GSA Schedules Open Market Items

Contractors that receive a General Services Administration (“GSA”) Multiple Award Schedule (“MAS”) Program contract publish a price list that contains all the products and services that have been negotiated and agreed.  The prices for the items on the price list are deemed to be fair and reasonable by the GSA and are available for purchase by agencies.  Buyers may issue orders for these supplies and services bypassing many onerous acquisition regulations.

The GSA Price List includes certain the contractor’s products and services. The rules generally allow users to purchase the listed items. Buyers frequently added non-price list items to delivery / task orders to complete the order requirements.  These non-schedule items are called “open market” items.  These “open market” items were intended to be incidental to the purpose and statement of work in a task order.  For many years there was no clear definition of an “open market” item, so many contracting officers set their own rules.

In 1997 the Court of Federal Claims (“COFC”) decided a protest1 against the Army finding that it failed to comply with the Competition in Contracting Act (“CICA”)2. The Court of Federal Claims awarded an injunction to ATA Defense Industries terminating a purchase Order that had been awarded to a competitor under its GSA Schedule that contained approximately 35% of the products, i.e., open market items, were not carried on the MAS contract. The COFC ruled that unless a product or service can be classified within an exception to the competition requirements in the CICA, or can be classified as de minimus, then the products or services must be purchased on a competitive basis.

Two years later the Government Accountability Office (“GAO”) decided3 a protest that implemented the earlier COFC decision, sustained the protest, and overturned an Army purchasing decision by ruling that when the value of open marketitems exceeds the micro-purchase4 threshold must be competed and a best overall analysis conducted.  In addition, the Federal Acquisition Regulations (“FAR”) was amended5 to require open market items to be added to orders only if all applicable acquisition regulations have been followed.

Despite the decisional law and regulations, many vendors continued to quote open market items, and be awarded orders that included such items.  A case in point is the decision from the General Accountability Office (“GAO”) in the protest of Seaborn Health Care, Inc., File: B-400429, October 27, 2008.

Seaborn protested a Request for Quotations (“RFQ”) by the Department of Veterans Affairs (“VA”) for pharmacists and pharmacy technicians at the VA consolidated mail order pharmacies (“CMOP”). The RFQ required that contractor to provide on-site supervisory personnel at no cost to the VA.  Seaborn filed the protest challenging the inclusion of the supervisory personnel.

Seaborn argued that including the on-site supervisory personnel in the RFQ “constitutes an improper requirement that vendors price non-FSS services as part of their quotations.”  The VA responded that it was merely “providing for appropriate contract administration and supervisory services that are inherent in the cost of administering the contract” because it is a non-personal services contract.

The GAO agreed with the protestor.  “Our review of the pertinent [Federal Supply Service] FSS Contract 621 I, Professional and Allied Healthcare Staffing Services reveal no provision for on-site supervisory personnel or services.”  The GAO continued, “We are not persuaded by the Agency’s argument…because, essentially supervision by the contractor is inherent in non-personal services contracts.”

“Even when non-FSS products and services6 are viewed as incidental or integral to FSS items, they may not be purchased using FSS procedures.”

The moral of the story is to object to the inclusion of open market items in an RFQ, except perhaps for travel in excess of the micro-purchase threshold.  If you submit a quote that includes open market items, someone may protest award of an order that includes such items, and you may eventually lose the award.

Tom Petruska, Owner
Contracts Unlimited, Incorporated

The foregoing is not legal advice or a legal opinion.  See your attorney for legal advice.

Footnotes:

1. ATA Defense Industries, Inc. v United States, No. 97-382C (Fed. Cl.) June 27, 1997

2. 41 U.S.C. 253

3. Pyxis Corporation, B-282469, July 15, 1999

4. Currently $3,000.

5. 48 C.F.R. 8.401

6. Open Market Items

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