Transactional Data Reporting Public Meeting Presentation Slides

Public Meeting Transactional Data Reporting General Services Administration Proposed Rule 2013-G504, Transactional Data ...

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Public Meeting Transactional Data Reporting General Services Administration Proposed Rule 2013-G504, Transactional Data Reporting April 17, 2015 Public Meeting begins promptly at 9 a.m. EST

WELCOME & OPENING REMARKS JEFFREY K. KOSES SENIOR PROCUREMENT EXECUTIVE, GENERAL SERVICES ADMINISTRATION

CATEGORY MANAGEMENT ANNE RUNG ADMINISTRATOR, OFFICE OF FEDERAL PROCUREMENT POLICY

MAS TRANSFORMATION IMPLEMENTATION KEVIN YOUEL-PAGE DEPUTY COMMISSIONER FEDERAL ACQUISITION SERVICE, GENERAL SERVICES ADMINISTRATION

BACKGROUND & CONTEXT MARK J. LEE DEPUTY DIRECTOR, OFFICE OF GENERAL SERVICES ACQUISITION POLICY, INTEGRITY & WORKFORCE GENERAL SERVICES ADMINISTRATION

Why are we having this conversation?

Background and Context on Key Aspects of the Proposed Rule  Use of Transactional Data in Office Supplies 2 (OS2)  Burden Analysis  Analysis of Basis of Award Requirement (BOA) of the Price Reduction Clause (PRC)  Alternatives  Multiple Award Schedules (MAS) Pilot

OS2 implementation of Horizontal Price Analysis Techniques and Dynamic Pricing demonstrates how substantial savings rates can be achieved

Comparison of

OS2 Pre-Dynamic Pricing (November 2012 - January 2013) and Dynamic Pricing Savings Rates (June 2013 - present)

Cumulative OS2 Indirect Savings

Current Reporting Burden under Price Reductions Clause

Gathering transactional data could negate the need for the Price Reductions clause and its associated reporting burden: Estimated Reporting Burden of Price Reductions Clause*

Burden

No. of Responses per Total Annual Responses Respondent Responses

Avg. Burden Hours per Response

Total Burden Hours

Training

16,000

1

16,000

4

64,000

Training Administration

16,000

1

16,000

5

80,000

Compliance Systems (heavier lift)

3,200

1

3,200

55

176,000

Compliance Systems (lighter lift)

12,800

1

12,800

30

384,000

Negotiations

19,000

1

19,000

7

133,000

Audits

70

1

70

445

31,150

Total Burden Hours

19,000

1

19,000

46

868,150 Annual burden hours to be superseded with new policy

*Reporting burden is based on estimated burden from Price Reductions Clause Submission for OMB Review, 9/20/2012: https://federalregister.gov/a/2012-23137

Distribution of Vendor Sales The majority of MAS and non-MAS vendors had sales under $2 million in FY13 Distribution of MAS and non-MAS Contractor Sales, FY13 Median sales for MAS contractors: $33,000 (total vendors: 17,816) 60%

MAS Vendors

% of Vendors

50%

Median sales for non-MAS contractors: $1.4M (total vendors: 477)

40% 30% 20%

51 MAS vendors (0.6%) and 18 non-MAS vendors (4%) had sales over $50M in FY13

Non-MAS Vendors

10% 0% $0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

$11

$12

FY13 Vendor Sales (millions)

$13

$14

$15

$16

$17

$18

$19

$20

>$20

Current vs. New Reporting Burden Comparison Current Reporting Burden (Price Reductions Clause) Average Annual Burden per Vendor

Aggregate Annual Burden

New Reporting Burden (Pricing Policy)*

Savings (New – Current Burden)

45.7 hours

6.3 hours (12.3 hours in year 1)

39.4 hours (33.4 hours in year 1)

$3,108

$430 ($838 in year 1)

$2,678 ($2,270 in year 1)

868,150 hours

115,631 hours (225,389 hours in year 1)

752,519 hours (642,761 hours in year 1)

$59,034,200

$7,862,942 ($15,326,486 in year 1)

$51,171,258 ($43,707,714 in year 1)

By superseding current reporting requirements, the proposed transactional data reporting rule is estimated to result in a net burden reduction of about 752,000 hours / $51 million per year *Year 1 under new pricing policy includes one-time burden for setting up reporting systems.

