Procurement Services Agreement (PSA)
A Procurement Services Agreement (PSA) is an interagency agreement through which one federal agency (the servicing agency) acquires goods or services on behalf of another federal agency (the requesting agency), governed by FAR Subpart 17.5 and the Economy Act.
What Is a Procurement Services Agreement?
A Procurement Services Agreement is the formal interagency arrangement supporting an interagency acquisition. Two main types of PSA-based acquisitions exist: assisted acquisition, where the servicing agency executes the procurement on behalf of the requesting agency (the servicing agency is the contracting party); and direct acquisition, where the requesting agency uses the servicing agency's pre-established contracts (the requesting agency contracts directly under those terms).
PSAs document the responsibilities of each agency, the funding mechanism (typically reimbursable from the requesting agency's appropriation), the scope of services, and the management of the resulting contracts. GSA's Assisted Acquisition Services is one of the largest federal PSA providers, supporting federal agencies through GSA-administered procurements.
GSA Schedule contracts are also widely used through PSA-style direct acquisition arrangements. PSAs allow specialized contracting expertise and established vendor relationships to be shared across federal agencies.
Key Characteristics
Procurement Services Agreements have several defining attributes. They involve two federal agencies: the requesting agency (the end user) and the servicing agency (the contracting party).
They are governed by FAR Subpart 17.5: which establishes the framework for interagency acquisitions. They include funding documentation: reimbursable funding from the requesting agency to the servicing agency.
They specify roles and responsibilities: who is responsible for technical evaluation, contracting decisions, and contract administration. They leverage specialized expertise: servicing agencies often have specialized contracting expertise or established vendor pools.
They support common contracting types: assisted acquisition (servicing agency contracts) or direct acquisition (requesting agency contracts under servicing agency's vehicles). Each characteristic shapes how contractors engage with PSA-based opportunities.
How It Works in Government Contracting
Procurement Services Agreements operate through a defined cycle. First, a federal agency (requesting agency) identifies a procurement need and decides to use a PSA-based interagency acquisition rather than direct procurement.
The decision often reflects: lack of internal contracting expertise; need for a specific contract vehicle the servicing agency administers; tight timelines requiring established processes; or strategic relationships. Second, the requesting agency engages the servicing agency to discuss the requirement and execute a PSA documenting roles, funding, and scope.
Third, the servicing agency executes the procurement: developing the acquisition strategy, releasing the solicitation, evaluating proposals, and selecting the awardee (for assisted acquisition); or supporting the requesting agency's use of the servicing agency's existing vehicles (for direct acquisition). Fourth, the contract is awarded with the servicing agency typically as the contracting party.
Fifth, the contractor performs the work supporting the requesting agency, with contract administration handled by the servicing agency (in coordination with the requesting agency's technical representatives). Sixth, the requesting agency funds the work through reimbursable transfers to the servicing agency, and the servicing agency pays the contractor.
Real-World Example
A small federal agency needs IT modernization support but lacks internal contracting expertise for a complex IT services procurement. The agency engages GSA Assisted Acquisition Services to execute the procurement.
GSA and the requesting agency execute a Procurement Services Agreement documenting the scope, funding ($15 million over 3 years), and respective responsibilities. GSA Assisted Acquisition Services develops the acquisition strategy, releases the solicitation under the GSA Alliant 2 GWAC, evaluates proposals from Alliant 2 contractors, and selects the awardee.
The contract is awarded with GSA as the contracting party. The contractor performs the IT modernization work supporting the requesting agency.
Contract administration is handled by GSA (cost reporting, modifications) in coordination with the requesting agency's technical representatives (technical reviews, deliverable acceptance). The requesting agency reimburses GSA through quarterly transfers, and GSA pays the contractor.
The PSA approach delivers specialized contracting expertise, established Alliant 2 vehicle access, and streamlined execution that the requesting agency could not have achieved alone. The 0.75% Alliant Contract Access Fee plus a modest GSA assisted acquisition service fee covers GSA's costs.
Regulatory Framework
Procurement Services Agreements are governed by FAR Subpart 17.5 (Interagency Acquisitions), the Economy Act (31 USC § 1535), the Federal Acquisition Streamlining Act, and various agency-specific authorities. The Economy Act provides the broad statutory authority for one federal agency to acquire goods or services on behalf of another.
