Friday Flash 08.05.16

FAR & Beyond Blog: The Dog Days of Summer

The Dog Days of Summer typically see a slow-down in the procurement policy world.  Not this year!  Since Memorial Day, we have seen the issuance of the GSAR Commercial Supplier Agreement (CSA) proposed rule, the Federal Strategic Sourcing Initiative proposed rule, Transactional Data Reporting (TDR) Rule, the Veterans First Contracting Policy Memorandum as a result of the Kingdomware Supreme Court Decision and, just last week, the release of a GSA Inspector General Report on IT Schedule 70 and reseller pricing.  These are all worthy topics for the FAR & Beyond blog.

With regard to the TDR rule, two weeks ago the FAR & Beyond blog launched the first in a series on the TDR rule by focusing on whether the rule’s reporting requirement are consistent with customary commercial practice.  This week the Coalition submitted comments on GSA’s proposed CSA rule and, accordingly, this week’s blog will further focus on the CSA proposed rule.  The TDR commentary series will return/continue next week.

As noted in our CSA comments, the Coalition supports the common goal of streamlining federal procurement.  However, the key to streamlining the procurement system is putting “commercial” back into commercial item contracting.  Streamlining commercial item contracting will reduce barriers to entry into the federal marketplace for small, medium and large commercial business.  Promoting effective commercial item acquisition policy can be a game changer, increasing access to new, innovative technologies and solutions from across the commercial market.

Unfortunately, the unintended consequences of the proposed CSA rule will be increased complexity, risk and burden for commercial item contractors.  The change in the order of precedence in the proposed rule creates a preference for government unique terms and conditions that will increase costs and risk for GSA contractors, especially small business concerns.  The result will be higher prices/costs for customer agencies using GSA’s suite of government-wide contract vehicles.  Ironically, this over regulation of commercial item acquisition puts at risk efforts by GSA’s Technology Transformation Service to promote access to, and adoption of, new technologies to meet customer agency IT mission support.

Of particular note in the proposed rule is a new, government-unique information collection requirement.  The background of the proposed rule provides that “[i]ncorporation by reference is allowed provided the full text of the terms is provided with the offer.”  The specific language of the proposed new GSAR clause states that “[t]his commercial supplier agreement may incorporate additional terms by reference, provided that the full text of the terms are provided with the offer.”

As a threshold matter, it is truly a government-unique requirement to provide that a contractor may incorporate by reference so long as it does not incorporate by reference.  Is up is now down?  More significantly, this language creates a new, burdensome information collection requirement for all GSA contractors.  It essentially means that all documents that are normally incorporated by reference as part of a license agreement, service agreement or other terms of sale or purchase must now be submitted to the government.  This significant new information collection burden will potentially impact approximately 18,000 Federal Supply Schedule (FSS) contractors. It will negatively impact thousands of commercial companies, especially small businesses, who may yet seek an FSS contract, thereby creating a new barrier to entry to the federal marketplace.

Troublingly, in the background information for the proposed rule, GSA concludes that the “proposed rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. 35).”  However, GSA provides no factual or legal analysis supporting this conclusion, despite the new requirement to submit to the government the full text of any terms “incorporated by reference.”

Finally, from a strategic perspective, the combined information collection burdens of the TDR rule and the proposed CSA are unprecedented.  There is a significant risk that GSA contracting officers, and the FSS program as a whole, will be overwhelmed by the scope and volume of these new data collection requirements.  At the same time, these reporting burdens create operational/administrative incentives for companies to seek less burdensome, more efficient contract vehicles to support their federal business.  The Coalition urges GSA to work with its industry partners to put commercial back in commercial item contracting and reduce information collection burdens.  We stand ready to work with stakeholders across the procurement community and GSA towards such an effort.

