Almost five years after launching the Transactional Data Reporting (TDR) pilot, the General Services Administration is reporting success.
Jeff Koses, GSA’s senior procurement executive, said the TDR pilot proves it’s valuable and a worthy replacement for the dreaded Price Reduction Clause (PRC).
“GSA has successfully demonstrated the value of TDR under the existing scope of the pilot. It has shown steady progress over the past four years, met most of the pilot’s objectives in the most recent year, and has made the necessary investments to leverage TDR’s potential in the years to come,” Koses wrote in an April 27 blog post. “We will continue to make improvements, especially in contracting officer usage.”
But multiple sources said that although TDR may work on paper, the reality is it’s unclear if any contracting officers are using the data to make decisions or even if the data is valuable enough for acquisition professionals.
“I have not experienced any negotiations based on TDR data in order to form an opinion,” said an industry expert, who requested anonymity because they work closely with GSA. “My clients who are TDR-covered have only been subject to contract-level price comparisons.”
Other sources said GSA’s three-year pilot proved more that it’s possible to use different and possibly better data to make price determinations, but the data is incomplete at best.
The source said customer agencies were hesitant to provide GSA with data on how much they paid for products and services. These issues may come to light in a new GSA inspector general report that it expects to release on the TDR pilot in the coming weeks.
Koses wrote in the blog post that GSA didn’t use the data in 2019 and made no mention of using the TDR information in 2020. He wrote:
“Looking at historical data, the pilot’s overall performance based upon a documented evaluation plan showed steady progress. This includes:
FY 18 results revealed that overall price position was maintained and burden lowered. However, data remained questionable, and no buying strategies resulted.
FY 19 results revealed substantial improvement in data completeness and in small business performance. However, we saw that the data hadn’t been used and data policy gaps existed.
FY 20 results revealed that data completeness, contract-level pricing and small business metrics all exceeded targets.”
While industry experts said the results of the TDR pilot and their individual experiences led them to see the effort in a new light, GSA still needs to be more transparent about the data and how it’s being used.
Larry Allen, president of Allen Federal Business Partners and a long-time GSA observer, was an outspoken critic of TDR when it started, writing a column with the headline, “Run, don’t walk from Transactional Data Reporting rule.”
“I think TDR has grown into a viable option for many businesses. I will admit to having been a skeptic, but I think that, so long as a company keeps good records on what they provide to their GSA contracting officer, TDR can be a good way for some companies to obtain a schedule contract that otherwise might not be able to,” Allen said in an email to Federal News Network. “GSA may have even been a little ahead of the curve here in terms of TDR attracting non-traditional contractors, something that is very sought after now in Defense Department and even civilian agencies.”
IG acceptance still a big obstacle
Others experts said it may be time for TDR to move on from the pilot stage and into real production.
Alan Thomas, the former commissioner of the Federal Acquisition Service and now chief operating officer at IntelliBridge, said it seems TDR is bearing fruit but how much is unclear.
“The claims in the blog post are great but will be even more compelling with accompanying data,” he said in an email to Federal News Network. “Stepping back from the pilot and thinking about full implementation, GSA is going to need a strategy for working with the inspector general on TDR. The IG has a lot invested in the current price reduction clause regime and won’t move away easily from it.”
The IG’s acceptance and use of TDR remains a huge challenge. Auditors regularly issue audit reports that highlight problems with GSA’s pre-award and post-award audit efforts. In April 2020, the IG issued a report that said GSA may have missed out on potentially $1.1 billion in savings through pre-award audits of prices.
Jennifer Aubel, a principal consultant with Aronson, a consulting firm, wrote in a July 2019 blog post that as more companies participate in TDR, the IG’s ability to audit prices before an award is made is becoming harder.
“Under the TDR pilot, the population of auditable contracts has ostensibly been cut in half. When you remove the major resellers and integrators, what remains are largely professional service contractors and products companies under Schedules 84 (Law Enforcement), 71 (Furniture), and 66 (Scientific),” Aubel wrote. “The audit threshold for annual sales is also reduced due to the smaller pool of contracts from which the OIG is selecting. Small businesses who would have never been a blip on the OIG’s radar are now at much higher risk of pre-award audit.”
Aubel wrote that GSA’s systems, in 2019, were not equipped to produce a “dynamic market driven pricing model.”
Impact of unpriced contracts unclear
Now almost two years later, it’s unclear if the systems are able to provide dynamic pricing, and more companies have moved to TDR, making the PRC less valuable.
Another complicating factor with moving away from the price reduction clause for the IG is it’s invested heavily in people and processes to perform those audits so refocusing those resources would be a challenge.
Thomas said the biggest issues with TDR data when he was FAS commissioner were quality and access, and both of these have been addressed.
“We put a small team of FAS leaders (Stephanie Shutt, Judith Zawatsky and Mark Lee) working with Jeff’s team in OGP to improve data quality and broaden access to the data. As a result, I believe the data being collected is now cleaner. Vendors are better trained on how to enter it and are more comfortable with the reporting regime,” Thomas said. “Likewise, regarding access, GSA erred initially on the side of caution. Pricing data is sensitive, but there were only a handful of people who had access to the TDR data. If you are a contracting officer, you can’t use what you don’t have! The team developed and implemented a reasonable set of safeguards that enabled more people to access TDR data.”
Thomas added GSA’s next steps should be to get the data in the hands of contracting officers, who can use the pricing information along with analytic tools and process automation software to make more strategic decisions and improve mission success.
This makes the price reduction clause and even TDR less necessary because it puts the burden on vendors to provide the lowest prices as part of contract negotiations.
Industry sources said GSA also can’t move away from TDR easily because of the investment companies have made into the systems to collect the data.
GSA’s Koses wrote that now with five years of pilot behind them, it will train contracting officers on the benefits of having access to more granular prices paid information and to support these efforts with management guidance, as necessary.
He said GSA will also refine and consider:
The ability of Federal Supply Schedule contracting officers to leverage transactional data for price negotiations in lieu of commercial sales practices (CSP) and price reduction clause (PRC) disclosures;
The impact of an expanded data collection on GSA’s ability to leverage the data it currently collects;
Impacts on current and future GSA schedule contractors;
Communication to industry partners ahead of changes;
Training and tools for category managers that are currently not impacted by TDR; and
Potential impacts on other FAS initiatives, such as MAS Consolidation and implementation of Section 876 of the FY 2019 National Defense Authorization Act.
Thomas said vendors need to keep these changes in mind and potentially invest in back-office systems to more easily collect and report pricing data.
“When this is the case, vendors need to make sure the government understands the art of the possible with current systems and, if an investment is required, what’s the size and scope of that investment,” he said. “Sometimes the government asks for things and doesn’t understand the full implication of the ‘ask.’ Leaders at GSA are reasonable but not clairvoyant, so keep an open line of communication.”