Services Administration Schedules Program
Type: NOTICEVolume: 70Number: 161Pages: 48953 - 48961
Docket number: [GSAR 2005-N02]
FR document: [FR Doc. 05-16254 Filed 8-19-05; 8:45 am]
Agency: General Services Administration
Official PDF Version: PDF Version
GENERAL SERVICES ADMINISTRATION
[GSAR 2005-N02]
General Services Administration Acquisition Regulation; White Paper-Adding Ancillary Repair and Alteration Services to the General Services Administration Schedules Program
AGENCIES:
Office of the Chief Acquisition Officer, General Services Administration (GSA).
ACTION:
Notice with a request for comments.
SUMMARY:
The General Services Administration (GSA) is considering adding ancillary Repair and Alteration (RA) services to the GSA Schedules Program. The Federal Acquisition Regulation (FAR) describes RA services as a subset of construction services. As such, the GSA Schedules Program has not been able to provide fully-integrated solutions that often involve RA services. The GSA requests that interested parties provide comments.
DATES:
Interested parties should submit written comments to the FAR Secretariat on or before October 21, 2005 to be considered in the formulation of a final rule.
ADDRESSES:
Submit comments identified by GSAR notice 2005-N02 by any of the following methods:
• Federal eRulemaking Portal: http://www.regulations.gov . Follow the instructions for submitting comments.
• Agency Web Site: http://www.acqnet.gov/GSAM/gsamproposed.html . Click on Proposed Rules, and the GSAR Case number to submit comments.
• E-mail: gsarnotice.2005-N02@gsa.gov . Include GSAR notice 2005-N02 in the subject line of the message.
• Fax: (202) 501-4067.
• Mail: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW., Room 4035, Attn: Laurieann Duarte, Washington, DC 20405.
Instructions: Please submit comments only and cite GSAR notice 2005-N02 in all correspondence related to this notice. All comments received will be posted without change to http://www.acqnet.gov/far/ProposedRules/proposed.htm , including any personal and/or business confidential information provided.
FOR FURTHER INFORMATION CONTACT:
The Regulatory Secretariat (VIR), Room 4035, GS Building, Washington, DC 20405, (202) 208-7312, for information pertaining to status or publication schedules. For clarification of content, contact Ms. Linda Nelson, Procurement Analyst, at (202) 501-1900 or by e-mail at linda.nelson@gsa.gov . Please cite GSAR notice 2005-N02.
SUPPLEMENTARY INFORMATION:
A. Background
GSA invites the general public and other Federal agencies to comment on the following White Paper that includes specific questions at the end. In particular, GSA encourages comments regarding its impact on small businesses.
Dated: August 11, 2005.
Roger D. Waldron,
Acting Senior Procurement Executive, Office of the Chief Acquisition Officer, General Services Administration.
White Paper-Adding Ancillary Repair and Alteration Services to the GSA Schedules Program
The General Services Administration (GSA) is considering the possibility of adding ancillary Repair and Alteration (RA) services to the GSA Schedules Program. Over the past several years, we have become increasingly aware of a growing number of customer requirements that fall within the scope of the GSA Schedules but which require ancillary RA services. Historically, the GSA Schedules have not provided an avenue by which a customer could obtain these combined requirements. Consideration of adding ancillary RA services is an attempt to extend the benefits realized through the GSA Schedules Program and to offer one-stop, total solutions to our customers.
The first step is to determine whether GSA should add ancillary RA services to the GSA Schedules Program. Should GSA decide to proceed, the next step is to determine the best approach for implementation. The implementation options GSA is examining include: (a) Adding a new Special Item Number (SIN) to existing GSA Schedules, (b) create a new Schedule, or (c) utilizing any other viable alternative to incorporate RA services to the GSA Schedules Program.
The North American Classification System (NAICS) and the Federal Acquisition Regulation (FAR) describe RA services as a subset of construction services. Contractors that are engaged in this industry are commonly known as general contractors (NAICS Subsector 236), or specialty trade contractors (NAICS Subsector 238). General contractor types may arrange the performance of separate parts of the project through subcontracts with other contractors. The specialty trade contractors perform a specific component ( e.g. , electrical work, painting) of the project. They often perform remodeling and repair type tasks associated with purchase of various other supplies or services (visit http://www.census.gov/epcd/www/naics.html for additional information on NAICS codes).