GAO Upholds Encore III Protest

The Government Accountability Office (GAO) has upheld a pre-award protest of Defense Information Systems Agency’s (DISA) 10 year $17.5 billion Encore III contract. According to the press release issued after the decision, “First, although the RFP contemplates awarding some portion of the task orders on a cost reimbursement basis–perhaps as many as half of the orders, according to the record developed during the protest–the solicitation does not seek any information for, or provide for the evaluation of, any of these costs.  Second, the solicitation establishes a cost/price evaluation scheme that mandates the elimination of an offeror’s proposal if the total proposed price falls below a pre-defined level. GAO concluded that the evaluation scheme was arbitrary, and thus inconsistent with procurement law and regulations.”

In August 2015, The Coalition submitted a letter to DISA expressing concern at the decision to use low price technically acceptable (LPTA) evaluation methodology for the contract. The Coalition also sent another letter to Under Secretary of Defense for Acquisition, Technology, and Logistics (USD ATL) Frank Kendall in October.

Two contractors submitted pre-award protests in April. Both protests referenced the Coalition’s letter to USD ATL Kendall. GAO has recommended that DISA amend the solicitation consistent with GAO’s decision.

 

4th Annual Joseph P. Caggiano Memorial Golf Tournament – August 24th

golf pic2

 

This charity tournament is to honor our good friend and colleague, Joe Caggiano, who was not only a 23-year veteran of the federal contracting marketplace but a naval veteran as well.  Once again, this year’s tournament proceeds are going to support the Coalition’s endowment for a qualified veteran concentrating their studies in the field of US Government procurement and pursuing the JD/LLM degree or the interdisciplinary Masters degree at The George Washington University. Joe would be so proud of this endowment as we encourage the next generation of skilled professionals to lead this critically important sector of the US economy.

This year’s tournament will once again be held at the beautiful Whiskey Creek Golf Course in Ijamsville, MD.  We have several exciting sponsorships available including title sponsors, beverage cart sponsors, hole sponsors, and many more with all budgets in mind. Please click here to review sponsorship opportunities and contact Matt Cahill at mcahill@thecgp.org or 202-315-1054 with any questions or commitments. Registration is open now and we look forward to seeing you on the course!

To register, please click here.

 

Coalition Responds to CSA Proposed Rule

On Monday, August 1, the Coalition submitted comments in response to the General Services Administration’s (GSA) proposed rule, General Services Administration Acquisition Regulation (GSAR); Unenforceable Commercial Supplier Agreement Terms. Although the Coalition agreed with the proposed rule’s underlying intent to streamline end user license agreement reviews and contract negotiations by ensuring that certain contract language defers to Federal law where there is a conflict with commercial terms. However, the change to the order of precedence and the increased burden of the proposed rule would adversely affect the availability of commercial products and services in the Federal marketplace.

Specifically, the Coalition expressed concerns related to the proposed rule’s compatibility with current law and regulation, as well as its potential to increase burdens for contractors. The Coalition recommended that GSA reverse the change to the order of precedence to the FAR clause language that existed prior to GSA’s July 2015 class deviation. This change would make the proposed rule consistent with law and regulation, as well as open the Federal marketplace to innovative solutions. In addition, the Coalition recommended that GSA revise GSAR Part 552 to allow for the incorporation of additional terms by reference. If GSA were to adopt this standard commercial practice, it would lessen the proposed rule’s burden for both contractors and government. For a copy of the Coalition’s public comments, visit our policy documents page.

 

Elliott Branch on SeaPort-e – August 16th

The GWAC/MAC Committee will be hosting a meeting on August 16, at 10:00 am at CGI Federal. The speaker for the meeting will be Elliott Branch, the Deputy Assistant Secretary of Acquisition and Procurement for the Navy. He will be speaking about the Navy’s SeaPort-e vehicle and discussing responses to the recent SeaPort-e request for information. The Coalition responded to the RFI in July. SeaPort-e will expire in April 2019.

Any members who would like to attend the meeting can RSVP to Jason Baccus at jasonbaccus@thecgp.org. RSVPs are required at CGI for security purposes.

 

Transactional Data Tutorial Now Available!

On August 2, the General Services Administration (GSA) hosted a webinar focusing on the upcoming Transactional Data Reporting (TDR) pilot program. GSA announced that the FAS Sales Reporting system, which will support the TDR information collection, is now open to the public and provides a tutorial to help vendors understand the new system and to assist with reporting the data.

