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Partnet – Part 4: Tera-Scope Contracts – Value Add or Gordian Knot?
Part 4: Tera-Scope Contracts – Value Add or Gordian Knot?
In Parts 1, 2 and 3 of this series we have looked at the trend for Federal Information Technology (IT) procurements to enter into “Tera-Scope” contracts where all possible IT goods and services are brought under one massive Performance Work Statement. Some Agencies are requesting all-or-none responses which are impossible for any one company to meet alone. This adds further to the complexity by necessitating Teaming Arrangements that create groups capable of meeting all the task areas, experience requirements and socio-economic requirements of the RFP. Some Agencies are creating their Tera-Scope RFPs but allowing companies to participate only in those areas representing their core competencies. This simplifies the proposal writing process for the contractor and the evaluation process for the Government.
Ultimately a set of contracts will result that can be used by the target customer groups within an Agency, or even Government-wide, for ordering. In Agency specific scenarios, the resulting contracts are promised to be the only vehicles to be used for any Agency requirement. Project Managers must work with a company or a Team that has one of the contracts under the Tera-Scope. Work may be competed only among those companies or Teams that have one of the contracts under the Tera-Scope. Let us hope the Source Selection Team has chosen wisely and avoided protests from the losing companies.
What does the Government believe will happen when it limits its buyers’ access to companies that provide goods and services?
Winning companies should provide better prices just because they know they are more likely to get work now that the competition has been narrowed (aka Strategic Sourcing).
Winning companies should continue to provide better and better prices because they have to compete within this smaller pool to actually get the work and therefore must remain competitive.
The Government has fewer contracts to manage and therefore should be doing a better job monitoring and managing them.
Buyers know they are choosing among vendors who have been vetted and selected through a rigorous process that should guarantee quality performance.
Buyers have less work to do in justifying their choices because they’re authorized from the start to limit who they consider and prices are already accepted (with additional discounts or reverse auctioning possible means of improving those).
Since most of these Tera-Scope contracts have requirements for a certain amount of the work to go to small businesses and small disadvantaged businesses, Agencies can get more easily meet their goals.
What are the possible negative outcomes?
The intent of socio-economic programs could be underserved. All that counts is orders and dollars to small businesses; not number of businesses being given opportunities. The letter of the law is being met while small businesses not selected are blocked from the opportunity to grow in the public sector. While GSA’s FSSI contracts are not Tera-Scopes they cover large ranges of commercial items (soon to be joined by services) where hundreds of participating sources are narrowed down to a handful. Not all MAS holders today get work but under FSSI, small business MAS holders who do not win FSSI are going to question whether it’s worth the effort to obtain and maintain their GSA Schedule contract. The large pool of entrepreneurs and start-ups will most likely dwindle as FSSI takes hold. This limits options for the future needs of the Government, but more importantly limits the number of small businesses that can do business with the Government.
Due to approaches like GWACs and FSSI, participation in GSA’s MAS no longer presents the possibilities it once did. No matter how good a company is the result is that they are denied access to Federal business in the name of efficiency. Tera-Scopes are further limiting who gets work. Recently John J. Young, former Under Secretary of Defense for Acquisition, Technology and Logistics, said that the Pentagon has steadily constructed barriers to entry for small and medium size firms, and that this needs to change. Tera-Scopes are perceived as producing better prices but they do block new entrants for long periods of time. A truly comprehensive scope leaves little room for finding a way in with something innovative.
Winning companies can, without collusion of any kind, figure out the natural level for labor hours and pricing that all participants in the Tera-Scope contract family can live with. With fewer competitors I wonder if it will be easier to figure out where that bottom is and, as time goes on will the bottom line creep up?
Even the most meticulous reviewer can only base decisions on what they see in each proposal. What is true on paper may leave something to be desired in actual performance. Once the guaranteed minimum is met for each winning company there is no promise of additional work to any company. There’s a possibility that poor performers may limit each project’s choices more than the Government really intended.
In reality the Government will have just as much to manage as ever because each task order issued to a Tera-Scope vendor is still subject to monitoring, reporting, auditing, invoicing and all other contract administrative matters.
To sum up, I don’t see a lot of additional benefits between MAS and long term contracts which include these Tera-Scope vehicles. If MAS was changed to permit cost type pricing arrangements it would represent a true open forum for facilitating contract awards under a broad range of products and services. If GSA contracting officers employed more rigor in their review process there would be more confidence in the schedule holders’ performance capabilities. The true efficiency is in forming contracts for the same products and services one time instead of each Department and Agency setting up their own. In the end the Government still has to compete each individual project among the schedule or contract holders, evaluate their responses and select one company or team to do the work. For each order placed all contract management and accounting functions still must be performed. The key difference between MAS and IDIQs/GWACs is the size of the vendor pool and the confidence level in how well vetted the vendors are from which to choose.
Tera-Scopes, on the other hand are a complex construct that I am not sure will serve the Government well in the long run. Tera-Scopes put every conceivable IT service in the hands of a limited number of companies for a long period of time. The Government has cut itself off from considering new companies with innovative ideas because they have committed the work to their Tera-Scope winners in order to get great pricing. As the Tera-Scope moves forward through time, however, who’s checking to see that this pricing promise is panning out? The Government neatly side-steps the issue of Operational Conflicts of Interest by making the Team Lead responsible for preventing them, but they’re putting that Team Lead in a very precarious position by allowing companies to participate on more than one team. Due to the complexity of Tera-Scopes there are probably just as many man hours expended in getting the procurement completed as if smaller chunks of IT services had been contracted for individually. I would expect to see a large turnover in Contract Managers who will burn out on keeping track of Everything. And finally, how is this significantly better than MAS? END OF PART 4
By Gabrielle Zimmerman|June 23rd, 2015|Defense Acquisition, Government Acquisition, Government eCommerce, Software Life Cycle Development|0 Comments
About the Author: Gabrielle Zimmerman
Gabrielle Zimmerman, PMP, CPCM is a Federal Retiree who spent most of her career working in Information Technology to support the procurement process. Years with the Defense Logistics Agency and the Defense Contract Management Agency have given her a great perspective on how things work and an authoritative voice. Today Gabrielle consults with Partnet, Inc. a pioneering small business that stays on the cutting edge of eCommerce and IT solutions delivery.
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