On Dec. 12, 2018, the General Services Administration hosted the Federal Marketplace Industry Day, at which, GSA announced its public launch of its Federal Marketplace Strategy (FMS). As an invited speaker representing Coalition for Government Procurement members, I was honored to participate and contribute to the dialogue around GSA’s strategic initiatives to increase transparency, enhance competition, and deliver best value solutions to support customer agency missions.
Many of you may recall that the FMS is underpinned by four cornerstones:
Multiple Awards Schedule (MAS) consolidation
A contract acquisition lifecycle management system, and
Administrator Emily Murphy, in kicking off the Industry Day, highlighted what FMS means for GSA’s customer agencies and industry partners:
“For customer agencies, it means we are using data analytics to get actionable insights to make it easier to find and buy solutions on the Schedules. For vendors, it’ll make it easier to offer those solutions in a way that best fits their technology and the way their customers actually want to buy things.”
It is a powerful, common-sense vision that has the potential to deliver innovative, best value, commercial solutions to meet customer agency needs, and, as anyone can see, the MAS Consolidation and Catalog Management cornerstones are central to this vision. Coalition members appreciate GSA’s strong engagement with its industry partners on MAS Consolidation and Catalog Management. Great progress on these cornerstone initiatives has been made, and we look forward to continuing the engagement.
In particular, Coalition members remain hopeful to see the next steps in achieving the administrator’s vision for schedules transformation. The aforementioned cornerstones must be buttressed by fundamental reforms of the MAS pricing policies and procedures for services. Reform of the pricing policies is central to increasing schedules accessibility and ease of use for commercial firms to offer their commercial services and solutions “in a way that best fits their technology and the way their customers actually want to buy things.” Pricing reform can be a win-win-win for customer agencies, GSA, MAS contractors, and, ultimately, the American people. The “building blocks” for that reform include:
Implementing and expanding “unpriced schedules” for services. The 2019 National Defense Authorization Act included Section 876, Increasing Competition at the Task Order Level, which authorized GSA to negotiate and award schedule contracts for hourly rate services without consideration of price. This reform would properly focus price, performance, and value on competition for customer agency requirements at the task order level rather than through artificial, arbitrary, contract-level pricing. By increasing access to innovative, best value, commercial capabilities, the authority is a game changer. Unfortunately, it has been over 20 months since the 2019 NDAA became law, and, to date, GSA has taken no formal, public steps to implement this reform.
Eliminating the Price Reduction Clause (PRC). The PRC is an outdated, burdensome, and anti-competitive pricing mechanism that ignores the realities of the 21st-century marketplace. As GSA has noted publicly, the PRC has little impact on schedule pricing. At the same time, it is a significant administrative cost/burden for contractors, and, as noted, it restricts the ability of commercial firms to compete for requirements in the private sector.
Implementing flexible, market-driven pricing for cloud services. The current, static structure of cloud pricing on schedule unnecessarily restricts market-driven value for customer agencies. Cloud pricing is variable, it changes frequently and rapidly based on supply and demand from customers. GSA should look to commercial best practices in negotiating and administering cloud pricing and services. So too, GSA should be mindful of market dynamics and the Total Cost of Acquisition in the cloud space, particularly recognizing the importance of cloud transition costs in multi-cloud environments, which are the commercial norm today. Needless to say, the PRC should not apply!
Addressing the appropriate use of cost-build negotiations for services. This building block boils down to ensuring that contractors can offer solutions consistent with the way they do business and that best fits their technology. Firms that go to market on a cost-basis should be allowed to negotiate services using cost-build. In contrast, firms that do not use cost-build and that have commercial sales of their services and solutions should not be driven to price in a manner inconsistent with their commercial practices. To do otherwise, limits access to new, innovative services and solutions, undermines commercial access to the federal market, and, ultimately reduces government access to commercial innovation.
Embracing commercial practices, structures, and solutions. The MAS program should not be a cookie-cutter program where commercial firms are driven towards a government-mandated framework. Such an approach undermines the administrator’s sound, visionary goal of making it easier to offer solutions in a way that best fits a firm’s technology/capabilities and the way customers actually want to buy things. Vendors should go to the federal market the way they do commercially, whether that be on a firm-fixed price, labor hour rate, or team-based method. Again, to do otherwise will limit access to cutting-edge commercial capabilities.
These pricing reform building blocks are needed now more than ever to support the partnership between government and industry in meeting the challenges we face as a nation. These building blocks will increase transparency, increase competition and access to the commercial market, and reduce unnecessary contract duplication. A true “best in class” contract is all about outcomes for customers, and the vision laid out by GSA in December of 2018 was all about best value outcomes for customer agencies. Coalition members stand ready to work with GSA on this shared vision for schedules transformation.