GSA will be hosting a second TDR webinar on August 17, 2016, from 1:00 pm to 3:00 pm EST. Those interested in attending may register here.

 

This Week On Off the Shelf: Greg Giddens

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This week on “Off the Shelf”, Greg Giddens, principal executive director and acting chief acquisition Officer, Department of Veterans Affairs, Office of Acquisition, Logistics and Construction, shares the vision for VA ‘s acquisition and logistics operations.

Giddens outlines the ongoing transformation of the VA supply chain and the vision for MyVA.  He also shares the acquisition principles shaping VA procurement operations including transitioning from a rule-based to principle-based procurements which provide a strong, foundation for VA acquisition operations.

To listen to the show, click here.

 

Professional Services Strategic Plan

On Tuesday, August 2, Tiffany Hixson, the Professional Services Category Manager, released the Professional Services Category Strategic Plan on the Acquisition Gateway. The plan describes how category management will be applied across the government-wide Professional Services category through the following seven key initiatives:

  1. Analyzing spend
  2. Improving requirements development and contract management through Acquisition Gateway tools
  3. Designating best in class contracts
  4. Developing a supplier management program
  5. Participating in language services working group
  6. Designating Identity Protection Services BPA as preferred source
  7. Launching civilian agency contract audit support services contract

The General Services Administration (GSA) has requested feedback from Industry regarding the strategic plan. After the surveys are completed, GSA will be conducting interviews with industry to gather more feedback on the strategic plan.

 

GAO: More Oversight Needed for DATA Act

The Government Accountability Office (GAO) published a report on July 29, detailing its concerns related to the implementation of the Digital Accountability and Transparency (DATA) Act. Specifically, GAO is concerned that the Office of Management and Budget (OMB) and the Treasury Department (Treasury) are not conducting sufficient oversight and management in advance of the law’s implementation next year.

In their review, GAO found that OMB and Treasury lack full documentation of controls and processes related to the law’s implementation. In addition, the agencies have yet to compile a full list of agencies that will be required to report spending data pursuant to the law. Further, GAO has yet to receive an agency implementation plan that contains all 51 elements, organized amongst 4 categories, described in OMB and Treasury guidance.

gao graph

Based on their report, GAO recommended that OMB and Treasury work together to determine a complete list of agencies that would be subject to the DATA Act’s requirements, as well as fully document all necessary controls and processes. OMB generally concurred with GAO’s report and Treasury deferred to OMB.

 

GSA Blog: Efforts to Improve Schedule Pricing

On July 29, the General Services Administration (GSA) published a blog on the recently released GSA Office of Inspector General (IG) audit on Schedule 70 Information Technology (IT) resellers and the latest initiatives designed to transform the Schedules program and address price variability at the contract level.

The July 22, 2016 IG audit focused on IT reseller’s effect on pricing, procurement workload, and the enforcement of contract clauses. Based on their findings, the IG made six recommendations to GSA, including establishing performance measures focused on price for contracting staff and procedures to better manage pricing on the Schedules. In addition, the IG recommended that GSA consider increasing the $25,000 minimum sales threshold for IT schedule reseller contracts to cover the agency’s costs, as well as alternatives to the $2,500 minimum payment clause.

In their blog, GSA agreed with the IG’s concerns and described their recent efforts to address them, including the Competitive Pricing Initiative (CPI), Formatted Product Tool (FPT), and Transactional Data Reporting (TDR) pilot. Contracting officers have also been utilizing GSA Price Point (XSB) which allows them to “compare products and evaluate prices of all existing and future GSA Advantage! product listings and contract price modifications.”  According to GSA, these initiatives have produced savings and reduced burdens by streamlining processes to allow for smarter purchasing decisions. Moving forward, GSA believes that these efforts will continue to enhance the Schedules program and provide best value to stakeholders.

 

OMB Launches Data Center Initiative

On Monday, August 1, the Office of Management and Budget (OMB) announced that it has launched the Data Center Optimization Initiative. The initiative continues to build upon the Administration’s recent efforts to promote the use of Green Information Technology (IT) solutions.