Reasons for Multiple Award Schedules (MAS) Price Reduction (PR) Modifications (FY14 as of August 2014)

51, 5% 116, 12%

33, 3%

16, 2%

33 PR modifications, representing 3% of the total, resulted from BOA pricing changes

Reasons for Price Reductions Basis of Award (BOA) Pricing Change Commercial Pricelist (CPL)/Market Rate Pricing Change Other: Corrected Errors, Industrial Funding Fee (IFF) miscalculations, etc. Temporary Price Reduction - e.g. Promotions Voluntary Price Reduction

750, 78%

Data Source: FSS19 Database Date Range: Awarded PR Mods from Oct - Aug Data Includes the following Schedules: 66, 84, 70, 899, 738 II, 874 V, 874, 871, 00CORP

Alternatives that were considered  Update GSA ordering tools (i.e. GSA Advantage, eBuy, and Reverse Auctions) and require use for all orders  Connections to agency specific contract writing and financial systems would need to be established  Significant investment and upgrades would be needed to these applications  GSA SmartPay Program data  Less than 1% of procurements are made using the purchase card  Collect data from customer agencies  Agencies do not store and collect this data in a manner that can be shared readily with GSA

MAS Transactional Data Reporting Implementation Pilot  Scope  Commercial products and commoditized services  Participation  Contractor participation is mandatory on select Schedules  These contractors would not be subject to the BOA requirements of the PRC  Evaluation of pilot  Clearly defined metrics such as savings rate, customer satisfaction, small business utilization, and commercial benchmarks  GSA would seek stakeholder feedback on pilot experience  Category Manager and Contracting Officer Roles  Software, Tools, and Training

Public Meeting Process  Public Meeting Process    

15 Minute Presentations; Each Presentation followed by 15 Minutes of Questions Transcripts from today’s discussion will be posted on Regulations.gov Presenters’ Panel will conclude the meeting GSA is here to listen and learn

 This meeting is part of an ongoing dialogue  Major themes will be captured by GSA’s Transactional Data Reporting Policy Team  Public Comments collected from March 3, 2015 to May 4, 2015  Implementation updates available on interact.gsa.gov

 GSA will reconcile all comments received in response to the proposed rule  Comment reconciliation will begin after May 4, 2015  GSA will continue to work collaboratively with all interested stakeholders

Facilitator Roles The public meeting is an opportunity for everyone to listen and learn from the diverse viewpoints of the federal acquisition community.  Ensure all views are heard  Adhere to the scheduled agenda  Move the dialogue forward

Ground Rules 1.

Brief & Concise Questions and Answers  In-person attendees raise your hands. Virtual attendees enter your questions in the Q&A pod of GSA’s Virtual Meeting Space  Questions should request clarification on the views from the presentations  Facilitators will alternate between in-person and virtual attendees 2. Today’s discussion is about getting clarification from presenters  Provide overall comments on the proposed rule in the Federal Register 3. Hold your questions during presentations

OMB & GSA Panel  15 Minute opportunity to ask about the development of the proposed rule and the implementation

15 MINUTE BREAK

Office of Inspector General U.S. General Services Administration

Public Meeting Presentation

Transactional Data Reporting: GSAR Case 2013-G504

Brian Gibson, Office of Audits

GSA Office of Inspector General

The GSA Office of Inspector General supports the collection and use of transactional data as an additional tool for contracting officers. However, it will not provide the government with the price protections currently afforded under the Price Reductions clause. We have four main areas of concern.

GSA Office of Inspector General

CONCERN ONE The proposed rule does not justify the elimination of the government’s price protections under the Price Reductions clause.

GSA Office of Inspector General

CONCERN ONE – DETAILS The proposed alternate Price Reductions clause removes all significant price protections – not just the basis of award tracking requirement.

GSA Office of Inspector General

CONCERN ONE – DETAILS As currently proposed, there is no contractual requirement for contractors to lower their prices offered to the government based upon the transactional data reported.

GSA Office of Inspector General

CONCERN ONE – DETAILS The Price Reductions clause results in real savings for the taxpayer that transactional data alone will not guarantee.

GSA Office of Inspector General

CONCERN TWO The proposed rule risks overreliance on reported transactional data at the expense of commercial price analysis; as a result, the government may pay more than the commercial market.

GSA Office of Inspector General

CONCERN TWO – DETAILS The premise of the Schedules program is grounded in marketbased pricing; however, prices derived from transactional data may not result in the best price for the government.

GSA Office of Inspector General

CONCERN TWO – DETAILS The proposed rule is unclear as to how GSA will use Commercial Sales Practices disclosures and vertical price analysis.

GSA Office of Inspector General

CONCERN THREE The proposed rule underestimates the burden and resources necessary for:  contractor data reporting;  GSA’s and ordering agencies’ use of the data; and  GSA’s enforcement of transactional data reporting requirements.

GSA Office of Inspector General

CONCERN THREE – DETAILS The contractor burden estimates are understated. We defer to industry for a more accurate burden calculation.

