(Editor’s Note.  We recently reported that the threshold for using simplified acquisition procedures (SAP) for commercial contracts had increased from $5.0 million to $5.5 million. That report triggered some inquiries on just what are these procedures. The inquiries we have received came from contractors both pursuing prime contracts as well as those anticipating awarding subcontracts to their suppliers. In researching recent developments of SAP we found an interesting article written by Michael Golden, Asst. General Counsel with the US Government Accountability Office, in the October 2004 issue of Procurement Law Advisor that addresses both the FAR and some interesting court decisions on the issue of SAP applied to commercial items.)

To streamline the federal procurement process, Congress in 1994 authorized use of simplified acquisition procedures (SAP) for purchases not exceeding $100,000 ($200,000 for contracts awarded and performed outside of the US in support of contingency or humanitarian operations). Such procedures, addressed in FAR Part 13, permit agency officials to expedite the evaluation and selection of offerors and to keep documentation to a minimum. In 1996, Congress expanded the use of SAP to allow government buyers to procure commercial items not exceeding $5 million in order to maximize efficiency and economy while minimizing the burden and administrative costs for government and industry. Under SAP, government buyers may issue combined synopsis and solicitation rather than separate ones and may significantly reduce solicitation notice and response time for receipt of quotations. The requirement is that the CO establish “reasonable deadlines” for submission of responses to a solicitation. Also consequences for late quotations are lessened where the GAO has held that requests for a quotation by a certain day cannot be construed as establishing a firm closing date unless the solicitation expressly states that quotes must by received by that date to receive consideration. In addition, the buyer is not required to establish a formal evaluation plan or competitive range, conduct discussions with vendors or score quotations or offers.  Rather a “simple comparative evaluation of offers” is considered proper.

The essence of SAP is that the price must be fair and reasonable. Ordinarily competitive quotes are sufficient to satisfy this obligation. If only one response is received, the CO should include a statement supporting the decision that the price is reasonable (e.g. comparison of price on prior buys, current price lists, catalogs, advertisements). Two other aspects of pricing are that (a) COs are to make every effort to obtain trade and prompt payment discounts and (b) evaluation of quotes should be inclusive of transportation charges from shipping point of the supplier to delivery destination. There is a common misconception that a simplified purchase price must always be awarded to the source offering the lowest price. Rather, the requirement is that the award must be made to the most advantageous quote or price where other factors that are stated in the RFQ are considered. The buyer may also minimize the documentation needed to support its selection decisions.  When making an award the agency is not subject to the FAR 15 principles of evaluation criteria but instead need only notify potential offerors of the basis on which the award will be made, which may be on price alone or other factors such as past performance and quality. 

Competition is required to “the maximum extent practicable” but need not meet the “full and open competition” requirements under normal acquisitions in order to avoid costly full competition for relatively inexpensive items.  Generally soliciting three sources is considered to be sufficient competition where documentation can usually be limited to notes in the contract file. A sole source simplified purchase is permissible when the agency reasonably determines at the time of award that only one source is available to meet its needs.  Even if it turns out there are other offerors out there it is still not sufficient to terminate the contract unless it is shown the agency made an unreasonable determination. 

Notification to unsuccessful bidders is to be given only if the award is required or requested to be synopsized. If a supplier requests information on a procurement that was based on more factors than price then the agency must provide a brief explanation under post-award debriefing rules found in FAR Part 15. When an agency makes a simplified purchases it will ordinarily do so by use of a purchase order or alternatively, use Form 347, Order for Supplies or Services.

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