An Open Market Item refers to a product or service that is not listed on a contractor’s GSA Schedule contract but is included in a federal purchase or order under specific regulatory conditions. These items are sometimes necessary to fulfill the complete requirements of an order, even though they have not been pre-negotiated or pre-priced through the GSA Schedule program.
In federal acquisition terminology, open market means that the item is being purchased outside the scope of an established contract vehicle such as the Multiple Award Schedule. Including such items in a GSA order is permissible only when certain rules are followed to ensure compliance with the Federal Acquisition Regulation.
The Relationship Between GSA Schedule Items and Open Market Items
GSA Schedule contracts are designed to offer federal agencies a streamlined method of purchasing pre-approved products and services at negotiated prices. However, not every requirement can be met entirely from schedule-listed items.
When an agency needs something that is not on the contractor’s schedule — such as a specialized component, unique material, or ancillary service — it may be added as an open market item. This approach allows the agency to consolidate procurement under a single order rather than issuing multiple separate purchases.
The Regulatory Framework Governing Open Market Items
The inclusion of open market items in an otherwise schedule-based order is addressed in the Federal Acquisition Regulation, particularly in FAR Part 8.402(f). These rules require contracting officers to follow specific procedures to ensure that the purchase remains compliant with federal law and acquisition policy.
The regulations make it clear that open market items are not part of the contractor’s GSA Schedule contract, and therefore must be treated as non-schedule purchases. This means they are subject to all applicable procurement laws and competition requirements as if they were being purchased independently.
Conditions for Including Open Market Items in a GSA Order
FAR 8.402(f) establishes the circumstances under which open market items may be included in a GSA Schedule order. The contracting officer must ensure that:
- All applicable acquisition regulations for open market purchases are followed.
- The items are clearly labeled as open market in the order.
- The price reasonableness of the items is determined and documented.
- Any required competition thresholds are met.
- Applicable trade agreements and socioeconomic program requirements are considered.
By meeting these conditions, the government maintains the integrity of the procurement process while accommodating necessary flexibility.
Examples of Open Market Items
Open market items can take many forms. Examples include:
- A specialized tool required for installation services when that tool is not listed on the schedule contract.
- Custom-fabricated parts for a piece of equipment purchased through the GSA Schedule.
- One-time training services from a third-party provider bundled into a larger schedule order.
- Consumable supplies required for a service that are not on the contractor’s schedule.
In each case, the open market nature of the item must be explicitly identified, and all associated procurement rules must be followed.
Benefits of Allowing Open Market Items
The ability to include open market items within a schedule order offers several practical advantages:
- Procurement Consolidation
Agencies can place a single order rather than multiple separate ones, reducing administrative burden. - Improved Efficiency
By combining schedule and open market items into one procurement, delivery and coordination can be streamlined. - Flexibility in Meeting Mission Needs
Agencies are not constrained by the contents of the contractor’s schedule contract when unique requirements arise. - Enhanced Vendor Coordination
Contractors can deliver complete solutions that include both schedule and non-schedule components.
Risks and Compliance Considerations
While open market items offer flexibility, they also introduce compliance risks if not handled properly. Potential pitfalls include:
- Failure to clearly identify open market items in the order, leading to confusion or audit issues.
- Neglecting to follow competition requirements for the open market portion of the order.
- Overreliance on open market items instead of leveraging the GSA Schedule for the majority of the requirement.
- Pricing disputes if price reasonableness is not well documented.
Contracting officers and contractors must be diligent in observing all applicable rules to avoid these risks.
Determining Price Reasonableness for Open Market Items
Just as with any federal purchase, the price for an open market item must be determined to be fair and reasonable. This determination can be made using a variety of methods, such as:
- Comparing the offered price to current market prices from other suppliers.
- Reviewing historical prices for similar purchases.
- Using published catalogs or price lists.
- Obtaining quotes from multiple sources when required.
The contracting officer must document the basis for the determination in the contract file.
Interaction with Other Procurement Rules
Open market items included in a GSA order remain subject to all relevant procurement laws, such as the Buy American Act, the Trade Agreements Act, and small business subcontracting requirements. This means that contractors and contracting officers must verify that the items meet all applicable compliance standards even though they are not part of the schedule contract.
Additionally, the dollar value of open market items can trigger different competition thresholds, making it essential to understand how these rules apply before including such items in an order.
Best Practices for Managing Open Market Items
Both agencies and contractors can benefit from following established best practices when dealing with open market items:
- Identify potential open market needs early in the acquisition planning process.
- Consult the FAR and agency policy to confirm compliance requirements.
- Clearly separate open market items from schedule items in quotes and orders.
- Maintain detailed documentation of price reasonableness determinations.
- Limit open market items to those that are truly necessary for the completion of the order.
These practices help ensure that open market items enhance, rather than complicate, the procurement process.
Example Scenario
An agency issues an order under a GSA Schedule contract for the installation of a secure communications system. The contractor’s schedule includes the core hardware and installation services, but the project also requires a specific type of custom cabling not listed on the contractor’s schedule.
Rather than issuing a separate open market purchase for the cabling, the contracting officer includes it as an open market item in the order. The officer obtains market quotes for the cabling, determines the price is fair and reasonable, and clearly identifies it as an open market purchase in the documentation. This allows the entire system to be delivered and installed under one coordinated order.
Conclusion
Open Market Items provide the necessary flexibility for agencies to complete complex procurements under a single order, even when all required elements are not available on a contractor’s GSA Schedule contract. While they offer efficiency and convenience, they must be managed carefully to ensure compliance with the Federal Acquisition Regulation and agency policies. Proper identification, documentation, and adherence to competition and pricing rules are essential to using open market items effectively and responsibly in federal procurement.
