Phillip R. Seckman, Partner, Dentons
Tyler Thomas, Associate, Dentons
On June 23, 2016, the General Services Administration (GSA) published its final rule on transactional data reporting in the Federal Register. 81 Fed. Reg. 41104, available here. The final rule requires contractors to report, on a monthly basis, transactional data related to orders placed against certain Federal Supply Schedule (FSS) contracts, Governmentwide Acquisition Contracts (GWACs) and Governmentwide Indefinite-Delivery, Indefinite-Quantity (IDIQ) contracts. The purpose of the rule is to provide GSA, as well as other agencies, heightened market intelligence so they can make “smarter buying decisions.”
It remains to be seen whether changing the information that contracting officers have historically utilized to ensure fair and reasonable prices, particularly in the context of the schedules program, will in fact improve acquisition outcomes. Additionally, valid contractor concerns remain that horizontal pricing is a harbinger of a lowest price wins procurement model and that, if realized, such a system will disproportionately negatively impact small businesses. GSA has sought to assuage these concerns in the final rule by emphasizing the overarching policy of best value and that transactional data is just part of the suite of information collected and used to make procurement decisions. Time will tell.
In the near-term contractors will face new and different contract administration burdens and complexities as the transition to this new reporting paradigm occurs. Contractors presented with a proposed bilateral modification to incorporate the transactional data reporting clause are well advised to carefully study the modification and its accompanying compliance obligations. Contractors should consider making investments now in policies, practices, and systems to begin collecting the information required by the rule. Contractors that do so will be better positioned for the future.
In some respects, the final rule improves on the proposed rule. For example, contractors subject to the new transaction data reporting rule need not comply with requirements for commercial sales practices (CSP) disclosures or with price reductions clause (PRC) tracking, provided the CSP provision and PRC clause are not incorporated and/or are removed from any contract modified to incorporate the relevant transactional data reporting clauses. The CSP requires the disclosure of pricing, sales, and discounts offered to commercial customers. The PRC tracking provisions require contractors to monitor their pricing throughout the life of a contract and provide the government with the same discounts provided to any basis of award customer or category of customers. The proposed rule would have still required significant CSP reporting and still reserved the potential applicability of the PRC. The removal of these compliance obligations in the final rule, therefore, is a notable improvement and one that is likely to be welcomed by many contractors. Of course, existing contracts must first be modified before these adjustments to CSP and PRC compliance obligations will be effected. Absent a modification, contractors must continue to comply with these important requirements.
While GSA has improved upon the proposed rule and has attempted to address some of the issues raised during the comments process, including those testified to in Congress by Dentons partner John C. Horan, as discussed here, this rule (1) will still place a significant burden on all contractors—especially small businesses, (2) remains poorly defined, and (3) is susceptible to misuse, which could result in considerable harm to contractors. One concern in particular relates to the new portal and, specifically, GSA’s desire to release transaction data to the “maximum extent practicable while respecting that some data could be exempt from disclosure.” The information sought to be released through a “public data extract” will supposedly only comprise information releasable under the Freedom of Information Act (FOIA). Nonetheless, contractors should carefully consider the information and level of detail they post to the portal, be cautious not to post any commercially sensitive information, and consider marking information they view as confidential or business sensitive to the extent possible. Details about this “public data extract” will be released in a subsequent Federal Register notice.
Under the final rule, transactional data is the information generated from government procurements. The final rule requires contractors to submit 11 standard transactional data points, but also includes a “fill-in” for additional data points subject to approval from GSA’s Senior Procurement Executive. The 11 standard data points are:
- Contract or Blanket Purchase Agreement Number
- Delivery/Task Order Number/Procurement Instrument Identifier
- Non-Federal Entity
- Description of Deliverable
- Manufacturer Name
- Manufacturer Part Number
- Unit Measure (each, hour, case, lot)
- Quantity of Item Sold
- Universal Product Code
- Price Paid per Unit
- Total Price
The rule will be immediately applicable to all new IDIQ and GWAC contracts and may be applied to existing IDIQ and GWAC contracts that do not contain other transactional data clauses. For FSS contracts, the rule will be implemented on a pilot basis that will involve the following eight schedules:
- Schedule 03FAC, Facilities Maintenance and Management: All SINs.
- Schedule 51 V, Hardware Superstore: All SINs.
- Schedule 58 I, Professional Audio/Video, Telemetry/Tracking, Recording/Reproducing and Signal Data Solutions: All SINs.
- Schedule 72, Furnishing and Floor Coverings: All SINs.
- Schedule 73, Food Service, Hospitality, Cleaning Equipment and Supplies, Chemicals and Services: All SINs.
- Schedule 75, Office Products: All SINs.
- Schedule 00CORP, The Professional Services Schedule: Professional Engineering Services (PES) SINs.
- Schedule 70, General Purpose Information Technology Equipment, Software, and Services: SINs 132 8 (Purchase of New Equipment); 132 32, 132 33, and 132 34 (Software); and 132 54 and 132 55 (Commercial Satellite Communications (COMSATCOM)).
These schedules will enter the pilot program on a rolling basis, with the GSA notifying contractors at least 30 days prior to applying the pilot to a specific schedule. The pilot program will be voluntary for existing FSS contract holders with the incorporation of the transactional data reporting clause and adjustments to other clauses occurring through a bilateral modification. Thus, contractors have the option of declining the modification. The new clauses will be mandatory for newly awarded FSS contracts and FSS contracts that are extended. Department of Veterans Affairs contracts are not included in this pilot. The program will neither become final nor be expanded for at least one year, and such decision will be dependent upon the results of the pilot program.