The OLM clause comes to Schedules

June 28, 2018 Jason Bakke 0 Comments

GSA is incorporating 552.238-82, Special Ordering Procedures for the Acquisition of Order-Level Materials, into Schedule contracts, allowing those contractors to sell non-Schedule items on task and delivery orders. Let’s take a look at the clause.

It defines order-level materials as

supplies and/or services acquired in direct support of an individual task or delivery order placed against a Federal Supply Schedule (FSS) contract or FSS blanket purchase agreement (BPA), when the supplies and/or services are not known at the time of Schedule contract or FSS BPA award. The prices of order-level materials are not established in the FSS contract or FSS BPA.

The definition also clarifies that order-level materials are not open market items, as discussed at FAR 8.402(f); they become, essentially Schedule items. Now for the good stuff:

Order-level materials are the “materials” in time and materials, as used in 52.212-4 (which contains the commercial T&M payment clause). [552.238-82(d)(2)]

Order-level materials must be ancillary to a Schedule buy (they should not be used to circumvent competition for the OLM itself). [(d)(3)]

OLMs may account for no more than one-third of the order’s total [(d)(4)], and they must be segregated onto the order-level materials SIN. [(d)(5)]

Contractors without approved purchasing system must solicit three quotes for each OLM [(d)(9)], and one quote may be from the contractor itself [(d)(7)(i)(a)].

Those with approved purchasing systems must follow those procedures, which I believe to be a disadvantage.

In the end, the ordering contracting officer must determine OLM pricing is fair and reasonable [(d)(7)(ii)], including any indirect costs [(iii)]. Per 552.215-71, Examination of Records by GSA, GSA has the right to evaluate records demonstrating contractors’ compliance with this clause.

So, contractors who have accepted the mass modification with the clause can now add OLMs to orders, so long as they get three quotes to demonstrate the reasonableness of the OLM’s pricing and the OLMs account for under one-third of the order total. This change affords contractors enormous service-offering and pricing flexibility.

Care to discuss? Contact us.

The OLM clause comes to Schedules was last modified: June 28th, 2018 by Jason Bakke

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