Selling Open Market Items
In past installments we talked about how a
contracting officer who wants to buy off the GSA Schedule will sometimes choose
to issue requests for quotes (even though the FAR doesn't require it) when:
Let's take a closer look.
"Incidental" Items
For many companies it's not practical to carry on the GSA Schedule all of the products that might be part of a large, complex IT Schedule purchase.
What happens, then, when a contracting officer wants to order from your company both Schedule items (say, for example, servers, desktops, keyboards and monitors) and non-Schedule items (cables, plugs, and power backup units)?
A few years ago, such an order was considered okay as long as the "open market" items could be deemed "incidental" to the order. Over time, the items labeled incidental got relatively large. In one decision, the General Accounting Office (GAO) allowed an incidental item purchase that was 17 percent of the total contract value.
In 1997, however, the U.S. Court of Federal Claims held that this practice violated the Competition in Contracting Act (CICA). On the heels of that decision, GAO ruled that there is no such thing as an "incidental exception" for open market orders. Agencies must still follow "applicable acquisition regulations." Pyxis Corporation, B-282469, July 15, 1999.
Open Market Options
What are the options, then, for both the vendor and the buyer after Pyxis?
If the buyer wants to make a direct purchase from one company (avoiding the process of seeking quotes), the open market items must be below the micro-purchase threshold of $2,500.
But, more to the point, what happens if open market items exceed $100,000? Does the buyer really have to go through a burdensome negotiated procurement for what used to be considered "incidental" items?
Fortunately, no.
If the incidental items are "commercial," the buyer can probably rely on FAR Subpart 13.5, Test Program for Certain Commercial Items, which authorizes the use of simplified procedures above the simplified acquisition threshold and not exceeding $5 million. In short, by soliciting quotes from three or more MAS vendors the buyer may purchase up to $5 million in open-market items combined with the Schedule items. (The authority to acquire supplies and services under FAR Subpart 13.5 is scheduled to expire on January 1, 2003.)
But what if the buyer chooses not to rely on FAR Subpart 13.5?
Teaming
This is one more reason why it's wise to have a teaming partner. If your company sells servers and desktops, team up with one or more that sell -- and have on the Schedule -- the equipment necessary to install and run servers and desktops. That way you're covered: (1) You don't have to have everything under the sun priced on the Schedule; and (2) You won't end up in a situation where a "pre-sold" buyer is forced to go through complex procedures to purchase open market items. If that happens, wave bye-bye to that big purchase.
If a buyer wants to place an order that includes open market items -- and you don't already have in place a teaming partner to provide those items -- go out and find one immediately. Use GSA Advantage to find a company that carries such products on the Schedule. Call up the company and let the right people know you have a business opportunity waiting for them. For more on teaming, see FAR Subpart 9.6.
This is all part of that bigger, overarching rule: set up options and be nimble so that buyers can make purchases quickly and easily. Personal selling is hard enough. Don't let the rules trip up your efforts.
- She's not quite convinced yours is the best solution (she's not "pre-sold"), or
- The order is very complex.
Let's take a closer look.
"Incidental" Items
For many companies it's not practical to carry on the GSA Schedule all of the products that might be part of a large, complex IT Schedule purchase.
What happens, then, when a contracting officer wants to order from your company both Schedule items (say, for example, servers, desktops, keyboards and monitors) and non-Schedule items (cables, plugs, and power backup units)?
A few years ago, such an order was considered okay as long as the "open market" items could be deemed "incidental" to the order. Over time, the items labeled incidental got relatively large. In one decision, the General Accounting Office (GAO) allowed an incidental item purchase that was 17 percent of the total contract value.
In 1997, however, the U.S. Court of Federal Claims held that this practice violated the Competition in Contracting Act (CICA). On the heels of that decision, GAO ruled that there is no such thing as an "incidental exception" for open market orders. Agencies must still follow "applicable acquisition regulations." Pyxis Corporation, B-282469, July 15, 1999.
Open Market Options
What are the options, then, for both the vendor and the buyer after Pyxis?
If the buyer wants to make a direct purchase from one company (avoiding the process of seeking quotes), the open market items must be below the micro-purchase threshold of $2,500.
But, more to the point, what happens if open market items exceed $100,000? Does the buyer really have to go through a burdensome negotiated procurement for what used to be considered "incidental" items?
Fortunately, no.
If the incidental items are "commercial," the buyer can probably rely on FAR Subpart 13.5, Test Program for Certain Commercial Items, which authorizes the use of simplified procedures above the simplified acquisition threshold and not exceeding $5 million. In short, by soliciting quotes from three or more MAS vendors the buyer may purchase up to $5 million in open-market items combined with the Schedule items. (The authority to acquire supplies and services under FAR Subpart 13.5 is scheduled to expire on January 1, 2003.)
But what if the buyer chooses not to rely on FAR Subpart 13.5?
Teaming
This is one more reason why it's wise to have a teaming partner. If your company sells servers and desktops, team up with one or more that sell -- and have on the Schedule -- the equipment necessary to install and run servers and desktops. That way you're covered: (1) You don't have to have everything under the sun priced on the Schedule; and (2) You won't end up in a situation where a "pre-sold" buyer is forced to go through complex procedures to purchase open market items. If that happens, wave bye-bye to that big purchase.
If a buyer wants to place an order that includes open market items -- and you don't already have in place a teaming partner to provide those items -- go out and find one immediately. Use GSA Advantage to find a company that carries such products on the Schedule. Call up the company and let the right people know you have a business opportunity waiting for them. For more on teaming, see FAR Subpart 9.6.
This is all part of that bigger, overarching rule: set up options and be nimble so that buyers can make purchases quickly and easily. Personal selling is hard enough. Don't let the rules trip up your efforts.
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