Data management tools, like pricing algorithms and artificial intelligence (AI), are playing an ever-larger role in Federal procurement as agencies look to streamline processes, increase efficiency, and improve contract outcomes. Just last month, at the Coalition’s Spring Training Conference, a panel of government and industry practitioners engaged in a fascinating discussion on how AI supports agency procurement operations. The potential is enormous. As AI evolves and algorithms are fine-tuned, agencies will increase the use of these tools, leading to new procurement strategies, practices, and analytics with the potential to enhance customer agency mission support for the American people.
Coalition members generally support the use of these new data management technologies. At the same time, current experience raises important policy considerations and questions for stakeholders across the procurement community. Transparency, data integrity, and compliance with the Federal Acquisition Regulation (FAR) all are foundational considerations in the use of AI and/or algorithms to support procurement operations. GSA’s current use of algorithms and pricing data is instructive in this regard.
Unpacking the Black Box of Price Analysis
Over the last several years, GSA has been using a series of data management tools to support the price evaluation of products under the Multiple Award Schedule (MAS) program. They include the Price Point Plus Portal (4P) tool, the Standardized Pricing Evaluation Logic (SPEL) tool, and, more recently, the FAS Catalog Platform (FCP). Underlying these tools is a price analysis algorithm that assesses or compares several pricing data points to generate a “market threshold” that can then be used to determine whether a proposed price is fair and reasonable based on the market information available to GSA.
To its credit, GSA has met with industry and outlined how it uses the algorithm to compare prices and establish a “range of fair and reasonable pricing” for a proposed product or set of products. In addition, through the FCP, GSA now is providing Compliance and Pricing reports that call out relevant datapoints that the algorithm is looking at for evaluation purposes. The next logical step is to provide industry partners with direct access to the algorithm and pricing database. With this transparency, contractors would be able to use the tools to conduct their own analysis in support of their proposal preparation. (Of course, any access to this information would be contingent on ensuring the pricing data was sanitized to protect competitively sensitive pricing information.)
Transparent access for industry to FAS’s pricing database would streamline the evaluation price, providing both parties to the negotiation a common, understood framework for price negotiations. Such access is in the public interest because it promotes efficiency and realism. Moreover, there is precedent for it. MAS service contractors have access to GSA’s Contract Awarded Labor Category (CALC+) tool, a database of hourly rates that is used for price analysis.
Consistency with Procurement Policy
Access to the algorithm and pricing database also would provide GSA’s industry partners with a clear understanding of how the tools are evaluating prices consistent with requirements of FAR 15.404-1(b)(2). It would answer questions, such as:
- How old is the pricing information in GSA’s database/tools?
- How are differing terms and conditions (e.g., volume, quality, delivery, warranty, Trade Agreements Act (TAA) compliance, and essentially the same (ETS)) being assessed and considered?
- What data is being pulled from commercial sites, and how is it being screened to ensure apples-to-apples comparisons to Schedule pricing, which involves numerous compliance requirements like TAA?
- How is GSA addressing the MAS solicitation terms which DO NOT leverage requirements? Key MAS terms provide for a guaranteed minimum of $2500 over 20 years with the opportunity to compete for individual orders.
- How is BPA pricing, typically volume-based pricing, considered in a price comparison evaluation?
These are just some of the questions that access to the algorithm and database would help answer for all of GSA’s stakeholders, including its industry partners. Readers should look for future blogs addressing data analytics and the MAS program.