Does MAS have limits anymore, or is it an anti-competitive tool?

The Federal Supply Service has become a major player in the field of innovative
procurement. But perhaps its Multiple-Award Schedule has become too innovative.

Originally, the schedule was a system of governmentwide discounts negotiated by the
General Services Administration for small purchases of simple commercial items. Buys in
excess of $50,000 had to be advertised in advance, in the Commerce Business Daily, to make
sure competition wouldn't yield a better value. And orders were subject to a $300,000
ceiling, called a maximum order limit, which was later raised to $500,000.

The new rules, however, open up the schedule considerably. Gone is the requirement to
post a synopsis in the Commerce Business Daily for buys of any amount. Buys over the
ceiling became permissible, and so it effectively vanished. Services were added, even
those at hourly rates. And vehicles called blanket purchasing agreements permit
mix-and-match buys at special prices.

In effect, the schedule is now a mechanism for buying anything remotely
commercial--without competition. Are there any limits at all?

Apparently, the entire new procedure is open to question. In a 1992 decision, the
General Accounting Office declared illegal the process of getting lower prices for
purchases over the maximum order ceiling [Komatsu Dresser Co., 71 Comp. Gen. 260 (1992)].

GAO reasoned that the Federal Supply Service met the statutory requirement for
competition only for orders at or below the ceiling.

Another limitation is that it is usually improper to combine schedule items with
nonschedule goods and services in a single contract. GAO ruled accordingly in a case
dealing with the schedule buy of off-the-shelf software along with services to modify the
software that were not then included on schedule contracts [American Management Systems
Inc., B-216998, July 1, 1985].

The Court of Federal Claims recently handed down a similar decision [ATA Defense
Industries v. U.S., No. 97-382C, June 27, 1997]. The court issued an injunction stopping a
procurement of firing range upgrade equipment. Some of the equipment was available on
schedule contracts, but more than a third was not. The agency was unable to shoehorn its
schedule buy into a sole-source justification for the rest of the contract.

Beyond the limits of the specific facts at issue, there is also language in the cases
that casts broader doubts on the new shape of the schedule.

In the Komatsu Dresser case, GAO noted that Congress authorized the continuation of the
schedule under the Competition in Contracting Act to "enable user agencies to acquire
small quantities of commercially available goods and services with minimal administrative
burdens." The program now goes well beyond that modest aim.

Also, the court ruling in ATA Defense Industries notes that the current program may not
meet the requirement under CICA that a schedule contract order be the "lowest overall
cost alternative." An e-mail message appearing in the administrative record noted
that competitive contract prices were historically 20 percent below the schedule prices.

Even more interesting was the emphasis the court gave to an oft-neglected part of CICA.
Under the law, an agency must use the competitive procedure or combination of competitive
procedures best suited to the procurement. Thus, if an agency uses the schedule for a
high-dollar buy, it needs to have some justification for taking this route.

All this suggests that GSA may have stretched the schedule program too far. The major
benefits of schedule contracting are speed and simplicity. It is a cure for the cumbersome
process under the now-defunct Brooks Act. But robust competition was a major strength of
the Brooks Act. The schedule virtually abolishes competition.

The migration from Brooks Act contracting to unfettered schedule buys marks a swing
from one extreme to another. We are still seeking a process that delivers new technology
before it is obsolete, while harnessing the cost-cutting power of competition.

Joseph J. Petrillo is an attorney with the Washington law firm of Petrillo &

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