The new initiative requires agencies to implement strategies that focus on consolidating inefficiencies, optimizing existing resources, and enhancing security. In addition, the initiative requires agencies to transition to more efficient infrastructure, such as cloud-based services and inter-agency shared services. OMB believes that these strategies will reduce the Federal government’s IT footprint, while also achieving cost savings and enhanced security.

 

DFARS Rules: Counterfeit Electronic Parts and More!

On August 2, the Department of Defense (DoD) issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to further address the avoidance of counterfeit electronic parts. Effective immediately, the final rule seeks to strengthen the integrity of the procurement process related to electronic parts, in order to prevent a proliferation of counterfeit electronic parts within the DoD supply chain.

Pursuant to the rule, DoD contractors and subcontractors that are not the original component manufacturer will be required to notify the contracting officer if it is not possible to obtain an electronic part from a trusted supplier. If a contractor obtains electronic parts from a source that is not a trusted supplier, the contractor is responsible for inspecting, testing, and authenticating the parts.

In addition, DoD issued a proposed rule that would revise the DFARS to allow “appropriate” DoD officials approve, as well as review and audit, contractors and subcontractors when in the process of identifying suppliers of electronic parts approved by the contractor or subcontractor. Comments on the proposed rule are due by October 3, 2016.

DoD also issued another final rule on Tuesday that adds Japan and Slovenia as qualifying countries in light of recently signed reciprocal defense procurement agreements. These agreements remove discriminatory barriers for procurements of supplies and services produced by industrial enterprises of the other country.

 

GSA’s Playbook on Risk Management

Federal Computer Week reported on Monday, August 1, that the General Services Administration (GSA) has released its playbook entitled, “Playbook: Enterprise Risk Management for the U.S. Federal Government,” to help Federal managers better manage risks and comply with the recently updated Circular A-123.

Pursuant to the updated Circular, agencies are required to develop and implement an enterprise risk management (ERM) structure so that they can improve accountability and catch problems before they become significant issues. The playbook is intended to be useful for every level of Federal employee and provides a selection of best practices that managers and employees can chose from based on their unique needs and missions.

CFPB Searching for Cloud Solution

The Consumer Financial Protection Bureau (CFPB) recently issued a request for information (RFI) seeking feedback regarding the process, requirements, costs associated with a potential move to a public cloud-based service in Fiscal Year (FY) 2017. The RFI contains 27 questions and responses are due by 5:00 pm on August 9.

CFPB’s current, private cloud-based service agreement, which is through a value added reseller not on the Email as a Service (EaaS) Blanket Purchase Agreement (BPA), still has two-and-a-half years remaining.

 

GSA Seeks Feedback on Second Generation of MRO

The General Services Administration (GSA) issued a market research questionnaire on FedBizOpps regarding the Maintenance, Repair and Operations (MRO) solution. GSA plans to use this market research to inform the planning process related to the development of a second generation MRO solution. Responses are due by Friday, September 6, at 5:00 pm CST. Vendors can participate in interviews with GSA’s MRO team after submitting the questionnaire to provide additional feedback.

GSA plans to award the second generation MRO in fiscal year 2019, and has stated that the second generation MRO will focus on achieving the goals of category management.

 

GSA’s New Transactional Data Reporting Rule Eliminates Existing Tracking and Disclosure Requirements

July 13, 2016

Over the past few weeks the General Services Administration (GSA) has published two Federal Register notices to implement an expansion of the pilot program for “Transactional Data Reporting.”  On June 23, 2016, GSA published its final “Transactional Data Reporting” rule, amending GSA’s acquisition regulation (GSAR) to provide for electronic reporting of transactional data on government orders placed against certain Federal Supply Schedule (FSS) contracts and other GSA government-wide contracts, including certain categories of Information Technology (Schedule 70) and Professional Services (Schedule 00CORP).  Then, on July 7, 2016, GSA issued a notice seeking comments on its proposal to publicly release most of the transactional data, including the total price paid and exempting from public disclosure only two elements:  quantities sold and unit pricing.  The final rule represents a significant improvement over an earlier, proposed version published by GSA on March 4, 2015, most notably because it takes the burden of tracking commercial sales practices off FSS contractors who participate in transactional reporting, but questions remain.

