As the increase in product and services costs started to hit the federal sector last year, the General Services Administration heard the complaints and frustrations of vendors for how long it took to modify schedule contracts, especially for adjusting prices to account for inflation.
Erv Koehler, the assistant commissioner of the Office of General Supplies and Services in the Federal Acquisition Service at GSA, called it a painful six months in the middle part of 2022.
Koehler said GSA pulled out all the stops to improve the timeline and now continues to address challenges around the modification process.
“Step one was resources. We were a little bit underfunded for a while and we’ve corrected for that. We’ve also surged in some contract support,” Koehler said after speaking recently at the Coalition for Government Procurement conference. “Then in the midterm, we have been focusing on the data coming in, so we can get some better information with inflation adjusted numbers. Then in the longer term, the catalog program will be the answer because it’ll be more real time and we’ll have better access to the information more quickly.”
He added GSA’s acquisition centers around the country received everything they asked for from a resource perspective.
With inflation hitting as high as 8% in 2022, companies were seeking relief from GSA in the form of economic price adjustments (EPA). GSA issued multiple memos — one in March and another in September — trying to give companies a path to increase prices more easily.
Koehler said one big challenge for contracting officers was having accurate data to make price adjustment decisions for vendors.
GSA recently updated the data from its Price Point Plus Portal tool (4P), which aims to help contracting officers evaluate proposed pricing on schedule contracts offering product, to help stabilize the challenge of keeping up with inflationary changes.
“The volatility of inflation seems to have slowed down and we are more stable. [The update] will have more hits, more action and be able to process the modifications faster,” he said. “In addition, we have incorporated some of the same data elements reporting requirements from the consumer price index that we have in Transaction Data Reporting (TDR). So we can now pull in other sources of information to do the price analysis in addition to what we’ve already had. That stuff will be a little more real time.”
Upgrades coming to pricing tool
Koehler said each modification is different so it’s difficult to say what the average time is, but he said he has seen a regular modification to a schedule contract happen in about 10 days and others where GSA is changing tens or hundreds of thousands of product prices happen in 30 days or so.
The goal for all of these modifications is both speed, but also making sure the prices are reasonable, a long-standing debate between GSA and its inspector general.
Koehler said this is why the data coming into the 4P tool is so critical to this modification effort.
“We’re trying to get a better mix of not just one thing from one source, but a good cross section of the overall market. Then we are really focusing on that original equipment manufacturer (OEM) part number and description, so we can do apples-to-apples comparisons, and then really get through the modification process more quickly,” he said. “Right now, the data is a little bit murky at times. Have you put a ‘J’ in front of all your part numbers or I put an ‘E’ in front of all mine, and it makes it tougher. But a lot of work has been poured into that to make it substantially better than it was and then the additional sources really, really rounded out. So again, we can get through with high confidence the price is reasonable.”
A big part of this effort is tied to the update of the schedule catalog GSA is undertaking.
Koehler said the catalog needs to be based on a market basket at the item level. GSA will hold industry days in the coming months to help figure out what that looks like to help industry adjust their supply chains to serve that market and innovate products or services.
“If I can get a smaller catalog that is easier for me to manage and easier for you upload and manage too, then I have to be faster on the modifications side,” he said. “I want to use the order level materials authority to allow orders to process without being on schedule. We are trying to get that process in play and then you can report it to me on TDR later. We will put fair controls in there to do $10,000 micro purchases or something like that. But the idea is if we can let those orders go through without them being on schedule so we can process faster, we can pick it up on the back end and add it to the market basket or not depending on the demand. That is conceptually what we are thinking about and I’m trying to use existing authorities so I can get it down quickly. I’m open to other suggestions, too.”
Consolidating products in the catalog
This is part of the broader initiative to improve the GSA Advantage and E-Buy catalog by reducing the number of products listed.
Koehler said there was a vendor that had a large catalog with more than 100,000 products, but in looking at their purchase histories, agencies bought only about 12,000 items.
“We’re looking at it saying ‘hey, this doesn’t make sense for any of us because we’re putting a lot of resources into stuff that is not bought 85% of the time.’ It clogs up the system,” he said. “But everyone worries that, ‘hey, if I don’t have all this stuff on there, you won’t add it fast enough.’ And that’s where I have to come through on my end of the deal to make that process a reality. There’s a lot of things out there that we need to manage better. We realize there’s a little bit of risk associated with that, so we’re going to go through the analytics side of it and once we get the code cracked, we’ll be moving out” to reduce the number of products in the catalog.
GSA is starting with the office supplies vendors first as a pilot to come up with a market basket.
“We’ll go from there so that those who have bigger catalogs will get smaller, those who have smaller category catalogs can choose to manage it how they do,” he said. “But the current solicitation is written in such a way that vendors are encouraged to provide their whole catalogue. We’re turning that over a little bit because we don’t want all of those things on a government contract, and it’ll make it more efficient to manage.”
The catalog refresh also includes a focus on improving data about the delivery status of products. Since October, GSA has been pushing vendors improve how they communicate with agency customers, and suspending any vendors from GSA Advantage and E-Buy who have a delivery rate or backlogged order rate of 50% or more among at least 11 line items on their bi-weekly report.
Koehler said GSA ended up suspending about 50 vendors out of about 4,000 vendors, with 35 coming back the next day to fix their communication problems.
He added that when GSA increases the bottom delivery rate threshold to 60% in the coming months, he would expect additional vendors to be suspended.
“We’re working with vendors to make sure that they can meet the standards. This has been a pretty light touch so far. We’re trying to be super accommodating. We want to keep small businesses in the market. We want to give them what we can,” he said. “At the same time, we do have the standards to meet because customers absolutely need to know when they’re going to get their stuff or if the order is cancelled.”