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April 17, 2006 - ASCE Comments - opposing use of Federal Supply Schedules for acquisition of engineering services

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The General Services Administration
Advance Notice of Proposed Rulemaking
GSAR ANPR2006-N01
71 Fed. Reg. 7910 (Feb. 15, 2006)
COMMENTS OF THE AMERICAN SOCIETY OF CIVIL ENGINEERS∗

April 17, 2006 

ISSUE

The General Services Administration (GSA) is requesting public comment on possible revisions to the General Services Administration Acquisition Regulation (GSAR) to clarify and simplify its procedures, 71 Fed. Reg. 7910 (Feb. 15, 2006). Commenters have been asked to discuss a number of issues, including recommendations for improvements to parts of the regulation that may “[u]nnecessarily impose an adverse significant economic impact on a substantial number of small entities.” Id. at 7911.

The American Society of Civil Engineers (ASCE) believes that the GSA strategy for providing long-term, governmentwide contracts with commercial firms for engineering and design services1 through its Schedules Programs operates to the great economic disadvantage ofsmall businesses. These engineering schedules also disregard the requirements of the Brooks Architect-Engineers Act of 1972, 40 U.S.C. 1101 et seq.

Therefore, we request that the GSA stop circumventing the government’s policy to select firms for engineering and related services on the basis of demonstrated competence and qualifications for the type of professional services required. To accomplish this GSA must remove any mention of civil engineering from the Federal Supply Schedules (Schedule 871 and Schedule 899). The current disclaimers are not working, as is evidenced by the contracts’ being awarded from FAR Part 36-covered activities by the Federal Supply Schedules.

BACKGROUND

A. The Federal Supply Schedules

Under the GSA Schedules—also known as Multiple Award Schedules (MAS) and Federal Supply Schedules (FSS)—GSA signs long-term, governmentwide contracts with commercial vendors to provide more than 10 million commercial supplies and services that can be ordered by federal agencies directly from GSA Schedule contractors. To become a GSA Schedule contractor, commercial firms first submit an offer in response to the applicable GSA Schedule solicitation; GSA then awards contracts to responsible companies offering commercial items, including architectural and engineering design services, that fall within the generic descriptions in the GSA Schedule solicitations.

The agency makes it very clear that price is the most important factor in the federal customer’s decision to buy a service from the FSS.

GSA Schedule contracts are negotiated with the intent of achieving the contractors' "most favored customer" pricing/discounts under similar conditions. In order to ensure that they receive the best value at the lowest overall cost when using GSA Schedule contracts, agencies are encouraged and empowered to seek price reductions, not only for orders over the maximum order threshold, but also when circumstances warrant.

U.S. General Services Administration, Frequently Asked Questions, at http://www.gsa.gov/Portal/gsa/ep/contentView.do?faq=yes&pageTypeId=8199&contentId=8106&contentType=GSA_OVERVIEW#1 (emphasis added) (last visited Apr. 5, 2006).

GSA goes on to urge prospective federal customers to hunt for bargains and negotiate for the best price available for all services offered through the FSS.

GSA has determined that prices under GSA Schedule contracts are fair and reasonable. With regard to Schedule contracts for services, while GSA has determined that the labor hour (hourly rate) for a labor [or] skill category is fair and reasonable, GSA has not determined that the level of effort or mix of labor [or] skill categories proposed in response to a specific requirement represents the best value. Therefore, when buying services that require a statement of work, the ordering activity must consider the level of effort and mix of labor [or] skill categories proposed for a particular requirement[] and make a determination that the total price is reasonable and represents the best value.

It is a proven best practice that ordering activities should seek additional price reductions [or] increased discounts and concessions when placing an order under a GSA Schedule contract. Contractors will often "sharpen their pencils" to obtain a large Schedule contract order. GSA Schedule contractors are not required to pass on to all Schedule users a price reduction extended only to an individual customer for a specific order.