Why Is This Final Rule Important?

The rule represents a fundamental change in how GSA will assess competitive pricing for products and services made available under the applicable GSA contracts.  Contractors will be subject to new disclosure obligations, requiring the reporting of specific “transactional data elements” of government orders for products and services offered for sale under the contracts.  Contractors will be required to report 11 standard data points, including a description of the goods or services sold, the unit of measure, quantity, price paid per unit, and the total price.  The announcement explains that GSA will use this data, along with other pricing information, as part of a more dynamic, market-driven pricing model to ensure a vendor’s offered price remains competitive relative to other vendors selling the same or similar items or services.

Recognizing the burden associated with the new reporting requirements, GSA also announced that participating FSS vendors will no longer be subject to the existing tracking and disclosure requirements under the Commercial Sales Practices (CSPs) form and the Price Reductions Clause (PRC).  Those requirements have been the source of heavy criticism from industry and add significant compliance risks for contractors because they impose complex and often ill-defined disclosure obligations on offerors and contractors.  Despite decades of criticism, GSA had been reluctant to let go of those requirements – until now.

GSA appropriately observes that this rule represents “the most significant change to the Schedules program in the past two decades.”  In fact, the new rule reflects a pivot for the FSS program, shifting its focus from offerors’ “commercial sales practices” to their pricing and sales practices in the government marketplace.

What Is This Final Rule’s Purpose?

The preamble explains that the purpose of the Transactional Data Reporting rule is to “transform” price disclosure and related policies in order to improve the value taxpayers receive when purchases are made.  The rule contains new clauses implementing the process for the electronic submission of the transactional data for covered contracts.  See GSAR 552.216-75, 552.238-74.

In its announcement, GSA noted that it has experimented with collecting transactional data through some of its contracts and found such data instrumental for improving competition, lowering pricing, and increasing transparency.  GSA will now test these principles on a broader base of its contracting programs.

In describing the benefits of this data, GSA explains that it currently uses a “vertical” approach under which a vendor’s Schedule pricing must be “fair and reasonable” in comparison to the same vendor’s commercial sales, as disclosed in the Commercial Sales Practices form.  By collecting transactional data, GSA will shift to a “horizontal” model under which it will compare a vendor’s Schedule pricing with prices charged by other vendors for similar items.  In effect, GSA will be looking at what is “fair and reasonable” for the government to pay, rather than what is “fair and reasonable” for the vendor to charge.

Under the current regime, however, the government can already employ a “horizontal” approach at the order-level, where contracting officers for GSA’s customer agencies compare the pricing offered by FSS vendors for the same or similar items.  Although GSA negotiates a “fair and reasonable” price (a baseline price in the absence of an actual sale) for making available the goods or services on a Schedule contract, the FAR provides for ordering activities to consider seeking additional discounts before placing an order or conducting order-level competitions.  Some industry commentators have expressed concern that the rule will be used to add another set of price points to continuously ratchet down contractors’ GSA pricing.  Under GSA’s rule, those sales (based on actual agency requirements) may be used to evaluate the price competitiveness of the Schedule price, in effect creating a new baseline GSA price for future orders.  In response to those concerns, GSA states that the transactional data will be viewed in the context of each procurement, taking into account desired terms and conditions, performance levels, past customer satisfaction, and other relevant information.  In practice, such non-price elements are not the type of data that can be easily captured in a reporting mechanism and the value placed on such terms is often subjective.  As a result, it remains to be seen how GSA will implement and use the new transactional data.