FAR 17.502 (Procedures) establishes requirements for the requesting agency's determination that an interagency acquisition is the best procurement approach. FAR 17.503 (Ordering Procedures) addresses the operational details of placing orders under interagency agreements.
OMB Memorandum M-19-23 (Centralized Mission Support Capabilities for the Federal Government) provides guidance on interagency acquisition use. Many PSAs leverage Government-Wide Acquisition Contracts (GWACs) like Alliant and CIO-SP3. Bid protests of PSA-based contracts follow standard FAR 33.103 rules.
Why It Matters for Contractors
For federal contractors, PSAs reshape the contracting relationship. The end-user agency is not the contracting party; the servicing agency is.
This affects: capture strategy (relationships with both agencies matter); contract administration (working with the servicing agency for modifications, while supporting the end user); and past performance (CPARS may reflect both agencies' input). PSA engagement interacts with Government-Wide Acquisition Contracts (PSAs frequently use GWACs), with Alliant and CIO-SP3 (commonly used through PSA), with GSA Schedule (commonly accessed through PSA-style direct acquisition), with past performance (CPARS may reflect both agencies' input), and with capture planning (capture strategy must address both servicing and requesting agencies).
Contractors that understand PSA dynamics build capture strategies that engage both the contracting office and the end-user agency, maximizing competitive positioning.
Common Misconceptions
The end-user agency is the contracting party in a PSA.
Usually no, for assisted acquisition. The servicing agency is the contracting party, with the end-user agency as the customer. For direct acquisition under the servicing agency's vehicles, the end-user agency may be the contracting party. The distinction matters for contract administration and dispute resolution.
PSAs are only for small agencies that lack contracting capability.
No. Large agencies also use PSAs to leverage specialized expertise, established vehicles, or strategic relationships. GSA Assisted Acquisition Services supports many large federal agency procurements.
PSA-based contracts use different FAR rules.
No. PSAs use standard FAR procurement rules, with FAR Subpart 17.5 providing the interagency-specific framework. The procurement itself follows standard FAR procedures with the servicing agency as the contracting party.
Frequently Asked Questions
What is the difference between assisted acquisition and direct acquisition?
Assisted acquisition: the servicing agency executes the procurement and is the contracting party. Direct acquisition: the requesting agency uses the servicing agency's pre-established contracts and is itself the contracting party. Both are forms of interagency acquisition supported by PSAs.
How does a PSA support GSA Schedule use?
Federal agencies can use GSA Schedule contracts directly without a formal PSA in many cases. Larger or more complex acquisitions through GSA Assisted Acquisition Services typically involve formal PSAs documenting the assisted acquisition relationship.
What fees apply to PSA-based contracts?
Servicing agencies typically charge fees covering their costs. GSA Assisted Acquisition Services fees are negotiated based on the assistance scope. GWAC Contract Access Fees (typically 0.75% for Alliant) apply when GWACs are used. Total PSA-related fees are usually 1-3% of contract value.
Who handles contract modifications under a PSA?
The contracting agency (servicing agency for assisted acquisition; requesting agency for direct acquisition under the servicing agency's vehicles). The end-user agency's technical representatives provide input on modification needs but the contracting agency executes the formal modification.
Related Government Contracting Topics
Government-Wide Acquisition Contract (GWAC): Multi-agency IT contract category frequently used through PSA-based interagency acquisitions.
Alliant Contract Vehicle: GSA-administered GWAC commonly used through PSA arrangements.
GSA Schedule: Common federal contract vehicle accessed through PSA-style direct acquisition.
Past Performance: CPARS may reflect both servicing and requesting agency input under PSA-based contracts.
Capture Plan: Strategic document for opportunity pursuit; PSA-based opportunities require dual-agency capture strategy.
How LotusPetal AI Helps
LotusPetal AI's capture and proposal automation platform helps federal contractors manage PSA-based capture, interagency acquisition strategy, and multi-agency relationship management with the same discipline as the largest primes. The platform combines compliance automation, AI-assisted proposal drafting, and structured capture workflows so teams capture the right opportunities, write compliant proposals, and protect their win rate.