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GCN Home > September 13, 1999 issue

FEDERAL CONTRACT LAW

Be wary of ordering incidentals on FSS

The General Accounting Office continues to ratchet up its reviewing of orders placed under contracts with the Federal Supply Service.

As an arm of the General Services Administration, FSS awards multiple contracts for a variety of goods and services. If you are placing orders that include incidental items, watch out.

In 1984, the Competition in Contracting Act made orders under schedule contracts exempt from the requirement for full-and-open competition. In the last few years, GSA has made it increasingly easy to order items from its FSS schedule contracts. For example, buyers no longer face maximum-dollar ceilings on orders, nor must intentions to buy be publicly announced in the Commerce Business Daily. Spot pricing discounts on individual orders are also now permissible.

With each order carrying a 1 percent ordering service fee, GSA has every incentive to increase schedule business. Schedule order dollars are rising by the billions.

In the view of some procurement experts, though, loosening restrictions on FSS orders is becoming a way for federal agencies to circumvent the requirement for competition in contracting. Perhaps in response, GAO is cracking down on such orders through its bid protest decisions.

In the past few years, GAO has heard and decided protests alleging a lack of competition held under the FSS program. Instead of issuing an open request for proposals, federal agencies will sometimes invite two or more FSS contractors to submit proposals in response to a statement of requirements.

Although not a classic negotiated procurement process, GAO uses its bid protest process to police these informal competitions and enforce fundamental notions of fairness.

Recently, GAO struck down the inclusion of so-called incidentals in FSS orders in a decision involving Pyxis Corp. of San Diego. Following the lead in a Court of Federal Claims decision, GAO held that all items purchased in an FSS order must already be listed in the schedule contract.

Lenient past



In a line of cases stretching back over a decade, GAO had not been so strict. If an order included a small amount of items which were not included in the contractor’s schedule contract, these were considered incidental and did not invalidate the order. A printer cable is a classic example.

The Court of Federal Claims, however, took a different tack in a 1997 decision, ATA Defense Industries Inc. vs. the United States. The court found no justification in the Competition in Contracting Act for an incidentals exception. Either the items ordered were included in the schedule contract or they were not. If not, their prices had not been negotiated or evaluated by GSA and therefore did not qualify for the exemption from the requirement for competition which CICA carved out for GSA contracts.



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