GSA also explains that the collection of this data supports category management, allowing the government to centrally analyze what it buys and how much it pays and identifying the most efficient solutions, channels, and sources to meet its needs.  In this regard, the new rule may address a “PR problem” for the Schedules program.  Several federal agencies have complained that publicly available pricing on GSA Advantage! is not competitive with pricing achieved by those agencies using other contractual vehicles.  According to the GSA’s notice, “the absence of good pricing information contributes to negative perceptions of the program, and as result, contract duplication.”  GSA therefore hopes that this transactional data will encourage agencies to use GSA contracts instead of creating new vehicles.  If successful, this could help companies by reducing the administrative burden of maintaining their goods and services on competing contract vehicles.

The Transactional Data Reporting Clause

FSS Contracts

The final rule’s Transactional Data Reporting clause (GSAR 552.238-74) is being implemented under the Schedules program on a pilot basis, to begin not less than 60 days after the publication date of the rule.  This pilot will involve eight Schedules, including certain SINs under the information technology Schedule 70 and the Professional Services Schedule (Schedule 00CORP), and will reach approximately 30 percent of GSA’s FSS contracts, which account for more than 40 percent of GSA the FSS sales volume.  (The rule will not apply to FSS contracts managed by the Department of Veterans Affairs.)

The clause will be mandatory for new Schedule contracts (and contract extensions) under the eight pilot Schedules.  Participation will be voluntary for existing Schedule contract holders, who may incorporate the new clause through bilateral modifications.  The incentive to do so will be that existing Schedule holders who elect to participate and comply with the Transactional Data Reporting requirements will not be required to provide CSPs or be subject to the PRC’s basis of award tracking customer provision.

Other GSA Contracts

GSA also created a Transactional Data Reporting clause (GSAR 552.216-75) for all new government-wide Acquisition Contracts (GWACs) and government-wide IDIQ contracts awarded by GSA.  The new clause will be applied to solicitations issued on or after the effective date of the rule.  GSA also may apply the clause to any existing contracts in this class that do not contain other transactional data requirements.

Impact on FSS Contractors

Because transactional data involve actual government orders, it is unclear how GSA contracting officers will negotiate pricing for new offerors or existing contractors seeking to add products or services to FSS contacts.  GSA explains that it will provide guidance to its contracting officers to place “greater emphasis on price analysis when negotiating prices with Schedule vendors.”  This price analysis will specifically consider, in order of preference:  (i) offered prices on FSS contracts or government-wide contracts for the same or similar items or services, (ii) prices paid, as they becomes available under this rule, and (iii) commercial data sources providing publicly available pricing information.  GSA also advises that, to ensure that pricing is fair and reasonable, contracting officers will retain the right under the FAR to request additional pricing information, such as data other than certified cost or pricing data (e.g., a cost breakdown).  This last category of data, however, may not typically be available in the commercial marketplace, which the FSS Schedules attempt to emulate.

The same FAR provisions also anticipate that a contracting officer may request an offeror to submit prices paid for the same or similar commercial items under comparable terms and conditions by commercial customers.  FAR 15.403-1(c)(3).  In other words, the obligation to disclose commercial sales may not be completely eliminated when introducing products or services to the Schedules program.

Once awarded, the Transactional Reporting Rule places the burden on contractors to capture each of the 11 data elements from government orders – GSA explains that the government lacks the capabilities to capture the data from the diverse set of government customers.  Contractors will therefore need to assess whether their current sales tracking systems capture each of the required data points, which are more than currently required for quarterly IFF Reporting under FSS contracts.  The impact on individual contactors may, of course, vary.  A FSS vendor that already has sophisticated sales tracking systems and a diffuse sales team may find that the new system substantially reduces its reporting burdens.  Other vendors who elect to participate in the transactional reporting may have to create new sales tracking systems to comply with the new requirements.  Contractors should also consider whether and to what extent their data systems capture other elements of each sale that are not required by the rule but might be relevant to price negotiations (i.e., unique terms and conditions, extended warranties, expedited delivery, etc.).

All FSS vendors who participate in the program will likely benefit from a reduction in compliance risk insofar as they are no longer subject to the tracking and disclosure obligations associated with CSPs and the PRC and the associated risks of False Claims Act liability.  Depending on the individual contractors, the Transactional Data Reporting involves a defined universe of customers, orders, and data points.  Accordingly, existing Schedule holders may want to give serious consideration to seeking a bilateral modification to their FSS Schedule contracts and participating in the new transactional data reporting requirements (if available under the pilot).  Nonetheless, the reporting of transactional data relevant to pricing is not without compliance risks – contractors will need to carefully consider how this new rule is implemented to ensure the accuracy of information provided to the government.

