Commentary

The unintended consequences of policy and data overreach

Potential contractors often confront conflicting rules requiring rationalization.

Roger Waldron

May 3, 2024 1:25 pm

4 min read

No discussion of the effective administration of Federal procurement can ignore the reality that the Executive Branch and Congress have leveraged the procurement system to affect important social policy goals. For example, leveraging takes place through the implementation of goals for small business acquisition and acquisition from socioeconomically challenged firms. The Biden Administration continues to focus on leveraging the procurement system to meet small business procurement goals, including small-disadvantaged business, as well as acquiring sustainable products and services, enhancing cybersecurity, and promoting domestic sourcing and innovation. All told, in addition to performing the core task of “buying stuff,” the procurement system plays an important role in addressing multiple policy imperatives determined to be in the nation’s interests by the citizens’ representatives. It is for this reason that the efficient and economic acquisition of goods and services is imperative, not only to meeting mission requirements, but also to addressing key social policy priorities.

GSA’s Multiple Award Schedule Program (MAS), with thousands of contractors offering millions of products and services, is the federal government’s largest commercial item contract vehicle. Notably, the MAS program not only plays a central role supporting customer agency missions, but it also has a long track record of implementing key Administration policy goals, like supporting socio-economic goals. Yet, today, pricing policy and data overreach threaten to limit the Administration’s goals for small businesses, cybersecurity, sustainability, and innovation.

Pricing Policy Overreach

Potential contractors often confront conflicting rules requiring rationalization. It is rare where they encounter the imposition of operational guidance that conflicts with acquisition regulations, but it does happen. Such is the case regarding FAS Policy and Procedure (PAP) 2021-05, Evaluation of FSS Program Pricing. Coalition members have provided feedback on where the PAP conflicts with underlying regulations and imposes unduly burdensome submission/evaluation requirements. We also have discussed its impact on MAS contracting officers and contractors.

The PAP’s impact on the program has been extensive, but it has particularly affected Economic Price Adjustment (EPA) and product/service addition modifications transactions, especially those concerning MAS small businesses. The policy directive drives the over-submission of documentation, such as invoices, that increases costs for contractors (including small businesses) and delays the addition of products to current contracts. In so doing, it hinders small business opportunities and limits access to sustainable products, cybersecurity capabilities, and innovation from the commercial market.

For example, the PAP essentially provides that when MAS contractor proposes a modification to add new products or services, that modification triggers the renegotiation of the entire contract, including all items unrelated to the proposed modification, notwithstanding the fact that the prices for such items already had been determined fair and reasonable (!). This approach drives uncertainty in the MAS market and fundamentally discourages contractors from adding new, innovative items to their contracts for fear of being locked in contract Purgatory while essentially starting over negotiations for all items on their contracts.

As noted above, the Coalition has provided feedback on the PAP to FAS, and we look forward to continuing the dialogue to address the PAP’s overreach. In addressing this overreach, however, FAS not only will enhance its support in meeting customer agency missions, but also will further, rather than limit, the Administration’s goals for small businesses, sustainability, cybersecurity, supply chain reliance, and innovation.

Data Overreach

In addition to the PAP’s burdensome data submission guidance, the current MAS solicitation now includes a set of templates and practices that are inconsistent with commercial practice, creating significant, costly administrative burdens for contractors. For example, the current pricing templates appear to compel contractors and offerors offering configurable products to submit each possible configuration into the corresponding template, along with an associated price. This approach reflects an overreach of Transactional Data Reporting (TDR) and data. In some industries, like furniture and information technology, there are thousands, if not millions, of individual configurations. As a result of the requirement, contract administration costs are becoming increasingly complex, burdensome, and costly. FAS’s practices in this regard also are at odds with commercial practices, creating an unnecessary disconnect between the MAS market and the commercial market. These disconnects, again, reduce opportunities for small businesses and access to the commercial market for sustainable products, cybersecurity capabilities, and innovation.

The unintended consequence of the current PAP and solicitation data submission requirements can be, and should be, addressed to better support customer agency missions and Administration policy goals. A potentially positive note are statements from FAS that the template data is optional. However, the solicitation and guidance to contracting officers must be updated to clarify the status of this information and how it should be addressed. Another positive step would be the use of reverse industry days, where the FAS acquisition workforce can engage with industry partners to enhance understanding of the commercial market and the impact of certain pricing policy approaches. Rethinking the PAP and working towards a more “performance-based” approach to data submission, rather than the current prescriptive framework, will go a long way towards promoting policy imperatives and meeting mission needs. Coalition members stand ready to work with all stakeholders toward that end, and, in particular, we look forward to the first reverse industry day!