Does the GSA have the best data to work with during price negotiations with contractors?

A new report from the General Services Administration’s Inspector General didn’t have many nice things to say about its Multiple Award Schedule’s Transactional Data Reporting (TDR) pilot. First criticizing the agency for not using the data, then calling the data itself unusable. This left at least one contracting expert confused on the IG’s true intent here. For more,  Federal Drive with Tom Temin spoke with Larry Allen, President of Allen Federal Business Partners.

Interview Transcript: 

Larry Allen This is just the latest salvo from the GSA office of the Inspector General taking issue with GSA’s Transactional Data Reporting system. The best way to look at transactional data reporting, as you mentioned, TDR, is that it’s an alternate path for companies seeking to obtain a GSA Multiple Award Schedule contract. And this path uses market research to determine price reasonableness. And yet, we have the IG coming out with this latest report saying that GSA didn’t rely on post-contract generated data and that the post-contract generated data that does exist isn’t very good. So I think that the IG kind of missed the point. Market research is supposed to be the main way that prices are obtained on the TDR path. And while post award sales data to the government may be somewhat useful, that’s not really what the intention was in terms of using that information to determine schedule price reasonableness. And I also I’m not really sure which part of this the IG is more aggravated with, the fact that GSA didn’t use the data or that the data itself wasn’t very good. So would they have been happier, for example, if GSA schedules people had used bad data? That seems to be what the report suggests. So I just think it’s a little confusing.

Eric White And so what are you looking for? I know that you laid out some of that right there, but could the IG actually help maybe make some needed improvements to TDR information or, you know, is there room to improve there from what you’ve seen?

Larry Allen I’m sure there’s room to improve in terms of the type of data that’s collected and how it’s used. GSA, though, for one part, is already starting to stand up its price comparison database, which has always been the long term objective of the TDR program. That’s going to be a tool that helps federal customers decide whether or not they’re getting a good deal on schedule offer. Those are the prices that are actually paid at the task order level, regardless of what the contract level pricing might be. So GSA standing that tool up. Another thing that they’ve done in terms of ensuring that contract level pricing is good is that they’ve developed their own it’s called a 4P pricing tool and GSA has developed that tool. So it’s not as if they need to rely on TDR data to determine price reasonableness. They don’t. The people that run the schedules program have gone ahead and created their own mechanisms, their own ways to assess price reasonableness. I’m hoping that the IG will look at those. Frankly, Eric, I think one of the things that I’m a little concerned about is the consistent stridency with which the IG has taken issue with the TDR approach may have blinded their ability to be impartial and to look at areas where they could actually make some positive comments.

Eric White Is it the case of where more information is always good, even if it’s not necessarily the most up to date information? I mean, will it help, regardless of how badly the IG thinks the information is?

Larry Allen Well, I think you really hit something there, Eric. And the idea about, it’s one thing to collect the information, it’s another to be able to use it. So at some point, are we more interested in just gathering a never ending stream of information or are we actually going to set up systems and protocols that enable us to use the information we already have? So it’s not just that we we get data. It’s how do we use that data? And then I think the larger part of that discussion is what role does the data analysis play in helping determine price reasonableness? Certainly, good data analysis is going to be a key part of that equation. But I never want to get to the point where we use data as its own self-executing reason for existing. And what I mean by that is data and data analysis is a tool, a tool that contracting officers can use in their process of determining price reasonableness. The tools should not become the self-executing, end all, be all. It should just be a tool. And ultimately the contracting officer should be able to use his or her own judgment in awarding the contract.

Eric White Got it. All right. And so that’s talking about the GSA’s role in federal contracting. But there’s another agency that is taking a bigger stand in the federal contracting process, and it may not be one that folks immediately think of when they think of federal contracting, is it?

