Doubts Raised About GSA’s New Vision for Federal Contracting
If comments at a recent public meeting are any indication, the General Service Administration’s proposed Transactional Data Reporting rule may be in danger of stalling before it even gets started. The proposed rule, announced to great fanfare last month, has been trumpeted by GSA as a “new vision for Federal purchasing.” During an all-day public meeting held at GSA headquarters, however, the proposal was the subject of pointed criticism from industry and government stakeholders alike. Some complaints were perhaps not unexpected given the dramatic changes envisioned by the rule, but the objections from both public and private sources could force GSA to rethink its proposed approach before moving forward with a final rule.
Overview of Proposed Rule
At the heart of the proposed Transactional Data Reporting rule is a shift away from the existing Price Reductions clause to a new framework that relies on the aggregation and analysis of large amounts of transaction-level data to permit horizontal price comparisons across vendors. Under the rule, contractors would be required on a monthly basis to report various elements of transactional data (e.g., unit measure, quantity of item sold, universal product code, prices per unit, etc.). This data would then be sorted and analyzed by expert “category managers,” with the resulting conclusions allowing government buyers — at least in theory — to “easily evaluate the relative competitiveness of prices between FSS vendors.” Significantly, contractors would no longer be subject to the basis of award customer tracking provision of the existing price reductions clause, but they would still be required to submit commercial sales practices (CSP) information when requesting a contract modification.
Comments at Public Meeting
Since its announcement last month, the proposed Transactional Data Reporting rule has attracted significant attention and inspired commentary from a broad range of perspectives. The Professional Services Council (PSC), for instance, issued a statement “welcom[ing] GSA’s publication of this partial elimination of the price reduction clause,” a move which it characterized as “necessary and long overdue.” Yet comments at the recent public meeting were generally less favorable, and consistently returned to two main themes.
First, many comments were critical of the proposed rule’s treatment of the existing Price Reductions clause, albeit for different reasons. As noted above, contractors would no longer be subject to the basis of award customer tracking requirements, but they would still have to submit CSP information, and GSA “would maintain the right throughout the life of the FSS contract to ask a vendor for updates to the disclosures on its commercial sales format.” Industry representatives at the meeting questioned the decision to retain this vestige of the much-maligned price reduction framework, saying that it could lead to greater confusion about pricing requirements going forward. Of specific concern was the fact that the proposed rule offers little guidance as to when or why GSA would be permitted to request price reductions, leaving open the possibility that contractors could be subject to transactional data reporting requirements in addition to — not instead of — the existing Price Reductions clause.
Meanwhile, comments from the GSA Office of Inspector General (OIG) were critical of the proposed rule’s partial elimination of the Price Reductions clause for the opposite reason. Unlike industry representatives, the OIG argued that the proposed rule “does not justify the elimination of the government’s price protections under the Price Reductions clause.” The OIG declared that the existing price reductions clause “results in real savings for the taxpayer that transactional data alone will not guarantee,” and it therefore urged GSA to utilize transactional data reporting as “an additional tool” rather than a replacement approach.
The second theme that repeatedly surfaced in comments during the meeting concerned GSA’s projections of the amount of time and resources that would be saved by the proposed rule. In the Federal Register announcement, GSA projected that “replacing the price reduction clause’s tracking customer requirement with transactional data reporting could reduce the annual burden on contractors by more than 85 percent, or approximately $51 million in administrative costs.” Both industry representatives and the OIG, however, questioned whether such projections were realistic. GSA’s calculations are premised on an assumption that, on average, contractors would need just 31 minutes per month to comply with the proposed transactional data reporting requirements. Given the amount of data that will have to be tracked and reported — as well as the above-referenced ambiguities in the proposed rule’s pricing provisions –members of the contracting community expressed concern that the rule’s burden would be greater than anticipated by GSA. The OIG echoed this sentiment, and added that the transactional data reporting rule also would consume additional government resources if the government is required to track what may be hundreds of millions of transaction-level data points.
Although the price protection provisions in multiple award schedule contracting have long been viewed as cumbersome and unworkable, the comments on the Transactional Data Reporting rule underscore the difficulty of overhauling such a complex system. And with GSA still accepting comments on the proposed rule until May 4, the number of competing perspectives and priorities will likely continue to grow. Whether and how GSA addresses these issues moving forward remains to be seen, and schedule contractors would be well-advised to closely monitor developments at the agency in the coming weeks and months.