The following is a sample of GSA schedules that include supplies or services whose purchase often requires the associated performance of ancillary RA services: Furniture Schedules 71-I (Office Furniture), 71-II (Household and Quarters Furniture), 71-II-H (Packaged Furniture), 71-II-k (Comprehensive Furniture Management Services), 71-III (Special Use Furniture), 72-I-A (Floor Coverings) and 72-II (Furnishings); and Schedule 70 (Information Technology). A thorough analysis of the current Schedules to determine which require inclusion of ancillary RA services will be conducted upon decision to proceed. A complete listing of current GSA Schedules is available on the Schedules e-Library ( www.gsa.gov/e-library ).
Given the GSA Schedules identified above, the following scenario realistically describes the current challenge a customer faces when acquiring supplies and services covered by the GSA Schedules that require ancillary RA services: An agency customer purchases new office furniture using GSA Schedule 71-I and new computers using Schedule 70. The customer's requirement also includes room alterations to accommodate the new furniture and installation of network cable for the new computers. Thus, the customer's total solution requires ancillary RA type tasks associated with the purchase of office furniture and computers. The current GSA Schedule model fails to provide customers with the integrated program design necessary to achieve the total solution needed because the above-mentioned customer must procure additional RA services to-
• Alter a wall to appropriate the new furniture: a general contractor, NAICS 236210 (Industrial Building Construction-Addition, Alteration and renovation, general contractors); and
• Install computer and network cable for the new computers: A specialty trade contractor, NAICS 238210 (Electrical Contractors-Computer and network cable installation).
Currently, when utilizing the GSA Schedule to procure the principal supplies and services, the customer must acquire the ancillary RA services from another procurement vehicle. As a result of the need to conduct an additional procurement, the customer is subject to inefficiencies, increased costs, unnecessary complexities as well as delay in realizing the end results. Adding ancillary RA services to the GSA Schedule would allow GSA to provide the customer with a one-stop, total solution process.
This document discusses the various relevant issues such as: Statutory/regulatory considerations, scope, pricing, competition, and clause applicability. Additionally, a primary GSA concern is the impact this initiative will have on small business.
GSA seeks comments from all stakeholders, and in particular, from small businesses to determine both the feasibility of this effort and how best to achieve the desired results.
I. The GSA Schedules Program
Overview
In a general sense, the role performed by the GSA under the GSA Schedules Program is that of a market maker, providing industry and customer agencies the necessary vehicles to come together and transact their business. Specifically, the GSA Schedules Program provides Federal agencies with a simplified process for obtaining commonly used commercial supplies and services at prices associated with volume buying. GSA awards indefinite delivery contracts to commercial firms to provide supplies and services at stated prices for given periods of time.
GSA schedule contracts are firm fixed price or firm fixed price with economic price adjustment type. They are typically evergreen (awarded with a 5-year base period and three 5-year options) and include conditions under which a contractor may offer price discount to authorized users without triggering mandatory across-the-board price reduction.
Prior to awarding a schedule contract, GSA determines the contractor to be responsible in accordance with FAR subpart 9.1, negotiates and approves an acceptable subcontracting plan for large businesses, and negotiates and awards fair and reasonable pricing based on the firm's Most Favored Customer rates. Because GSA performs much of the up-front work, agencies then benefit from a streamlined ordering process.
Under the GSA Schedules Program's continuous open solicitation policy, offers for commercial supplies or services may be submitted at any time. Similarly, contractors may request to add supplies/services to their contracts at any time during the term of their contract.
GSA Schedule Pricing Policies
Because GSA Schedule contracts are awarded under commercial terms and conditions, GSA uses a price-based approach to negotiate contract pricing. This approach relies on the prices of the supplies/services that are the same or similar to those in the commercial marketplace. Under this approach, submission of cost or pricing data is not required.
GSA's negotiation objective is to receive prices that are equal or better than a company's "Most Favored Customer" pricing. To arrive at a price that the Government considers fair and reasonable, offerors are required to submit information pertaining to their commercial sales and discounting practices using the Commercial Sales Practices Format (see Attachment) that is included in each GSA Schedule solicitation.
Under the Economic Price Adjustment clause, Schedule contractors may increase or decrease prices according to their commercial practice. Price decreases may be submitted at any time during the contract period. Price increases, resulting from a reissue or modification of the contractor's commercial catalog that formed the basis for award, can only be made effective on or after the initial 12 months of the contract period, and then periodically thereafter for the remainder of the contract term.