Larry Allen No, Eric, it’s not. Here we’re talking about the Environmental Protection Agency and the growing role that EPA rules play and will play in the lives of government contractors. I’m telling my clients, the people that read my newsletter, that they should definitely be adding the EPA to the list of government agencies that they look at in terms of those that can add burdens and requirements to your government contracts.

Eric White And why is that?

Larry Allen Well, we’ve already seen the EPA come out with a proposed greenhouse gas rule. And even though the rule isn’t finalized yet, it’s already the whole mechanism of greenhouse gas tracking and reporting has already started making its way into a couple of contracts. So it’s not mandatory now, but it will be once the rule is finalized. And, companies are going to, depending on the type of company and the size of your company, you’re going to have to track your greenhouse gas emissions and then report on them. And if you’re a big enough company, you’re going to have to tell the government what your mitigation strategies are going to be for that. But moving beyond that Eric, that’s just kind of the first salvo. We’re getting into things like sustainability and sustainability report cards for government contractors. How sustainable are your manufacturing processes, how sustainable are the service practices that you have if you’re a service company? The EPA is developing a report card for some of the largest government contractors. Whether you’re a large contractor or not, the creation of that report card is certainly going to have a major impact on companies and how they approach the market because federal customers are going to want to know how are you doing on the report card, even if you’re not one of the ones that appears on the report card.

Eric White We’ve seen these rules before and, you know, sometimes they have a little bit more teeth than usual. Sometimes companies may think, oh, well, we just maybe need to just wait out for another administration or something like that. But is this something that is definitely here to stay? And this is going to be something that, as you mentioned, contractors are going to have to take into account when doing business with the government?

Larry Allen Eric, I think it’s here for the foreseeable future. You know, certainly priorities come and go with different administrations. I’m not sure that I see this going away just because we might have a change in administration down the road. We may not either. And, you know, there are other things that stayed in government procurement, regardless of who sat in the White House. You know, category management, for example, started as an Obama administration initiative and kept right on going through the Trump administration and is still with us now in the Biden administration. So this whole role of environmental risk factors and how government contractors work in terms of being environmentally responsible corporate citizens, some element of that, I think, is always going to be here, whether it is as highly emphasized as it’s being now,  we’ll just have to wait and see.

Eric White Something that does matter who’s in the White House is when there is a split government and there’s often in the last decade or so, these debt ceiling showdowns. And what is the latest that you are telling folks and your clients about, you know, where things stand at the moment?

Larry Allen Eric I think the good news, to the extent that there is any good news on this front, is that all the parties are starting to talk to each other this week. We’ve got a whole group of people that have collected on Monday at the White House to talk about the debt ceiling issue. Hopefully that will start to produce something productive. It’s going to take negotiations. The House, after all, did pass a piece of legislation that set out certain parameters for how they viewed a debt ceiling increase moving forward. The Senate’s going to have to respond with its own version of it. I think the big thing here is we just don’t have a lot of time. We have a month, probably a little bit less than a month before we have that X date that the Department of Treasury always tells us about. I think the impact on contractors, though, is going to be felt even before we get to the X date. Agencies are going to have to do continuity of operations planning. They’re going to have to do that now. That’s increasingly going to take mid and senior level managers away from doing their, “day job.”  And they’re going to have to do that continuity planning in case their agencies actually do have to partially or totally shut down because they can’t pay their employees, which is one of the things that could definitely happen under a debt default. You know, the government has to be selective about what bills it pays. So we’ll have to think about that. But I definitely think that contractors should anticipate seeing an impact now, regardless of whether or not we get to an agreement. Last time we had this situation, Eric, with one party controlling the White House and another party controlling the House of Representatives, we got an agreement on the debt ceiling issue on X day. I’m not anticipating that we’re going to be a whole lot different this time, but it’ll be great to have an agreement of the day before X day, but that’s going to be up to our political leaders. I think, though, that it is good to know that last time around it really went up to the 11th hour plus. So hold onto your seats, it’s going to be a bumpy ride.

 

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