This blog addresses GSA’s proposed rule seeking to implement “Data Transactional Reporting” for the GSA Schedules program, GSA IT GWACs, and other GSA contract vehicles.  In my March 6th blog, I focused on the implications associated with the “wage and price” control regime the rule would implement across the GSA Schedules.    

This blog highlights a number of questions the rule raises regarding its operational burdens, its cost impact, and the underlying assumptions upon which it was constructed.   The Coalition appreciates the opportunity for public dialogue on these and other issues at the public meeting on April 17.

  • How did GSA estimate contractor costs for collecting and reporting transactional data? In justifying the imposition of transactional data reporting requirements on vendors, GSA states that the Government would incur tens of millions of dollars in costs to update its systems, like FPDS, to handle transactional data and years to implement.  GSA estimates that the initial startup burden for contractors to implement transactional data reporting would be only six hours, and that, after initial startup, the monthly administration/management burden of this requirement would amount to only 31 minutes.  Without knowing GSA’s methodology and analysis, it is difficult to understand how a Government burden of “tens of millions of dollars” translates into such a minimal burden for the private sector.  This burden needs to be accurately identified to allow GSA to understand any barriers to market participation and, ultimately, the increased cost burden for Government.  Black letter economics demonstrate that costs to industry will be recouped through increased prices to the Government. To help inform the dialogue, the Coalition is surveying members about the impact of the rule on their operational costs.
  • Why is the Government asking contractors to report data it created and already has in its possession? All the data to be reported has its origin within the Government.  Indeed, the Government already possesses all the transactional data it seeks to have reported.  We know of no commercial equivalent to such a reporting requirement, and it is difficult to see how this approach is consistent with the guidance established through the Paperwork Reduction Act.
  • How much burden has actually been lifted from contractors? GSA’s analysis concludes that by “trading” transactional reporting for elimination of the PRC’s tracking customer, contractor burdens will be significantly reduced.  Based on contractor performance experience, however, it is highly questionable whether any burden would really be reduced.  GSA reserves the right to demand updated Commercial Sales Practices (CSP).  Thus, the PRC, other than the tracking customer requirement, essentially remains in effect for contractors.  Contractors likely will see an increased burden, as they must now constantly track all aspects of the CSP.
  • What happened to adequate price competition in determining prices fair and reasonable? The preamble to the rule states that transactional data is required for a price analysis to determine whether prices are fair and reasonable.  FAR 15.404-1(b)(1), however, states that adequate price competition provides an exemption for obtaining cost and pricing data and/or data on the prices paid for the same or similar items.  On multiple award contracts, like the GSA Schedules, competition at the task order level promotes downward pressure on prices and upward pressure on value.  The statement that transactional data must be used to conduct price analysis is contrary to the price analysis requirements found in the FAR.
  • How will GSA maintain protection of the pricing data? Under the Freedom of Information Act (FOIA), unit pricing submitted in response to a competition requirement is protectable as commercial sensitive information.  Every day FSS contractors are providing such information to customer agencies.  Without understanding the measures that will be implemented to safeguard this information (and accounting for their cost), contractors face a new risk scenario as a result of this reporting requirement.

Earlier this week, the Court of Appeals for the Federal Circuit issued a decision that bears on consideration of this proposed rule.  In CGI Federal Inc. v. US (March 10 2015), the court concluded that the FAR Part 12 prohibition against the use of terms that are inconsistent with customary commercial practice applies to orders against a GSA Schedule contract.  Applying that principle, the court found that revised payment terms used by Health and Human Service’s Centers for Medicare and Medicaid Services violated FAR Part 12.  The Coalition has observed on a number of occasions throughout the implementation of the Federal Strategic Sourcing Initiative (FSSI) that GSA and OMB have imposed ever increasing data reporting burdens on contractors that have a high cost and are inconsistent with commercial practices.  GSA’s proposed rule on reporting transactional data seems to fall within this same category.

These topics and more need to be addressed by GSA as part of the dialogue around this proposed rule.  They represent the significant concerns across industry regarding the rule’s operational costs, risks, and impact.   Most significantly, the “wage and price controls” brought on by this rule, aside from presenting a troubling perspective regarding  the commercial market, likely will result in supplier suppression, that, in the long run, will reduce competition, value, and innovation across the GSA Schedules program.

For more on the rule please take a look at Jonathan Aronie’s article under this week’s Legal Corner.

Roger Waldron