Selling to the Federal Government Federal Supply Schedules and Other Contract Vehicles

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Selling to the Federal GovernmentFederal Supply
Schedules and Other Contract Vehicles

• Maureen Regan
• Counselor to the Inspector General
• Department of Veterans Affairs

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Contract Vehicles

• Federal Supply Schedules
• National Contracts or Blanket Purchase Agreements
  
• Local Contracts or Blanket Purchase Agreement
• Open Market

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Contract Vehicles

• National and Local Contracts and BPAs
• Competition among FSS vendors
• Full and open competition
• Set-asides to small businesses
• Sole-source awards to small businesses

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VA Purchasing Hierarchy Med/Surg and
Pharmaceuticals

• VA Awarded National Contracts
• Standardized products
• National BPAs
• FSS
• Local Contracts
• VISN level
• Local Facility
• Open Market

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Federal Supply Schedule Program

• Multiple Award Contract
• Indefinite Delivery, Indefinite Quantity (IDIQ)
• Guaranteed minimum/maximum (varies per commodity)
• Firm Fixed-Price Contract with Economic Price
  Adjustment

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Federal Supply Schedule Program

• Open and Continuous Solicitation Cycle
• VAs are multi-year (5 years base), with option
  to extend for up to an additional 5 years

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VA FSS Schedules

• FAR Part 38.000 GSA has delegated authority to
  the Department of Veterans Affairs to procure
  medical supplies under the VA Federal Supply
  Program.

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Federal Supply Schedule Program

• VA Schedules
• 65 I B -Drugs and Pharmaceutical-related Products
  (SIN 42-2A covered and B non-covered)
• 65 II A -Medical Equipment and Supplies
• 65 II C -Dental Equipment and Supplies
• 65 II F -Patient Mobility Devices

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Federal Supply Schedule Program

• 65 VA -X-Ray Film, Equipment and Supplies
• 65 VII -Diagnostic, Reagents, Test Kits and Sets
• 66 III -Cost-Per-Test for Clinical Laboratory
  Analyzers
• 621 I -Professional and Allied Healthcare
  Staffing Services
• 621 II Medical Laboratory Testing and Analysis
  Services

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Federal Supply Schedule Program

• Vendors must disclose commercial sales practices
  (CSP)
• Discounts and concessions to commercial customers
• Negotiation objective is Most Favored Customer
  (MFC)

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Pharmaceuticals Covered Drugs

• Public Law 102-585
• Codified at 38 U.S.C. Section 8126
• Pricing is the calculated Federal Ceiling Price
  for the Big Four, not MFC.
• If the manufacturer elects to have duel pricing,
  MFC is the negotiation objective and commercial
  sales practices disclosures are relevant.

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Most Favored Customer

• GSAR 538.270 The Government will seek to
  obtain the offerors best price (the best price
  given to the most favored customer). However,
  the Government recognizes that terms and
  conditions of commercial sales vary and that
  there may be legitimate reasons why the best
  price is not achieved.

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Most Favored Customer

• MFC is the objective when the FSS prices are
  negotiated
• No relationship to FCP pricing
• There is no relationship between the best price
  as used in the GSAR for FSS contract pricing and
  Medicare/Medicaid best price provisions.

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FSS Non-Competitive Award

• FSS non-competitive
• any vendor can obtain an FSS contract if the
  vendor is responsible, offers fair and reasonable
  prices, and agrees to comply with certain
  contract terms and conditions
• The FSS allows vendors to offer full product
  lines for purchase by eligible FSS customers

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Federal Acquisition Regulation (FAR)

• 48 Code of Federal Regulations
• Part 8.4 Policies and procedures for
  purchasing off the FSS
• Part 38 Policies and procedures for FSS
  contracting

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GSA Manual

• Section 552 GSA clauses
• 552.212-70 Preparation of offer
• 552.212-71 Terms and conditions for commercial
  items
• 552.215-72 Price adjustment Failure to provide
  accurate information
• 552.216-70 Economic Price Adjustment

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Trade Agreements Act

• Must certify that the products being offered
  under contract are made in the United States or a
  designated country.