General Services Administration Schedules, at http://www.gsa.gov/Portal/gsa/ep/contentView.do?programId=10016&channelId=-13463&ooid=8126&contentId=10779&pageTypeId=8199&contentType=GSA_BASIC &programPage=%2Fep%2Fprogram%2FgsaBasic.jsp&P=FCOC (emphasis in original)(last visited Apr. 5, 2006).

The agency operates the “Service Acquisition Center” to provide professional services from contractors on the GSA Schedules. These services are provided through the Financial and Business Solutions Center (Schedule 520), which offers accounting, budgeting, and financial management services provided by commercial firms; the Advertising and Integrated Marketing Solutions Center (Schedule 541), which provides public relations, marketing, and media services to federal agencies; and the Professional Engineering Services Center (Schedule 871), which offers, among other things, civil and design engineering services from a number of large engineering corporations. In addition, the GSA also offers engineering services through the Environmental Services (Schedule 899) under its Management Services Center program.2

Schedule 871, Professional Engineering Services, provides system design and engineering, including computer-aided designs and design studies. The schedule contains six subschedules, called “Special Item Numbers (SINs),” which break down the engineering schedule into specialty areas. Several commercial firms on this schedule provide engineering services that traditionally have been awarded under the Brooks Architect-Engineers Act.

Although the GSA Web site states that architectural, engineering, and design services are to be obtained under the Brooks Architect-Engineers Act, the agency retains a number of engineering firms on Schedule 871 that effectively offer civil engineering services governedunder the Brooks A/E Act in contravention of the Act. A few examples of commercial engineering firms offering Brooks A/E Act-covered services under the Federal Supply Schedules will suffice:

GSA Contract No. GS-23F-0025K. “[The firm] will translate product concepts into preliminary and detailed engineering design plans and specifications.”

GSA PES Contract No. GS-23F-0128N. System design, engineering, and integration services, including “a preliminary and detailed design … [and] engineering plans and specifications … “).

GSA PES Contract No. GS-23F-0114L. Geotechnical engineering services, including “site selection, foundations, ground stabilization, erosion control, geophysical investigation, seismic analyses, special inspection and testing, and construction monitoring.”

GSA PES Contract No. GS-23F-0161M. “Civil Engineering. Provides professional civil engineering design services for site improvements, roads and streets maintenance and construction, sanitary and stormwater collection and conveyance systems, drainage and stormwater management facilities and wastewater treatment plant operations and maintenance.”

GSA PES Contract No. GS-00F-0005R. System, design, and integration services, including “a preliminary and detailed design [and] engineering plans and specifications …”

Schedule 899, Environmental Services, also provides engineering-related services. Among the types of engineering services obtainable from the this Schedule are hazardous-wastesite investigations, environmental assessments and the preparation of Environmental Impact Statements under the National Environmental Policy Act (NEPA); mapping and cartography; the drafting of endangered species, wetlands, watersheds, and other natural resource management plans; the preparation of waste-management plans; environmental program management and environmental regulation development; “and other environmentally related studies … or consultations.”

See General Services Administration, Federal Supply Schedule Listing, Schedule Summary, at http://www.gsaelibrary.gsa.gov/ElibMain/ScheduleSummary?scheduleNumber=899&x=18&y=12 (last visited Apr. 5, 2006).

B. Qualifications-Based Selection for A/E Design Services

The Brooks Architect-Engineers Act established a governmentwide policy “to publicly announce all requirements for architectural and engineering services and to negotiate contracts for architectural and engineering services on the basis of demonstrated competence and qualification for the type of professional services required and at fair and reasonable prices.” 40 U.S.C. § 1101(emphasis added).

Congress clearly intended to protect the ability of the government to obtain on a competitive basis the services of the most qualified architects and engineers at the fairest price. “[T]he committee feels that the Government's interest, which is the public interest, is best served by placing the emphasis on obtaining the highest qualified architectural and engineering services available.” S.Rep. No. 92-1219 (1972), reprinted in 1972 U.S.C.C.A.N. 4767, 4772.