The Ordering Process
The GSA Schedules Program provides a streamlined ordering process for customer agencies. The specific ordering requirements that a customer must follow are governed by whether the requirement is for supplies or for services and the dollar value of the order. The ordering procedures are contained in FAR subpart 8.405-1 and 8.405-2 and may be accessed via the following Web site: http://www.acqnet.gov/far/ .
A unique feature of the GSA Schedules Program is the Maximum Order Threshold (MOT). The MOT represents the level above which customers should seek additional price reductions from Schedule contractors. Contractors are not required to accept orders above the MOT, but they may elect to accept any size order.
The GSA Schedules Program also affords contractors an opportunity to join with other Schedule contractors in teaming arrangements to fill specific customer orders. Not only does this increase a contractor's opportunities for business, but it also enables customers to achieve a "total solution" to meet their needs.
II. Issues, Questions, and Alternatives for Consideration
Statutory/Regulatory Requirements for RA Services
There are statutory and regulatory considerations associated with the addition of RA services to GSA Schedules Program.
A primary issue is the fact that GSA Schedule contracts are typically awarded using the procedures outlined in FAR part 12, which governs the acquisition of commercial supplies and services. In a July 2003 memorandum entitled "Applicability of FAR part 12 to Construction Acquisitions," Angela Styles, former Office of Federal Procurement Policy Administrator, indicated that routine alteration and repair services are considered commercial and may be acquired using FAR part 12 procedures (this memorandum may be accessed at the following Web site under "Memos": http://www.acqnet.gov/AcqNet/Notes/ ). Consistent with the memorandum, it is not GSA's intent to circumvent the unique construction-related requirements contained within FAR part 36 when incorporating ancillary RA services to the GSA Schedules. The following excerpt from the memorandum describes the scope of the ancillary RA services envisioned by this initiative:
* * * routine painting or carpeting, simple hanging of drywall, everyday electrical or plumbing work, and similar noncomplex services, as well as for purchases of commercial construction material and associated ancillary services.
In order to safeguard the government's interests and to comply with applicable labor laws, GSA proposes including all of the required statutory/regulatory requirements pertaining to ancillary RA services. Some of the major statutory requirements applicable to RA services include:
• Davis Bacon Act
• Copeland Act (Anti-Kickback)
• Contract Work Hours and Safety Standards Act
• Miller Act (bonds)
Matrices detailing all of the required clauses for both construction and commercial item contracts may be found at http://www.arnet.gov/far/current/matrix/Matrix_01.html and at http://www.arnet.gov/GSAM/gsam.html .
A second issue is the consideration of whether to implement the above-mentioned requirements at the contract level or at the task order level. Currently, when an agency customer uses the GSA Schedules to procure a requirement to which additional agency-specific restrictions are applicable, the agency-unique provisions may be incorporated at the task order level as long as they do not conflict with the underlying Schedule terms and conditions. Security clearances are an example of such a requirement.
Just as agency-unique provisions are addressed at the task order level, it appears that the Miller Act requirements should be dealt with in a similar fashion, for similar reasons. The FAR contains thresholds and differing provisions for bonding at various thresholds. Acknowledgement of the Miller Act and other FAR mandated payment/performance protection requirements should take place at the contract level. However, the implementation of the actual requirement would be enacted at the task order level as appropriate.
Contract Scope and Its Impact on Competition
GSA ensures that the GSA Schedules afford ordering agencies the maximum opportunity to compete requirements under the program (as of June 2004, there are 15,546 Schedule contracts in effect). Additionally, increasing procurement opportunities for small businesses is and has been a major GSA initiative. GSA works hard to ensure that small, veteran-owned small, service-disabled veteran-owned small, HUBZone small, small disadvantaged, and women-owned small business sources have every opportunity possible to participate in the Federal procurement process.
GSA is fully committed to strengthening the sustainability of the 25 million small businesses in America. Under the Schedules Program, GSA actually exceeds the expectations of the Small Business Administration. The governmentwide goal for contracting with small businesses is 23 percent. In FY 2002, small businesses received 34.8 percent of the total $21.1 billion in Schedule sales and in FY 2003, small businesses received 35.6 percent of the total $25.6 billion in sales. As of Q3 FY 2004, small businesses received 35.7 percent of the total Schedule sales; and approximately 80 percent or 12,414 of 15,546 GSA Schedule contracts awarded is with small businesses.