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FSS Eligible Entities

• Listing of all eligible FSS entities is found on
  the GSA Website.
• From www.gsa.gov choose GSA schedules, click on
  For customers ordering from Schedules and
  choose eligibility to use GSA sources.
• This listing is downloadable in Word format.

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Purchasing/Selling

• Purchasing is done at the local level
• Marketing is at the local level

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FSS Purchasing FAR Part 8.405

• For supplies or services requiring no statement
  of work
• Below 3000 place order with any contractor that
  can meet the agencies needs.
• Above 3000 but below the Maximum Order Threshold
  (MOT) ordering activity must consider best value
  by surveying products or services of at least
  three FSS vendors before placing order.
• Orders above the MOT review prices of additional
  FSS vendors, request price reductions, place
  order with vendor that provides best value.

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FSS Purchasing FAR Part 8.405

• BPA To fill repetitive needs for supplies and
  services.
• May be to one or multiple vendors
• Can be multi-agency
• Single BPA - ordering agencies can place orders
  directly
• Multiple BPAs must compete order among BPA
  vendors as per ordering provisions in the BPA.

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FSS Purchasing

• Maximum Order Threshold (MOT)
• Formerly Maximum Order Limitation (MOL)
• MOT is established for each Special Item Number
  (SIN) within the contract
• FSS pricing is based on orders valued at the MOT
  or lower
• FAR 8.405-1 Ordering Activities must seek price
  reductions when orders exceed MOT or when
  awarding BPA

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Direct Delivery

• Multiple award contracts for durable medical
  equipment MRIs, CT scanners, Ultrasound, etc.
• VA and DoD purchasing through same contracts
• Commercial Sales Practice data is required
• VA purchasing conducted centrally
• DoD is at local level

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Pricing DisclosuresCommercial Sales Practices
(CSP)

• All FSS and Direct Delivery offerors must
  complete the CSP data sheets contained in the
  solicitation.
• Disclosure of commercial sales practices is
  necessary because prices, discounts, and
  concessions to commercial customers are the bases
  for determining whether offered prices are fair
  and reasonable
• Failure to provide the required information will
  result in a no award decision.

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Pricing Disclosures - CSP

• The disclosures required in the CSP are used to
• determine whether the offered prices are fair and
  reasonable
• identify tracking customers for price reductions
  during the term of the contract.

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Disclosure Requirements

• If offering equal to or better than the most
  favored customer price, must disclose the
  customer(s) that receive the most favored
  customer price.
• If not offering equal to or better than the MFC
  price, must disclose all prices to all customers
  equal to or better than the offered price.
• Vendor may limit disclosures to those products
  that exceed 75 percent of actual historical
  Government sales by Special Item Number (SIN).

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CSP-1

• Disclose whether the discounts and concessions
  offered the Government are equal to or better
  than vendors best price (with discounts and
  concessions) offered to any customer acquiring
  the same items regardless of quantity or terms
  and conditions.

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CSP-1

• Disclose any deviations to written policies or
  standard commercial sales practices that were
  previously identified and explain the deviations.

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CSP Deficiencies

• Common Deficiencies
• Failure to provide data
• Failure to provide accurate data
• Failure to use transactional sales data
• Failure to include sales to all customers
  regardless of terms and conditions
• Failure to include concessions that result in
  lower pricing

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Price Adjustment Failure to Provide Accurate
Information 552.215-72

• CO may reduce the price if CO determines after
  award of contract or modification that price was
  increased by a significant amount because the
  contractor failed to
• provide required or requested information
• submit information that was current, accurate, or
  complete or
• disclose changes in commercial pricelists,
  discounts, or discounting policies that occurred
  after submission and before award.

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Price Adjustment Clause 552.215-72

• Contractor is liable to the United States for any
  overpayments and simple interest.
• Any disagreement will be resolved as a dispute.
• CO may also terminate the contract for default.

