Tuesday, December 16, 2008

“I got a ‘rated’ purchase order under my GSA Schedule? What does that mean?”

A client recently asked what it meant when a military Contracting Officer issued them a high-priority “rated” purchase order. Although the company had held a GSA Schedule for years, they had never seen a rated order, and weren’t sure what their obligations were.

GSA Schedule holders may receive orders that require the contractor to give preferential treatment to that order under a set of procedures called the Defense Priority and Allocations System (DPAS).

These orders can be rated either “DX” or “DO”, and these classifications establish the priority level of the order. DO rated orders take preference over non-rated (commercial) orders. DX rated orders take preference over DO rated orders and non-rated (commercial) orders. Each rated order must also contain a required delivery date.

Your obligation under a rated order is usually simple: you must modify your production or delivery schedules to ensure that rated orders are delivered by the required date, prioritizing them over non-rated (commercial) orders or lower rated orders, even if this means disrupting or delaying orders to other customers.

Under the DPAS system, you may also flow these ratings down to your suppliers, requiring them to modify their production and delivery schedules to ensure that you receive your component or raw materials at a higher priority than other customers.

There are some complex situations that arise regarding rated orders. For example, if you receive 2 rated orders simultaneously, you may need to determine the correct way to prioritize one over the other. You may also receive an order that combines rated and non-rated products.

You may even receive an improperly rated order – an order from an agency which is not authorized to place a rated order or for products which
by law cannot be placed on a rated order.

In order to resolve these situations, you may need to seek guidance from the original Defense Production Act of 1950, or in more recent implementing regulations such as the FAR and DFARS.

While not a common occurrence, understanding the basics of DPAS priority rated orders will allow you fulfill them as quickly as possible with minimal disruption to your commercial customers.

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