Coming Soon to MAS Schedules: Order Level Materials (OLMs)
A final rule published to the General Services Administration Acquisition Regulation (GSAR) by the General Services Administration (GSA) on January 24th, 2018, has now made the purchasing of order level materials through the Multiple Award Schedule (MAS) program a reality. This groundbreaking rule will help Schedule contractors provide more complete procurement solutions to purchasing agencies while upholding fair and reasonable pricing standards. Under the previous guidelines, the acquisition of ancillary services often resulted in duplicative contracting actions – including the creation of new commercial Indefinite-Delivery/Indefinite-Quantity (IDIQ) contracts and open market procurements. The Assistant Commissioner in the Office of Policy and Compliance at GSA’s Federal Acquisition Service, Mark Lee, stated that, “[The IDIQ proliferation] costs the government a lot of money, but it also costs industry a lot…It can be as low as $10,000, but [as much as] $1 million in bid and proposal costs for them to get on one of these IDIQ contract vehicles. So the aim of this is really to reduce that duplication, and let industry use their bid and proposal money to compete at the task order level, which is a priority for GSA.”
What Are Order Level Materials?
Order level materials (OLMs), as outlined on GSA Interact, are:
- Supplies or services acquired in direct support of a task or delivery order placed against a Schedule contract or Blanket Purchase Agreement (BPA) (no more than 33.33% of the order, excluding travel costs).
- The type and quantity of supplies or services are not known at the time of Schedule contract or BPA award.
- Prices of OLMs are not established at the Schedule contract or BPA level.
Upcoming Changes to the MAS Schedules
Although the GSAR was published in late January 2018, many changes to the MAS Schedules are yet to come. In order to allow for the incorporation of OLMs, a new Special Item Number (SIN) will need to be created along with the publication of a Mass Modification to add the terms and conditions to current MAS contracts. The Federal Acquisition Services (FAS) plans to initiate an advanced solicitation for OLMs in April 2018 through GSA Interact, and GSA’s Director of the MAS Program, Stephanie Shutt, has indicated that SIN development is currently underway. The new rule will allow for schedule contractors to provide ancillary services on a task order level, as long as the cost of the OLMs does not comprise over one-third of the total cost of the order. The one-third ceiling was generated as a way to mitigate a potential loophole which would allow for the purchasing of products and services not on the Schedules, while still allowing for valid OLM purchases. In addition, Schedule vendors will be required to provide three quotes as supporting documentation for fair and reasonable pricing. However, in response to industry’s outcry against this provision, there are some exceptions that have been incorporated into the final rule. These exceptions include: Schedule holders whose purchasing systems were previously approved by the Contractor Purchasing System Review (CPSR) process or if the cost of the OLMs fall below the acquisition threshold, which is currently set at $250,000.
A Bright Fourth-Quarter on the Horizon
GSA Assistant Commissioner for the Professional Services and Human Categories in FAS, Tiffany Hixon, stated that, “We have been pressing my policy and program counterparts hard to get the policy out the door so we can try to get these provisions implemented through our schedules programs by mid-to-late third quarter…We know that this year there will be a huge push in terms of year-end buying just given where we are with the budget cycles. So getting this tool into the hands of frontline contracting officers is a big deal.” Although there are still several aspects of the OLM inclusions that must be further detailed by GSA, including how OLMs and other direct costs (ODCs) will apply to BPAs and if the industrial funding fee (IFF) for all schedule buys will be included in the ceiling price for OLMs, it is GSA’s hope, as stated by GSA Procurement Executive Jeff Koses, that “… this is a way to deal with some of the ongoing challenges and to ensure a successful end-of-year buying season.”
Find Out How BH Sky Can Help Add Order Level Materials to Your MAS Contract