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Price Adjustment Clause 552.215-72

• How does VA find out?
• Post-Award Review
• Voluntary Disclosures
• Civil actions filed under the qui tam provisions
  of the False Claims Act
• Complaints from employees, former employees, and
  competitors

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Price Reductions Clause 552.238-75

• Prior to award, VA and contractor will agree on
• The customer or category of customers which will
  be the basis of award, and
• The Governments price or discount relationship
  to the identified customer(s)

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Price Reductions Clause 552.238-75

• Relationship shall be maintained throughout the
  contract period
• Any change to the Contractors commercial pricing
  or discount arrangement applicable to the
  identified customer(s) which disturbs the
  relationship constitutes a price reduction.

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Price Reductions Clause 552.238-75

• Contractor must
• Report to the CO all price reductions to the
  tracking customer(s) and explain the conditions
  under which the reductions were made.
• Can make the notification anytime but no later
  than 15 calendar says after the effective date.

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Price Reductions Clause 552.238-75

• Triggers
• Revisions to the commercial catalog, pricelist,
  schedule or other document upon which contract
  award was predicated that result in reduced
  prices.
• Grant more favorable discounts or terms and
  conditions to the tracking customer(s) than those
  contained in the commercial catalog, pricelist,
  schedule, or other documents considered at the
  time of award.

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Price Reductions Clause 552.238-75

• Triggers (cont.)
• Grant special discounts to the tracking
  customer(s) which disturbs the price/discount
  relationship of the Government.
• Notification is also required if the tracking
  customer changes over the life of the contract
  through mergers or contract termination. This
  provision is found in the award letter.

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Price Reductions Clause 552.238-75

• Exceptions
• Firm, fixed-price definite quantity contracts
  with specified delivery in excess of the maximum
  order threshold.
• Sales to Federal agencies.
• Sales to state and local government agencies that
  purchase off the FSS contract (this was an
  addition to the clause that was introduced in the
  May 2004 revision).
• Caused by an error in quotation or billing and
  adequate documentation is provided.

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Price Reductions Clause 552.238-75

• Price reductions will be offered to the
  Government for the same time period as extended
  to the tracking customer(s)

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Economic Price Adjustments 552.216-70

• Contractors may request price increases when all
  of the following conditions are met
• (1) Increases result from a reissue or other
  modification of the Contractors commercial
  catalog/price list that was used as the basis for
  the contract award.
• (2) Increases are requested before the last 60
  days of the contract period.
• (3) At least 30 days elapse between requested
  increases.
• NOTE 2 to the clause states The tracking
  customers price must be disclosed with requests
  for increases. The awarded tracking customer and
  the established ratio at time of award will
  affect the ability to receive an increase.

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Pre-Award

• FAR Clause 52.215-20 (b)(4)
• By submission of an offer in response to this
  solicitation, the Offeror grants the contracting
  officer or an authorized representative the right
  to examine at any time before initial award .
• FAR clause 52.215-21 (b)(3)
• Authorized the right to examine the Offerors
  books and records for contract modifications.

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Pre-Award Reviews

• VA contracting officers request pre-award reviews
  for new contracts, requests for modifications,
  and contract extensions.
• Reviews are performed by the Office of Contract
  Review in the VA Office of Inspector General
  under an agreement with VAs Office of
  Acquisition and Materiel Management.

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Pre-Award Reviews

• Purpose of a pre-award is to advise the
  contracting officer of the reasonableness of the
  offer and to recommend tracking customers for
  price reductions.
• To ensure that pre-awards are conducted in the
  most effective and efficient way possible,
  specific instructions are provided on CP-5 and
  CP-6 of the solicitation.

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Pre-Award Reviews

• Full support for disclosures, including detailed
  reports used to develop disclosures and sales
  information by item number or NDC, both direct
  and indirect along with sales transaction tapes
  as specified.
• Discounting policies, procedures, and marketing
  practices.
• If MFC not offered, copies of agreements that
  result in better prices than those offered the
  Government.

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Pre-Award Reviews

• Sales transaction data should include all
  products sold to commercial customers for the
  6-month period ending no earlier than 60 days
  prior to the date of the offer.
• Must include all FSS and non-FSS customers.
• Data must reconcile to financial accounting
  records.