The Comptroller General has stated repeatedly that the contracting agency retains wide discretion in the use of the Act in order to safeguard the government’s best interests.

[T]he determination concerning the applicability of the Act to a particular procurement is the responsibility of the contracting agency … because it concerns the nature and the scope of the work to be done and the needs of the contracting agency. We have, therefore, recognized the broad discretion on the part of the
agency to make these determinations and we will not disturb them unless the agency's conclusions are shown to be so unreasonable as to demonstrate an intent either to circumvent the Act or to employ the noncompetitive procedures enunciated by the Act to secure services that should properly be solicited by
competitive means.

In Re Consulting Engineers Council of Metropolitan Washington 1983 WL 27932, *2 (quoting Association of Soil and Foundation Engineers, 62 Comp. Gen. 297 (1983), 83-1 CPD 362).

C. The Engineering Industry

In 2002, the last year for which complete data are available, there were 55,229 establishments providing engineering services in NAICS sector 541330. U.S. CENSUS BUREAU, ARCHITECTURAL, ENGINEERING, AND RELATED SERVICES: 2002, 19 (2004).3 These establishments generated $116.5 billion in revenues. The 50 largest engineering firms operated 2,433 establishments—just four percent of the total. But these 50 firms had total revenues of $40.2 billion—nearly 35 percent of all industry revenues for 2002. Thus the bulk of the engineering industry’s income in 2002 was generated by small (or smaller) businesses.4

COMMENTS

The selection of professional engineers as prime consultants and subconsultants should always result from competition based on the qualifications best suited to complete the work successfully. Qualifications, including the training, registration, experience, skills and availability of the proposed project personnel, must be the dominant factor in the selection of engineering services.

The cost of engineering services, while important and meriting careful negotiations and performance accountability, is related to work to be performed which often is not clearly defined at the time the engineer is selected. Therefore, cost should be secondary to professional qualifications.

The qualifications-based selection (QBS) procedure assures the selection of the best qualified firm. Under QBS, A/E firms compete based on their professional qualifications and quality of services, which allows large and small firms alike to compete on an equal footing. Thus, the process allows small firms to try to win contracts based exclusively on the quality of their services. Larger firms would have a distinct advantage if competitive bidding were based solely on price. Indeed, we have been told by more than one executive of major engineering firms that the larger firms would be able to win many more federal contracts without the Brooks Architect-Engineers Act simply by underbidding their smaller competitors and making up the loss elsewhere on the contract.

QBS is the preferred system for selecting A/E services because the precise scope and range of the design services which are the basis for any contract price cannot be accurately determined until specific negotiations begin. Innovative approaches and alternative designs or methods arise when a client and a design professional develop the precise scope of a project together.

Too often when a scope of work is developed as part of a price bidding system prior to the selection of an A/E firm, it is so vague that inaccurate assumptions are made by the A/E firm responding to the solicitation. Even when a government agency or grantee has in-house professional design staff sufficiently skilled to develop a detailed scope of work upon which an A/E's price bid can be based, the complexity of the contract cannot be anticipated and the bids often do not accurately reflect the cost.

QBS requires A/E firms to compete based on skills, experience and ability to perform the required services-not on the illusory economy that a low bid may seem to provide. Low bids requiring substantial change orders or resulting in high construction or high life-cycle operating or maintenance costs are not cost effective.

QBS is the preferred procurement process for the selection of A/E services; a simplified QBS should be used in small purchase procedures; and whenever state or local law requires the use of QBS for government-funded A/E services, QBS should be used for contracts for federally funded projects that solicit such services.

This process has been so successful at the federal level that it is recommended by the American Bar Association in its model procurement code for state and local government. Fortyfive states have enacted their own qualifications-based selection laws for architecture, engineering, surveying and mapping services. Others use it as a standard procedure. Today, no state has a specific law requiring bidding of architectural or engineering design services.

ASCE urges GSA to remove the ability for agencies to purchase A/E services from the Federal Supply Schedule, which is a direct infringement on the explicit requirements of the Brooks Architect-Engineers Act.