Many existing GSA Schedule contracts are worldwide in scope in the sense that firms may elect to offer delivery of supplies and services domestically, overseas, or internationally. It is possible that the inclusion of ancillary RA services in contracts having worldwide scope may have an adverse impact on certain businesses. While some RA firms are national in scope, most are regional or locally based and they must be duly licensed under local jurisdictions. Therefore, GSA may consider narrowing the scope of a resultant RA Schedule to designated regional areas.
As indicated previously, the scope of the RA services being contemplated is ancillary in nature to existing Schedule supplies/services and represent minor repairs and alterations. The GSA Schedules containing ancillary RA services must be consistent with all rules and regulations and the SOW must be well-defined.
Pricing
One of the most difficult questions to address in this area is how to negotiate pricing for ancillary RA services under the GSA Schedules Program. As noted above, Schedule contracts are predicated on the Government's negotiation of most favored customer discounts from contractors' established prices for commercial supplies/services.
On a typical Schedule contracts providing services, pricing is negotiated based on fully-loaded hourly rates for the type of service to be provided. Ordering agencies seeking services would provide the SOW and ask Schedule contractors to quote fixed rates and the level of effort/mix of labor for such services. However, it has been suggested that ancillary RA services do not readily lend themselves to such a pricing methodology due to the numerous labor categories generally involved in an RA project and all of the variables that come into play at the work site.
Listed below are some alternatives for pricing ancillary RA services under a GSA Schedule contract:
a. Award the RA Schedule contracts without pricing, allowing customers to compete and negotiate pricing for individual requirements among the various Schedule contractors. This is similar to the method that GSA's Public Buildings Service (PBS) currently utilizes in the award of multiple award indefinite delivery/indefinite quantity construction contracts. Although customers would still need to negotiate prices under this alternative, they would still benefit from GSA having completed much of the up-front work in awarding the Schedule contract.
The Schedule contract would provide them with a source of contractors already deemed responsible in accordance with FAR Subpart 9.1. In addition, GSA would negotiate subcontracting plans and incorporate basic terms and conditions into the contract.
b. Negotiate pricing based on labor rates for specific geographic areas at the contract level (including utilization of techniques such as fixed price multiplier, applied to the locality-specific Davis Bacon base rates) and allow the customer to seek price quotes for individual orders based on the negotiated labor rates.
c. Negotiate pricing based on the commercially-accepted Means Cost Data ( e.g. , RSMeans Cost Data). The Means Cost Data is a series of publication that cover general construction costs in such categories as labor, materials, equipment, as well as pricing for subcontracting specialties such as mechanical, concrete/masonry, plumbing, electrical, and repair and remodeling. The Means Cost Data also contain adjustment factors covering various cities in the United States. If this approach were adopted, GSA would need to ensure that the costs contained in the Means Cost Data are reflective of and include wage rates that are in compliance with the Davis Bacon Act. It may be possible for GSA to negotiate an agreement with the publishers of the Means Cost Data to publish an electronic GSA-unique version of the publication.
d. Allow firms to propose various pricing strategies depending upon their commercial practice. This may take the form of labor rates, fixed unit prices, overhead adjustors, markups, share-in-savings, etc.
Award Considerations
The following are three suggested methods to include ancillary RA services into the GSA Schedules Program:
Alternative One -Add an RA services SIN to those GSA Schedules where the purchase of the supply/service often requires ancillary RA services be performed. An issue associated with this alternative is whether to restrict award of such a SIN to only contractors who provide the primary supply/service or to allow all responsible offerors to be considered for award under the ancillary RA SIN regardless of whether they are under contract to provide the related supplies and services. This decision may impact access to small businesses and it may also require customers to deal with multiple contractors under teaming arrangements.
Alternative Two -Establish a new Schedule specifically for minor RA services. An independent schedule for these services would highlight RA's unique requirements, allowing for a clear definition of the types of minor services applicable, identification of the specialized clauses, unique pricing instructions if required, different scope requirements, etc. Existing Schedule contractors could team with the RA Schedule firms to provide a total solution to customers.
Alternative Three -Combine Alternative One and Two. This alternative provides maximum flexibility to the customers.
Other Considerations
The Public Buildings Act of 1959, as amended, provides that only GSA and those agencies having a delegation from GSA or having their own independent authority may enter into construction contracts. The Department of Defense (DoD), National Aeronautics and Space Administration (NASA), and GSA's Public Buildings Service (PBS) represent three dominant procurers of construction services. Language will be added to the Schedule and any associated user-related brochures to stipulate clearly that only warranted construction Contracting Officers representing authorized agencies may use this Schedule to procure RA services.
