Recently, the Government Accountability Office (GAO) released a bid protest decisionGSA Logo2 that calls into
question the extent to which GSA’s Federal Supply Schedule (FSS) program is commercial. In HealthDataInsights, Inc., GAO rejected the argument that certain pricing terms in a request for quotations (RFQ) were inconsistent with customary commercial practice on the basis that FAR Part 12 does not apply to FSS procurements, which are conducted under FAR Subpart 8.4. The decision contributes to uncertainty regarding the types of clauses that may be used by agencies in FSS acquisitions.

FAR Part 12 identifies policies and procedures for the acquisition of commercial items. In its HealthDataInsights opinion, GAO noted that the FAR directs contracting officers to use Part 12 procedures in conjunction with those prescribed in other parts of the FAR, such as FAR Part 15 (contracting by negotiation). FAR Part 12 does not specifically require that its provisions be used in conjunction with FAR Subpart 8.4 procurements. Accordingly, GAO held that because FAR Part 12  procedures do not apply to orders being placed under the FSS, an agency is not required to issue a waiver before including any provisions in RFQs that are inconsistent with customary commercial practices.

HealthDataInsights is a departure from recent precedent. Going forward, FSS contractors will be unable to rely on Part 12’s mandate for consistency with customary commercial practice to contest the terms of solicitations for FSS orders or blanket purchase agreements (BPAs). Although clauses in RFQs still might be inconsistent with the terms of an FSS contract or unduly restrictive, the mere fact that they may differ from commercial practice may not be enough to require revision of an RFQ. That is an interesting result given that FSS often is viewed as the primary means for the Government to acquire commercial products and services.

In a footnote, GAO stated in HealthDataInsights that FAR Part 12 would apply to GSA’s initial award of an FSS contract, citing the GSA Acquisition Manual. That view raises the question whether the panoply of clauses in an FSS contract are consistent with FAR Part 12.301’s mandate for consistency with customary commercial practice. Many in industry long have questioned whether the price reduction clause is consistent with commercial practice.  It is unclear whether or how GAO would entertain a challenge in this regard from a potential FSS contractor.

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