The current procurement passion for collecting data, in particular prices paid data, raises many policy questions. Coalition members have, on a number of occasions, indicated that data is not a free good! Shifting the burden of data management and reporting to federal contractors increases costs for industry, and therefore, government; costs that are ultimately borne by the American people. The passion for data reporting can overshadow the fundamental purpose of a government contract, which is the delivery of products, services and solutions to meet customer agency missions. Contracts should be structured to maximize the potential for contractors to deliver best value to customer agencies. The impetus must be on contract structures that maximize performance of mission requirements rather than data reporting.
It is time for a comprehensive dialogue between government and industry regarding data collection. Among the questions to be discussed are the following:
- How can government and industry work to together towards common sense management of data?
- What does the Federal Acquisition Regulation (FAR) say about determining a “fair and reasonable” price?
- What will the information be used for?
- What data is relevant?
- Can the government collect its own transactional data?
- What information will be in the prices paid portal?
- When does the Paperwork Reduction Act apply to new contract provisions seeking additional data?
A dialogue around these fundamental questions is the first step towards government and industry working together towards common sense management of procurement data.
The FAR guidance regarding determining a “fair and reasonable” price should inform the collection, management and use of prices paid information. As a threshold matter, FAR 15.404-1(b)(2)(i) states that “[n]ormally, adequate price competition establishes a fair and reasonable price.” As such, under the GSA Schedule program or any other multiple award IDIQ (e.g. Seaport-e, Alliant, NASA SEWP, Networx), adequate price competition at the task order level for agency specific requirements is sufficient to determine fair and reasonable pricing. Agency specific requirements and commitments at the task order level drive competition and pricing. Accordingly, what role will the prices paid portal data play?
Price alone is incomplete data. The FAR provides guidelines for comparing proposed prices to historical prices paid, for the same or similar items. Notably, FAR 15.404-1(b)(2)(ii)(A)(B) states:
(A) The prior price must be a valid basis for comparison. If there has been a significant time lapse between the last acquisition and the present one, if the terms and conditions of the acquisition are significantly different, or if the reasonableness of the prior price is uncertain, then the prior price may not be a valid basis for comparison.
(B) The prior price must be adjusted to account for materially differing terms and conditions, quantities and market and economic factors. For similar items, the contracting officer must also adjust the prior price to account for material differences between the similar item and the item being procured.
Does the prices paid portal include sufficient information for contracting officers to comply with the above guidance? Are contracting officers sufficiently trained to identify, understand and reasonably consider and adjust prior prices based on materially different terms, quantities, and market and economic factors?
The underlying concern across industry is that the prices paid portal will be used to drive contract level prices to the lowest reported point, regardless of terms and conditions, quantities, market and economic factors. This type of pricing is not sustainable by industry over the long term. Such an approach may make for a short term “gain” or headlines regarding savings by the government. However, such an approach will compromise the government‘s long term, strategic interests in fostering competition, ensuring best value mission support and access to “priceless” commercial innovation.
Roger Waldron
President