GSA will need to address how tenants residing in Government-owned/leased buildings that are managed by other authorized Federal agencies ( e.g. PBS) will coordinate the purchase of Schedule RA services with the appropriate building owner/manager. Agencies that fail to coordinate RA services with the appropriate building owner/manager may find themselves monetarily responsible for restoring the space to its original condition. For example, any alteration of PBS-controlled real property requires approval/oversight by the PBS Building Manager. This should be the policy of all building owner/managers. Concerned parties have also suggested that drilling a simple hole in a wall may interrupt an entire building's HVAC system. Therefore, GSA believes it may be necessary to add requirements for customers to coordinate all Schedule RA services with, and receive approval from, the appropriate building owner/manager prior to placing an order against the RA Schedule. These instructions will be included in unique ordering procedures for Schedule RA services and should include:
a. Discussion of the project scope in detail with the building owner/manager.
b. Proposed work shall not exceed basic alteration of stud walls of non-structural gauge hollow metal framing and will not impact structural assemblies or load bearing walls. The work does not preclude utility work within the basic alteration.
c. All work shall be in strict accordance with "Building Standards.'
d. Work shall have no impact on historical preservation elements or historic zones.
e. Work shall meet all applicable building codes, including but not limited to egress and fire safety standards.
f. All contractors must comply with existing policies involving security requirements for working in federally owned/leased buildings.
g. All contractors must possess all required credentials of the trade(s) which are to be employed.
h. Work planned should not exceed $25,000 in construction value.
III. Conclusion
Many issues must be carefully analyzed and addressed if GSA is to successfully add ancillary RA services under the GSA Schedules Program. Prior to moving forward, GSA seeks comments on the entirety of this white paper and responses to the specific questions identified below. For reference, the questions below pertain to the discussions contained within the associated subheadings as stipulated above.
Statutory/Regulatory Requirements
1. Would it be more advantageous to incorporate and apply the Davis-Bacon Act requirement at the contract level or order level?
2. To comply with the Miller Act, should contractors be required to obtain the necessary bonds as a condition for contract award or should this be a requirement imposed only at the time of order placement?
3. Other than those addressed above, are there other significant statutory or regulatory requirements that apply to RA services contracts?
Contract Scope and Its Impact on Competition
4. Do construction firms typically conduct their business within a specific geographic area? If so, what is the usual scope of that geographic area?
5. What impact would retaining a worldwide scope when adding RA services to the Schedules have on the construction industry and on competition among contractors interested in participating in the program? In particular, what would be the impact on current GSA Schedule contractors that are small businesses?
6. Would changing the contract scope specifically for RA services from worldwide to regional (covering major metropolitan areas) afford small firms a better opportunity to compete for business under the GSA Schedules Program?
7. RA services can include various types of work on a particular building or site that is dedicated to and deemed a part of the worksite. Should limitations be included in the SOW contained within the Schedule solicitation? If so, please provide suggested language.
Pricing
8. Can GSA apply the same pricing methodology of negotiating Most Favored Customer pricing to RA service contracts? Does the construction industry have different categories of customer for pricing purpose, such as a Most Favored Customer category?
9. Will the construction industry be able to provide standard commercial pricing, terms and conditions under the Commercial Sales Practices Format so that GSA can determine the price reasonableness of a firm's proposal?
10. How many different labor categories would typically be involved in a contract for construction services and how are commercial RA tasks typically priced?
11. Please comment on the usefulness and applicability of the proposed pricing methods. What pricing alternatives, other than those discussed in the Pricing section above, should be considered?
12. Is there any reason why customers would be unable to use a Firm Fixed Price, Time and Materials type order to procure these services from an RA Schedule?
Award Considerations
13. Which of the three alternatives set forth previously do you believe offers maximum benefit and why?
14. Please suggest any other alternatives.
Other Considerations
15. Generally, are the GSA Schedule ordering procedures in FAR Subpart 8.4 suitable for RA services contracts?
16. Should a maximum order limitation/threshold be established for RA services?
17. Are the items addressed in Section II, a-h appropriate conditions for inclusion in the ordering procedures for Schedule RA services?
18. What unique criteria, if any, should be established for a buyer of RA services?
General
19. What other issues or concerns need to be addressed?
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[FR Doc. 05-16254 Filed 8-19-05; 8:45 am]
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