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The proliferation of multiple award contracts across the government has reached a tipping point. The Office of Federal Procurement Policy is on a listening tour to figure out how to tame this unwieldy beast. The administration's efforts come as several agencies plan to recompete or issue new procurements for MACs in the coming year. Federal News Radio's Jason Miller explores all sides of this complex issue in our series, Contract Overload.
Part 2: Unique needs, high fees propel increases in agencywide contracts
Tuesday - 5/18/2010, 6:50am EDT
By Jason Miller
Federal News Radio
The proliferation of multiple award contracts across the government over the last 15 years can't be attributed to just one reason. But the undercurrent that many federal and industry officials often point to is money and poor customer service.
Agencies especially over the past 10 years realized how much money they were paying to use fee-for-service contracts from the General Services Administration, the Interior Department's National Business Center, NASA and the National Institutes of Health. And during that time, GSA, which is by far the largest provider of governmentwide contracts, faced scrutiny from its own inspector general and that of its largest customer-the Defense Department-for how it was managing the money and contracts.
DoD at one point was spending up to $150 million a year on fees with GSA alone. The Pentagon led the thinking that the money could be put toward the mission instead of fees if the it developed its own multiple award contract, and many agencies followed suit.
"What has changed is growth in the use of indefinite delivery, indefinite quantity contracts by agencies," says Alan Chvotkin, senior vice president for the Professional Services Council, an industry association. "When they were first formed in late 1990s, the effort was to streamline the process to get from task to award more quickly by using pre-qualifications. I think there was very little expectation we would have tens of millions or billions of dollars in ceilings or task orders. But as the mission grew and the workforce remained static or shrunk, the ability to use multiple award contracts grew and grew. And now it is the vehicle of choice for most agencies."
The second part of the issue for the growth in MACS is customer service. As GSA's business grew to $65 billion in 2009 from about $35 billion in 2000, the perception at least was the agency didn't keep up with customer needs.
One agency executive when asked why their agency was developing their own contract instead of using one that GSA runs, said quite candidly, "Their customer service isn't any good so why would we want to use them."
Some vendors and other agencies also say their experience with GSA is rarely good.
None of these executives would go on the record because they didn't want to be seen as critical of another agency or customer.
"In many cases, an agency's perception of GSA or any other GWAC or MAC is based on past performance information they have, correct or incorrect," Chvotkin says. "One bad experience may sour an activity and therefore they have no confidence. Activities like GSA have an enormous hill to climb to demonstrate value time and again."
And it seems GSA recognizes that this perception exists. Administrator Martha Johnson has made it a priority for GSA to be more intimate with their customers.
"Administrator Johnson charged us with being better and we will be better," says Ed O'Hare, GSA's assistant commissioner of the Integrated Technology Services Office in the Federal Acquisition Service. "Customer service is problematic in the schedules world and that is where I need to solve the problems."
Despite this perception, O'Hare says GSA continues to receive good reviews on its annual customer satisfaction survey. He says these surveys are done by a third party on behalf of the agency.
- GWACs: 78 percent satisfaction in 2009; target for 2010, 81.8 percent
- Network services: 73 percent in 2009, target for 2010, 73.4 percent
- Schedules: 67 percent in 2009, target for 2010, 70.9 percent
Jim Williams, the former commissioner of FAS, says the customer service complaint doesn't hold water.
"I wish we could get past this customer service issue," he says. "What does it mean to have customer service in GWAC mode? The only time a customer agency would ever come to GSA is to modify an umbrella contract. But most of the time when you're buying services such as under Alliant, which is extremely broad, you don't need to modify the contract. GSA said if the customer wants them to review their work, GSA will do it for free. Otherwise, the agency doesn't need to talk to GSA. Where customer service problem in that?"
Williams says even the complaint about fees is weak. He says agencies pay no matter who does their acquisition work-- GSA or the agency's own employees, which have built in costs for salaries, benefits and expenses.
O'Hare adds that under Alliant, for instance, the fees are capped at $150,000 per year per task order, and the industrial funding fee for the schedule is less than one percent.