Transition Papers Transactional Data

Transactional Data – Benefits and Cost Burdens Introduction In June 2016, the General Services Administration (“GSA”) pu...

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Transactional Data – Benefits and Cost Burdens Introduction In June 2016, the General Services Administration (“GSA”) published the final rule implementing Transactional Data Reporting (“TDR”) for GSA’s Federal Supply Schedule (“FSS”) program, Governmentwide Acquisition Contracts (“GWACs”), and other Governmentwide Indefinite-Delivery Indefinite Quantity (“IDIQ”) contracts (Veterans Affairs Schedule contracts are exempt). This rule, which amends the General Services Acquisition Regulations (“GSAR”), is intended to enhance the ability of the government to make smarter purchasing decisions. However, the rule also imposes significant new and costly reporting burdens and compliance risks on contractors. The paragraphs below discuss these issues as well as possible alternatives that may satisfy the government’s desire for information while imposing minimal burden and compliance risks on industry. Government Need for Information According to GSA, TDR is necessary in order to: (1) improve GSA’s ability to conduct meaningful price analysis and decrease price variability; (2) validate fair and reasonable pricing on both its non-FSS and FSS vehicles more efficiently and effectively on an order-by-order basis; and (3) allow GSA’s customers to improve their ability to compare prices prior to placing orders under GSA contracts. To facilitate these objectives, contractors must report at least eleven transactional data items, including contract number; delivery/task order number/procurement instrument identifier; non-federal entity; deliverable description; manufacturer name; manufacturer part number; unit measure; quantity of item; universal product code (“UPC”); price paid per unit; and total price. This data may be based on invoices issued or payments received and, once reported, will be provided to category managers, FSS contracting officers, and agency contracting officers (though GSA has not yet indicated how it will manage access to the information or protect such information, some of which may be confidential commercial information, from disclosure). In effect, TDR requires GSA contractors to aggregate, validate, and report data that the government already has in its possession and, in this respect, increases costs for contractors (which are inevitably passed on to agency customers through higher pricing) and avoids addressing the internal systems needs of the government. Inconsistency with Commercial Practice Mandating contractors to report transactional data on a monthly basis is not consistent with customary commercial practices, as required by the Federal Acquisition Streamlining Act (FASA) and the implementing rules applicable to commercial item procurements in Federal Acquisition Regulation (FAR) Part 12. FAR 12.301(a)(2) requires that contracts for the acquisition of commercial items “shall, to the maximum extent practicable, include those clauses …[d]etermined to be consistent with commercial practice.” Over the last four years, we have seen the United States Court of Appeals for the Federal Circuit reaffirm the statutory proscriptions regarding the use of customary commercial practices for commercial item

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acquisitions1. In both these cases, solicitation terms were struck down as inconsistent with customary commercial practices. Likewise, earlier this year, the GAO sustained a protest against the terms of a solicitation for commercial waste management services issued pursuant to FAR Part 12 where the agency’s market research failed to reasonably support the agency determination that the solicitation’s pricing terms were consistent with customary commercial practice2. To date the Coalition has seen no evidence to indicate that the requirements of TDR are a customary commercial practice. Compliance and Cost Burdens In addition, a number of considerations exist with respect to the compliance and cost burdens associated with TDR for contractors. In a Coalition survey, members indicated that GSA’s cost burden estimates of TDR were grossly understated3. For example, based on the survey results, the Coalition’s estimate of the Total 1 Year cost of transactional data reporting was more than $800 million--30 times larger than GSA’s estimate. These costs represent an unnecessary economic drain on the private sector, especially small businesses. It is also unclear whether contract holders’ potential exposure for noncompliance is greater under TDR or the traditional Commercial Sales Practices (“CSP”)/Price Reduction Clause model. In fact, instead of alleviating contractors’ potential defective pricing liability related to CSP disclosures, GSA actually may have shifted that potential liability to a different set of data. Simply put, because TDR requires contractors to report on a monthly basis (as opposed to CSP disclosures, which occur once every five years or when new products are added), the likelihood that a contractor will inadvertently provide inaccurate or incomplete data increases. Recommendations Given the shortcomings of TDR, we recommend that the government:   



Suspend implementation of TDR and the associated pilots. Conduct a top down review of TDR and look into alternatives, such as investing in government systems that track and manage procurement data internally. To the extent that any aspect of TDR is maintained, identify metrics to measure performance such as total cost of ownership (direct and indirect costs) for both government and industry. Investigate the feasibility of establishing unpriced GSA contracts to streamline the procurement process, enhance competition, and increase value for Federal agencies and taxpayers.

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Verizon Wireless, B-406854, September 17, 2012 and CGI Federal Inc. v. United States, March 10, 2015 Red River Waste Solutions, LP, B-411760.2, January 20, 2016; Denial of Reconsideration, B-41170.3, June 15, 2016 3 See Coalition comments in response to GSAR Case 2013-G504 Transactional Data Reporting at http://thecgp.org/images/Transactional-Data-Comments_Final1.pdf 2

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