Finally, the import of the Price Reduction Clause may not be completely gone.  GSA’s notice describes the new rule as supporting “dynamic pricing models, where prices are continually adjusted based on transactional data, resulting in less variation and lower prices.”  As an example, it describes an existing product tool where GSA “identifies pricing outside a range determined to be acceptable for identical items” and provides the vendor an opportunity “to use this market intelligence” to lower the price or “to advise if they have a unique value proposition, such as speedier deliveries, guarantees, or quantity that warrants a higher price.”  It is unclear what, if anything, GSA will do if a vendor does not take an action in response that GSA deems acceptable.  GSA’s notice explains that “GSA does not intend to continually renegotiate all prices based on transactional data.”  Nonetheless, contractors may want to consider taking some measures to review proposed government orders that would result in pricing below the GSA Schedule price and capture data relevant to future price negotiations with GSA over those transactions.

Release of Transactional Data

Addressing concerns that public release of the data may disclose proprietary and confidential business information normally protected from disclosure under the Freedom of Information Act (FOIA), GSA, in a July 7, 2016 Federal Register Notice, asked for feedback on the public availability of data gathered under this final rule.  It plans to exempt from disclosure only two of 11 categories of data – excluding data on the quantities of items sold and the price paid per unit under a FOIA exemption for trade secrets and confidential commercial information.  Otherwise, the GSA plans to make publicly available the other nine categories of data, which will promote transparency and competition while still respecting that some data should be exempt from disclosure, according to GSA.  GSA is asking for feedback before August 29 on which data elements should be publicly available before establishing its final position.

Anticipate Agency Guidance on Use of Transactional Data

The Federal Register announcement notes that nonregulatory instructions for GSA category managers and FSS contracting officers are also being incorporated into the GSAM (General Services Administration Manual), including:

  • Instructions for how category managers can use transactional data for category analysis;
  • Approval requirements for adding data elements to the new Transactional Data Reporting clauses; and
  • Instructions for how FSS contracting officers can use transactional data (as well as market research and, where necessary, “data other than certified cost or pricing data”) to evaluate offers, including consideration of FAR evaluation requirements (terms and conditions, quantity discounts, socio-economic considerations, etc.).

This last bullet represents a departure from existing practices.  GSA’s current regulations – which were subject to mandatory public notice and comment – specifically address the process for negotiating price when awarding a Schedule contract based on CSPs.

Looking Forward

Clearly, this GSA final rule is a significant development with major impact to the Schedules program and its vendors – even those not yet covered by the rule.  The final rule reflects an effort by GSA to modernize and make more effective a system that has caused significant compliance burdens for Schedule contractors, including the long overdue elimination of requirements to disclose commercial sales practices and price reductions to basis of award customers.  But, the rule imposes new monthly reporting obligations on GSA contractors to track and capture specific details about government orders, with little concrete guidance on how GSA contracting officers will use this new data.  As a result, although this final rule may represent progress that should be welcomed by those participating in the Schedules program, there are issues to be addressed, including issues associated with public release of the data, which is the subject of the July 7 GSA notice, and its full impact on GSA contractors remains to be seen.

 

Legal Corner

Revised FOIA Statute May Increase Release of Contractor Data

By: Scott A. Freling, Partner, Covington & Burling LLP and Nooree Lee, Associate, Covington & Burling LLP

On June 30, 2016, President Obama signed into law the Freedom of Information Act (FOIA) Improvement Act of 2016.  The new law revises FOIA to codify the Obama Administration’s policy that executives agencies adopt a presumption that openness prevails.  Among other changes, the act also calls for the creation of a new consolidated online FOIA portal permitting a single point of entry to request documents from any agency.  These changes have the potential to increase the number of FOIA requests and the codification of the presumption of openness may make it more difficult for contractors to object to the public release of contract-related information and other agency records.

