GSA Proposes Other Direct Costs Mechanism for Schedules

Under a proposed new rule for the GSA Schedules, the Government will be able to purchase the Other Direct Costs (ODCs) necessary for order completion on a given Schedules contract. If, for instance, your cybersecurity solution requires a dedicated server, once the rule takes effect you will be able to bill the Government for it.

Currently, the Schedules program has no means of providing for ODCs. Instead, the Government has to procure the ODCs through the unwieldy Federal Acquisition Regulations process – a massive inconvenience in order to acquire minor-but-necessary items. Meanwhile, contractors have no easy way to build ODCs into their pricing.

The Schedules are unusual in this regard. Other IDIQ style contracts have long had ODC mechanisms built in. The proposed rule thus marks a major step forward for the Schedules program.

The new rule will, however, place a few new burdens on contractors. First off, since ODCs will get their own Special Item Number (SIN), contractors will have to modify their contracts to include that SIN. Secondly, the Government is not handing contractors a blank check. Contractors must prove that the ODCs are “fair and reasonable” in price by providing three quotes for each item over the $3.5K micro-purchase threshold (that is, to prove you’re not charging $10K for a widget that could be purchased elsewhere for $5K). In other words, the burden of proving “fair and reasonable” pricing for open market items shifts from the Government to the contractor. Finally, ODCs are capped at 33% of the task or delivery order, so you must ensure that you do not exceed that threshold.

GSA plans to give the rule a test-run under the following schedules:

  • Schedule 03 FAC: Facilities Maintenance and Management
  • Schedule 56: Buildings and Building Materials/Industrial Services and Supplies
  • Schedule 70: General Purpose Information Technology Equipment, Software, and Services
  • Schedule 71: Furniture
  • Schedule 84: Total Solutions for Law Enforcement, Security, Facilities Management, Fire, Rescue, Clothing, Marine Craft, and Emergency/Disaster Response
  • Professional Services Schedule 99: All Professional Services
  • Schedule 738X: Human Resources and EEO Services

Global Services is prepared to assist with all matters relating to the proposed new rule – contact us today to discuss how it will affect your firm!