GSA Office of Inspector General

CONCERN THREE – DETAILS There is little information provided concerning the required systems architecture and costs associated with transactional data analyses.

GSA Office of Inspector General

CONCERN THREE – DETAILS The proposed rule does not provide enforcement provisions necessary to ensure contractor compliance with transactional data reporting requirements.

GSA Office of Inspector General

CONCERN FOUR The planned expansion of this initiative in the Schedules Program assumes services and solutions can be effectively standardized and relies on undefined criteria to evaluate whether the pilot is successful.

GSA Office of Inspector General

CONCERN FOUR – DETAILS Expansion to services – which make up two-thirds of schedule sales – will be challenging due to the difficulty of standardizing labor categories. A pilot focusing on products won’t be applicable to services.

GSA Office of Inspector General

CONCERN FOUR – DETAILS The proposed rule lacks specifics regarding the pilot’s evaluation criteria, such as “commercial benchmarks” and “other available data.”

GSA Office of Inspector General

SUMMARY Outside of the Price Reductions clause, there is no requirement for contractors to lower their prices offered to the government.

GSA Office of Inspector General

SUMMARY Prices Paid within the Government

≠ Best Price

GSA Office of Inspector General

This presentation represents a summary of our position related to GSAR Case 2013-G504. Upon formal submission, this presentation and our written response will be available at www.gsaig.gov.

GSA Office of Inspector General

If you have any questions, please contact: Theodore R. Stehney Assistant Inspector General for Auditing 202-501-0374 [email protected] James P. Hayes Deputy Assistant Inspector General for Acquisition Programs Audits 202-273-7321 [email protected] Brian J. Gibson Program Director 202-273-7278 [email protected]

ROGER WALDRON PRESIDENT THE COALITION FOR GOVERNMENT PROCUREMENT

GLENN PERRY RETIRED FORMER SENIOR PROCUREMENT EXECUTIVE, DEPARTMENT OF EDUCATION

LUNCH BREAK

MAUREEN REGAN COUNSELOR TO THE INSPECTOR GENERAL DEPARTMENT OF VETERANS AFFAIRS

CHRISTOPHER WOLF VICE PRESIDENT, CONTRACTS & PROCUREMENT THE LOUIS BERGER GROUP, INC.

COMMENT ON GSA’S PROPOSED TRANSACTIONAL REPORTING RULE

PUBLIC MEETING APRIL 17, 2015, GSA HEADQUARTERS

J. RUAIRI MACDONALD MASTERS IN GOVERNMENT PROCUREMENT LAW (LLM) CANDIDATE GEORGE WASHINGTON UNIVERSITY

OVERVIEW I. PROBLEM STATEMENT II. COMMENTS ON GSA’S PROPOSED SOLUTION -Data -Standards -System III. CONCLUSION

I. PROBLEM STATEMENT • Competition => fair and reasonable price. • If you narrow competition, you need data on wider market. • IDIQs, FSS, and BPA narrow competition, but additional data is not collected or available to COs.

II. COMMENTS ON GSA’S PROPOSED SOLUTION

Helpful to distinguish three things:

Data

|

Standards

|

System

DATA | STANDARDS | SYSTEM •

Why limited focus on modernizing consumer (i.e. government) generated review data?



What data would be available by expanding the use of Purchase Cards?



Open data and access to information



Is an expansion of great risk / liability to contractors necessary or helpful?

DATA | STANDARDS | SYSTEM Harmony with DATA Act • May 2015 – May 2017: Agencies must begin using data standards for financial, budget, payment, grant, and contract reports to Treasury, OMB, and GSA. • 2016-2018: Inspectors general report on completeness, timeliness, quality, and accuracy of each agencies’ standardized spending data. • August 2018: OMB may decide to adopt data standards for all contractor and grantee reporting; agencies implement.

Source: Data Transparency Coalition http://www.datacoalition.org/wp-content/uploads/2014/11/dataactinfographic.pdf

DATA | STANDARDS | SYSTEM • Will Common Acquisition Platform be an open source solution? • Purchase card systems? • API important.

