GSA Schedules are the most-used federal acquisition vehicles with a wide array of commercial products and services. GSA leverages competition in the commercial market to set fair and reasonable pricing for agencies across the government, which can then place orders using already-negotiated pricing, seeking additional discounts.
There has long been concern about how other direct costs (so-called ODCs) are handled on Schedule contracts. ODCs are non-Schedule items that are supplemental to the order. There have been reports of agencies using Schedule buys to circumvent competition rules by procuring, with a small Schedule buy, significant ODCs—the real reason for the procurement.
For example, I may procure temporary secretarial services from a Temporary and Administrative Professional Staffing (TAPS) Schedule holder, with 500 laptops as ODCs. Those laptops are not supplemental to the order; they are likely its r’aison d’etre, with a similar or higher dollar value.
GSA has lacked visibility into ODCs, as Schedule holders report and pay the industrial funding fee (IFF) only on Schedule contract items.
Now, the agency has released the final version of the so-called order-level materials (OLM) rule (aka ODCs) to govern the provision of other direct costs on schedule buys:
- The cumulative value of OLMs must not exceed 33.33% of the order [552.238-82(d)(4)]
- Offerors must submit three quotes to KO [(d)(7)(i)]
- Pricing and indirects (if applicable) must be determined to be fair and reasonable
- Orders must be made off the forth-coming OLM special item numbers (SINs) [(d)(5)]
Companies with approved purchasing systems must use those purchasing systems for OLMs. Everyone else gets streamlined processes laid out in the new clause.
Additionally, OLMs may include non-Schedule items from the offeror, so long as they are one of three quotes for OLMs received (d)(7)(i)(b).
Companies will need to modify their Schedule contracts to add the ODC SIN. If you have any questions about this new rule, please contact us.