The presumption of openness has been the stated policy of the Obama Administration since President Obama’s first day in office.  The new law adds the statutory language that agencies may only withhold information if “the agency reasonably foresees that disclosure would harm an interest protected by an exemption described in subsection” or if the disclosure is otherwise prohibited by law.  This new statutory language will introduce another variable in FOIA-related litigation, particularly in “reverse-FOIA” actions brought by government contractors seeking to prevent agencies from releasing contractor-provided information.

This codification of existing policy all but ensures that this presumption of openness will survive the end of the Obama Administration.  This may put an end to the back and forth FOIA policy changes that accompanied turnover in the White House.  Before President Obama, the George W. Bush Administration’s stated policy had encouraged agencies to be value the importance of protecting the ability of agencies to deliberate and communicate privately.  And prior to that, under the Clinton Administration, the policy had espoused principles of openness.  The FOIA Improvement Act in part codifies some of the openness principles put forward by the last two Democratic administrations.

Much of the political press coverage of the FOIA Improvement Act has focused on the new 25-year sunset provision which limits the applicability of the “deliberative process” exemption to documents generated within the past 25 years.  This change will likely result in the release of many older intra- and inter-agency documents that were previously withheld under this exemption.  However, this sunset provision does not extend to the FOIA exemption for trade secrets and commercial or financial information, which is the primary exemption relied upon by contractors to protect their data.

In addition to these major changes, the FOIA Improvement Act makes a number of other changes, including new reporting requirements for agencies and restricting when agencies may charge request processing fees.  It remains to be seen precisely how agencies will choose to implement the new requirements and what form the new consolidated FOIA portal will take.

 

Rob Coen Moving to FedSIM

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Rob Coen, director of the National Institutes of Health’s IT Acquisition and Assessment Center (NITAAC), is leaving for a new role at the General Services Administration (GSA) according to a report issued by Federal News Radio on August 3. After more than seven years at NITAAC, Coen is leaving for a new position as the head of a new sector at GSA’s Federal Systems Integration and Management Center (FedSIM). As part of the Federal Acquisition Service’s upcoming reorganization, it will be adding at least one, if not two, new sectors to its current civilian, defense, and enterprise services sectors. Coen will begin at FedSIM starting August 22, but his replacement at NITAAC is unclear at the moment.

 

GSA Planning Government-wide Payroll System

Last Friday, the General Services Administration (GSA), acting on behalf of the Unified Shared Service Management (USSM), released a request for information (RFI) seeking vendor feedback on how to improve the efficiency of payroll systems. USSM wants to migrate five existing payroll systems into one, government-wide system to improve efficiency and increase savings.

Specifically, the RFI asks vendors about eight components which the USSM wants a solution to fulfill:

  • Gross to Net Payroll Calculation
  • Payroll Identity and Access Management Federation
  • Self-Service for Employees, Managers, and HR/Payroll Specialists
  • Upfront Data Validation
  • Cloud Technologies for Payroll
  • Payroll Data Management
  • Standardized Traceability of Functional Requirements to Technical Requirements
  • Comprehensive Workflow Management Capability

Responses to the RFI are due by 5:00 PM on August 29.

Nominations Open for 2016 Excellence in Partnership (EIP) Awards 

Nominations are now open for the Coalition’s 17th annual Excellence in Partnership (EIP) Awards, which will be taking place on the evening of November 16 at The Westin Tysons Corner.  This special event honors federal and contractor organizations, individuals, and acquisition officials who have made significant strides in promoting and utilizing multiple award contracting vehicles and supporting the evolving needs of government. In addition to a list of last year’s winners, full category descriptions for 2016 can be seen and nominations made by clicking here. Nominations for the following awards will be accepted through October 14:

  • Lifetime Acquisition Excellence Award
  • Government Savings Award
  • Myth-Busters Award
  • Best Veteran Hiring Award
  • Green Excellence in Partnership Award

 

Please note, there are several sponsorship opportunities available for this exciting event.  Please contact Matt Cahill if you have any questions or commitments!