III. CONCLUSION GSA is addressing a significant problem. Take-Aways: • More data from Consumers (i.e. Gov.) • Embrace DATA Act • Expand Gov. Purchase Card

THANK YOU! J. Ruairi Macdonald

Masters in Government Procurement Law (LLM) Candidate GEORGE WASHINGTON UNIVERSITY LAW SCHOOL [email protected] linkedin.com/in/ruairimacdonald @RuairiMacd

15 MINUTE BREAK

GSA TRANSACTIONAL DATA REPORTING RULE

Mr. Will Goodman Vice President for Policy 58 58

Burden Reduction? •

• • •





“GSA believes replacing the price reduction clause’s tracking customer requirement with transactional data reporting could reduce the annual burden on contractors by more than 85 percent, or approximately $51 million in administrative costs…” This estimate is based on an exchange of the Price Reduction Clause (PRC) for new Transactional Data Reporting. But it is not immediately clear, other than trading the PRC’s tracking for transactional data reporting, what other burdens will be reduced. The exchange of the two processes, if not coupled with other burden reductions through relief from the PRC, could essentially be a one-forone trade, or the burdens could even increase. The rule makes these costs non-reimbursable (“at no cost to the government”) in Part 552.216-75, which means the government has fully shed any costs it might suffer as a result of increased burdens. Whatever the government chooses to do in this area, the costs it creates for contractors through distortions not found in the commercial marketplace should be fully recoverable by contractors.

59

Shift the Burden on What Basis? •







• •

“The Federal Acquisition Regulation (FAR) has long emphasized the need for contracting officers to conduct price analysis as part of their responsibility to establish that offered prices are fair and reasonable.” “GSA proposes to address this [requirement] through the use of a transaction data reporting clause. Under the clause contractors would be required to report historical information…” The best way to work toward appropriate administrative burden reductions is to place those burdens on the government, to create incentives for the government to streamline. (A good example of this incentive in action is the Pentagon’s recent legislative proposal to the Congress to streamline reporting burdens on program managers.) The government is more likely to forget and excuse burdens placed on contractors than burdens that it must directly carry. Furthermore, shifting the burden from the government to contractors to establish price reasonableness undermines the goal of the Paperwork Reduction Act.

60

Why Not Automation and Expertise? •











“The current lack of transparency on prices paid by government customers has led to significant price variation, sometimes 300 percent or more, for identical purchases by federal agencies from the same commercial vendor as well as the unnecessary duplication of contract vehicles.” Yet “the current lack of transparency” is a statement made by the government about information to which the government already has access, if not in a form that is readily accessible to contracting officers. Rather than establishing a new manual process, the government should take advantage of this evident need to update its systems to track these data in an automated fashion. Creating information systems capable of automatically capturing the data would not only increase its accuracy and timeliness, but it would help bring the government closer to “state of the practice” processes used outside of government. The government is likely to make these investments at some point, and the sooner they are made, the sooner the government will have access to the information it needs without needless investment in a manual system that may not prove much cheaper than a more efficient automated collection system. Creating sophisticated price research tools and cultivating expertise in supplier selection will bring the government more closely in line with commercial practices.

61

Why Not Competition? • “GSA found that only about 3 percent of the total price reductions received under the [PRC] came as a result of commercial pricelist adjustments and market rate changes, with the balance for other reasons,” e.g., competition. • While transactional data reporting can contribute to competition, if the vast majority of price reductions are already occurring due to competition, the current competitive environment appears to be sufficient. • FAR 15.404-1(b)(1) states, “Price analysis may include evaluating data other than certified cost or pricing data obtained from the offeror or contractor when there is no other means for determining a fair and reasonable price.” • If 97 percent of current price reductions result from task award competition, not from PRC requirements, that fact suggests that there are other means than obtaining pricing data from contractors to establish price reasonableness—there is active and effective task award competition.

62

Category or Item Analysis? • The horizontal price comparison proposed by GSA is not likely to lead to a true “apples-to-apples” comparison of items. • Complex services offerings are priced according to very specific circumstances related to risk, security requirements, geographic area of performance, and the qualifications of the individuals performing the work. • The wide product quality variation in a category like “laptop computers” suggests that such comparisons will be equally difficult for customized or complex products. • Horizontal price comparisons are unlikely to take into account these specific circumstances at this level of detail when looking at prices paid by different government customers. • Grouping by categories will therefore likely lead to inappropriate price comparisons in some cases.

63

Protection of Proprietary Pricing Information from Competitors? • Certain pricing data, such as terms and conditions or discounts offered to a specific government customer under a Blanket Purchase Agreement (BPA), are sensitive and would affect competition. • The rule is silent as to restrictions on GSA’s disclosure of sensitive pricing information to competitors during price negotiations. Industry opposes the exposure of its proprietary BPA information from one offeror to another offeror by the government for negotiation purposes. • GSA should include specific restrictions on the disclosure of sensitive pricing information and explain the safeguards it will put in place to prevent accidental exposure of such information.

64

PRESENTERS’ PANEL

CLOSING REMARKS JEFFREY K. KOSES SENIOR PROCUREMENT EXECUTIVE, GENERAL SERVICES ADMINISTRATION

Public Meeting Transactional Data Reporting General Services Administration Proposed Rule 2013-G504, Transactional Data Reporting April 17, 2015