Buying Services
The Government buys many types of services. Examples of services include facility support services (e.g., janitorial or food service), administrative support, engineering, and program support. The Government is now embracing the concept of Software-as-a-Service (SaaS). Google AI defines SaaS as:
Software as a Service (SaaS) is a cloud-based software delivery model where applications are hosted by a vendor and made available to customers over the internet, typically through a web browser. Instead of purchasing and installing software on individual devices, users subscribe to SaaS applications and access them remotely. This model eliminates the need for local software management, updates, and infrastructure, shifting these responsibilities to the SaaS provider.
These are all different services requiring different skill sets, but how the Government buys these services is still governed by the FAR principles.
When purchasing services, several acquisition questions are asked to develop a requirement. Let’s go through some of the key questions that drive acquisition strategy.
The first question is whether the service is severable or non-severable. The FAR definition of both is as follows:
Severable services” means services that are continuing and ongoing in nature—such as help-desk support, maintenance, or janitorial services—for which benefit is received each time the service is rendered.
“Non-severable services” means work that results in a final product or end-item and for which benefit is received only when the entire project is complete, such as systems design, building conversion, or environmental study.
Contracts for severable services may cross fiscal years as long as the period of performance (excluding options) is no more than 12 months. Contracts for goods or non-severable services are not similarly limited.
The services being procured must be identified as either severable or non-severable. Due to fiscal law, this designation of service type will determine the contract periods of performance.
Then the question that has recently gained increased importance comes out of Executive Order 14275, titled “Restoring Common Sense to Federal Procurement”, which directs the elimination of excessive acquisition regulations to improve efficiency and save taxpayer dollars. In this EO, government agencies are instructed to assess their ability to work with existing government personnel and obtain approval for any acquisition decision involving the purchase of goods or services other than commercial services. The CO will have no input into the assessment of the agencies’ in-house capabilities. The CO will conduct market research on the availability of services from the industry. The CO will most likely, in most agencies, have to write and sign the waiver request to procure services; therefore, the CO will have to ensure that the assessment of in-house capabilities is accurate. I have found in my experience that this type of situation exists far too often in contracting. The CO is asked to sign for the agency a review document that consists of data wholly gathered by others. CO has to ask questions and get smart about a subject like this before signing.
The next question is what amount of service is required. For example, consider janitorial services. The agency must determine how many offices will be serviced, and whether that service will be daily. One agency I worked for decided that trash pickup service would not be available at each desk, but rather at designated collection points throughout the building, resulting in a different cost for removing trash in this manner.
In purchasing program support or engineering support, many agencies establish labor categories based on skill levels. For example, a junior program analyst may require a four-year degree, while a senior analyst may require an advanced degree and a higher level of experience. Each category is priced accordingly. A Full-Time Equivalent (FTE) becomes the measurement for the number of people required. The contract’s structure provides for FTE’s of various levels based on the skills needed. Now we get the severable/non-severable issue. Will the work being performed be ongoing or to complete a specific project?
Finally, the contract pricing type must be determined. Using fixed-price type contracts for services usually works well for repetitive service-type tasks. While labor cost per FTE may be fixed, the number of FTEs needed will vary depending on the budget or project growth. Agencies may opt for a cost-type contract to provide flexibility in performing the work.
These questions, when answered, will determine the requirement and contract structure that the CO will use in the RFP. There are multiple variations of these questions, each unique to its respective agency. With the push for SaaS, I see more fixed-price type contracts, as commercial contracts are usually fixed-price. Be prepared for much uncertainty in the coming months.
