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What To Do: When Less Than Three Contractors Are Available

Ordering Procedures for Federal Supply Schedules (FSS) When Less Than Three Contractors Are Available
NOTE:  The procedures discussed here apply to orders for supplies where the total value of the order is less than the Simplified Acquisition Threshold (SAT) ($150,000).
 
IAW FAR 8.405-1, when ordering supplies that exceed $3,000, but do not exceed $150,000, the ordering activity shall “survey” pricing from at least three FSS contractors, and make a “best-value” determination.  This is generally accomplished through GSA Advantage.  The ordering activity (contracting officer or purchase card holder) should review and compare prices using GSA Advantage from at least three contractors and then place the order on a best-value basis.  Alternatively, the ordering activity has the discretion to issue a Request for Quote.
 
What happens when there is less than three contractors available for a specific item?
While GSA works hard to ensure at least three contractors are available for all items on Schedule, in some instances the item(s) that the ordering activity is attempting to buy will be available from only one or two contractors.  The FAR does not provide specific guidance on how to handle this situation, so we must consider the available information within the regulation.

The competition requirements in FAR Part 6 do not apply to orders placed against Schedule contracts (see FAR 8.405-6).  However, an ordering activity must justify its action when restricting consideration to less than the three FSS contractors as required by FAR 8.405-1.  The intent of FAR 8.405-1 is to ensure competition occurs at the order level within the FSS program.

When the ordering activity believes that there is less than three contractors available on Schedule they may still place the order by giving fair notice to all contractors under the Special Item Number (SIN) for which it seeks to place an order. Giving fair notice to all Schedule contract holders is the standard for competition for orders above the SAT; however, this standard can also be applied to orders below the SAT.

FAR 8.405-1(c) supports this by stating that one method of meeting competition requirements is “by requesting quotations from at least three schedule contractors” and FAR 8.402(d) states that “eBuy is one medium for providing fair notice to all Schedule contractors.”  Based upon these requirements the ordering activity should post a Request for Quote to GSA eBuy prior to making a purchase.  This will help to ensure that the item(s) is not available from additional contractors and will meet the competition and fair notice requirements outlined above. 

Can I compare schedule prices to open market prices to ensure adequate competition?
No.  It is inappropriate to mix competition from vendors who do not have an FSS contract with those who do (see FAR 8.404(a)).
 
What if I am ordering services under FAR 8.405-2 procedures and less than three contractors are available?
 
Note:  It is rare when buying services that there are less than three contractors that can perform the required service, although it is possible. 

When ordering services where the total order value is under the SAT the same basic procedures apply.  The additional steps that must be taken for services is to prepare an RFQ with evaluation criteria and provide it to the contractor(s) along with the RFQ.  The ordering activity must also indicate the order type (i.e. Firm Fixed-Price, Time and Materials, or Labor Hour). 

Why do I not have to prepare a Limited Sources Justification (LSJ) IAW FAR 8.405-6 when there are less than three contractors available on Schedule?

LSJ Non-Brand-Name
The LSJ requirements are intended to be used when the ordering activity restricts the competition for the order to less than three contractors on Schedule.  By providing fair notice through GSA eBuy to all MAS contract holders under a specific SIN, the ordering activity has met competition requirements for that order and did not restrict the competition.

LSJ Brand-Name
If the requirement is for an item peculiar to one manufacturer (a brand-name item) the brand-name LSJ requirement must be met IAW with FAR 8.405-6(b).

How should I document my purchase records/contract file?

The following sample language may be considered by the ordering activity for file documentation, but the ordering activity should ensure that all pertinent details are documented and that agency and local policies are followed. 
 
The requirement to survey at least three prices within the Schedules program could not be met due to limitations on the number of contractors available [or the number of quotes received], which is outside the control of the ordering activity.  GSA has determined the pricing to be fair and reasonable and it is inappropriate to consider GSA Schedule contractors with non-GSA contractors (See FAR 8.404(d) and FAR 8.404(a) respectively).  Additionally, in order to ensure maximum competition and fair notice requirements are met a request for quote was posted to GSA eBuy. 
 
Based upon these facts, the contracting officer (or ordering official) has determined that it is in the best interest of the government to complete this purchase through the GSA Schedules program.”

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