This column was originally published on Roger Waldron’s blog at The Coalition for Government Procurement, and was republished here with permission from the author.

This blog marks the first in a series of blogs focusing on the General Services Administration’s Transactional Data Reporting (TDR) rule.  As you know, the “final” rule was issued on June 23, and it implements TDR across the Federal Supply Schedule (FSS) program, the largest, most successful commercial item contracting program in government.  Interestingly, the designation of the rule as “final” appears premature, as it implements a pilot program that is subject to change!

Over the course of reviewing GSA’s analysis, explanations, and discussion of the rule, it becomes increasingly clear that GSA’s primary focus was on addressing the concerns raised regarding the burden associated with implementing and complying with the rule.  In any case, GSA’s discussion of key policy and operational issues, as well as its responses to public comments, raises significant issues/questions for the procurement community.

A key threshold question is whether the mandated terms of the TDR are consistent with customary commercial practices, as required by the Federal Acquisition Streamlining Act (FASA) and the implementing rules applicable to commercial item procurements set forth 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.”

FAR 10.002(b) requires that agency market research address, among other things, customary practices regarding the acquisition of commercial items.  Finally, FAR 13.302(c) prohibits a contracting officer from tailoring any clause or otherwise including any additional terms or conditions in a solicitation or contract for commercial items in a manner that is inconsistent with customary commercial practice unless a waiver is approved in accordance with agency procedures.

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 acquisitions.  See Verizon Wireless, B-406854, September 17, 2012 and CGI Federal Inc. v. United States, March 10, 2015.

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 practice.   See Red River Waste Solutions, LP, B-411760.2, January 20, 2016; Denial of Reconsideration, B-41170.3, June 15, 2016. 

The Coalition raised the question of the TDR terms versus customary commercial practice in its comments on the proposed rule.  GSA’s responded as follows:

Comment: One commenter stated this rule is inconsistent with the Federal Acquisition Streamlining Act of 1994 (FASA) and the subsequent procedures in FAR Part 12, which aims to ‘‘establish policies more closely resembling those of the commercial marketplace.’’

Response: GSA’s intention is to further align itself with commercial buying practices. Horizontal price analysis is a common technique used by commercial firms and individual citizens, and one that GSA plans to further leverage through the use of transactional data. To the contrary, the removal of CSP disclosures and the PRC tracking customer provision, which both predate FASA, are an attempt, in conjunction with horizontal pricing techniques, to harmonize GSA policies with the FAR and commercial buying practices.

See General Services Administration Acquisition Regulation (GSAR); Transactional Data Reporting, 81 Fed. Reg. 41124 (June 23, 2016)

GSA’s response misses the point.  The Coalition’s FASA/FAR Part 12 “comment” was not directed at the practice of horizontal price analysis.  Such analysis should have been a component of government market research and competitive activities all along, consistent with The Competition in Contracting Act.  Rather, the Coalition’s comment pointed out that the terms of the TDR mandating monthly transactional data reporting by contractors are not consistent with customary commercial practices, as required by law and regulation.

Indeed, nothing in the record and nothing we have received from our members indicates that the requirements of the TDR are customary commercial practices.  Thus, the contracting community is in a quandary as to how to come to an amicable balance between the stated needs driving the rule and the law.

The Coalition supports the Administration’s desire to remove regulatory barriers to innovation like the Price Reduction Clause.  To that end, the Coalition proposes another look at alternatives.  Earlier this year, the Coalition articulated the belief that DoD’s automated capture of data could be a step on the path addressing the need for internal procurement data collection.  For this reason, we proposed exploring the creation of a Category Management Data Working Group led by DoD and GSA, with a charter of identifying strategies/opportunities to facilitate/implement improved internal collection and management of procurement data by the government.

As part of its responsibilities, the working group would also conduct market research on pre-existing commercial sources of market data, as well as commercial best practices for the internal management and reporting of transactional data.

In light of the potential obstacles identified above, the Coalition offers its assistance.  Specifically, in an effort to support GSA in our common mission of improving the procurement system, the Coalition restates its offer to work with its members to identify commercial best practices for the internal management of procurement data and thereby avoid the challenges that exist with the implementation of the TDR.

Roger Waldron is the president of the Coalition for Government Procurement, and host of Off the Shelf on Federal News Radio.

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