June 2014

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How Does An Agency Buy What it Needs? It Depends!


At home, you make the purchases you need in many different ways, and you take different things into consideration – cost, convenience, delivery, brand name.

You might shop at your local supermarket for your weekly groceries because they have the best prices, but pick up milk at a higher-priced but more convenient mini-mart on the way home from work. For larger purchases, like a new TV, you will take more time to compare the features of different brands, as well as warranties, delivery and price.ways, and you take different things into consideration – cost, convenience, delivery, brand name.

In many ways this mirrors the way federal agencies make their purchases. Contracting officials are required to document their decisions, and have to make more justifications as the overall cost of the item increases.

Micro Purchases: Under $3,000
Purchases up to $3,000 (Micro-Purchase Threshold) can be made without obtaining competitive quotes, and the agency may use a Government Purchase Card such as GSA’s Smart Pay card.

Simplified Acquisitions: Under $150,000
For purchases under $150,000 (Simplified Acquisition Threshold) the Contracting Officer will conduct initial market research: issuing Request for Information, Sources Sought or Market Research notices;
checking the System for Award Management database, the SBA’s Dynamic Small Business Search site, commercial websites, or any corporate capability statements on file. The Contracting Officer’s goal is to get at least three quotes, and document the decision making process.

Purchases may be set-aside for a small business, or for a specific socio-economic category (veteran-owned, woman-owned, 8(a), Hub-Zone) if there are at least two businesses in that category that are able to submit quotes.

Large Purchases: Over $150,000
When the value of the contract exceeds $150,000 the agency may issue a Request for Proposal, detailing the product or service required, and accepting proposals from prospective contractors describing how they intend to fulfill the requirement, and at what price. Proposals may be subject to negotiation after they have been submitted.

Evaluating Offers

Best Value
In ‘Best Value’ procurement the agency may consider several factors when making an award, including price, warranty or delivery. For service-type contracts they may also evaluate the company’s technical capability, managerial approach and past performance, in addition to price.

Low Price Technically Acceptable
The agency will require you to submit your Technical Proposal (managerial approach, capabilities, and past performance) separately from your Price Proposal. They will evaluate all offers for technical acceptability, including whether the offer conforms exactly to the submission instructions. All offers deemed technically acceptable are then separately evaluated for price.

Recurring Purchases, Long-Term & Multiple-Award Contracts

Almost all agencies have certain common purchasing needs – carpeting, furniture, office supplies, maintenance, or perishable foods for example. In many cases these purchases are consolidated into various purchasing vehicles, such as:

Blanket Purchase Agreement:
Used when an agency has a recurring requirement, such as office supplies. Allows the agency to purchase these items as needed over the life of the contract, usually from 1 to 5 years. May be awarded to a single supplier, or the agency may make awards to multiple contractors.

Indefinite Delivery, Indefinite Quantity Contract:
A long-term contract (usually 1 or 2 years) with no specific quantity or delivery dates. (The solicitation document may give an estimated quantity, and sometimes a guaranteed minimum.) May be a single award, or a multiple-award contract, with purchase or task orders issued as needed.

Multi-Agency Contracts:
A single contracting office will establish pricing and terms with many different companies, and allow other agencies to purchase from this pre-negotiated contract. Many different contractors are issued ‘approved’ status to supply specific products and services.

Contracting Officers can issue RFQs to three or more of these approved companies, knowing that the agency has already negotiated the best possible pricing and terms.

One of the best known and largest of these is the GSA’s Federal Supply Schedule Program, more commonly known as a ‘GSA Contract’.

A Government-Wide Acquisition Contract or GWAC, is a multi-agency contract vehicle specifically for Information Technology, and includes 8(a) STARS; Alliant Small Business; Millennia and more.

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