Lightening or merely shifting the burden on contractors?

A powerful driver of federal acquisition policy is suspicion the government isn't getting the absolute lowest prices vendors have to offer.

When I used to bench press with a single heavy bar, it looked impressive when I put a big plate and a few little ones on either end. But after a while it started to hurt my shoulders. So this never-to-be-Charles-Atlas switched to dumbbells. Even with the same total weight, somehow having each arm work separately makes for less stress on the rotator cuff.

To some extent, the General Services Administration has start to change, though not really lighten, the heavy lift of reporting and compliance it imposes on federal contractors. The big question is whether the new reporting regime will also sink under its own weight.

By way of background, a powerful driver of federal acquisition policies is suspicion the government isn’t getting the absolute lowest prices vendors have to offer. Long ago that gave rise to the hated price reduction clause for sales on the GSA multiple award schedule contracts and other contract vehicles.

The clause often acted as a gotcha mechanism for the government, when it discovered — or a whistleblower disclosed — that this or that customer is getting a lower prices for a given widget than this agency. Ergo, the vendor is by definition violating not only the price reduction clause but also the False Claims Act. Vendors tend to settle and pay, rather than go to court over what may have been an inadvertent mistake.

If the price reduction clause was the 45-pound plate on one end of the heavy bar, the commercial sales practices regulation hung on the other end. It’s the government’s way of getting any new discount programs a vendor offers commercial customers.

So after long deliberation and contentious rule-making, GSA finalized its transaction reporting rule. As Jason Miller reports, the basic idea is to have contractors eventually upload data about every federal sale it completes. In theory, contracting officers would tap all this aggregated data and somehow know what they should be paying for a thing. The transaction reporting rule pushes all the right contemporary buttons — category management, big data, data analytics.

I predict this will be a whole lot harder to implement in practice than it sounds in theory. You have to wonder about something that takes 185 pages to describe. Among my questions: How will vendors or the government know that data is consistent from company to company, elements such as product descriptions or terms and conditions? Will the information match the information in the government’s existing systems that record what it bought and how much it paid? How come that information doesn’t become the basis of analysis in the first place? Will the data be able to show real comparability in sales when terms and conditions might be different even though the product itself is identical?

GSA is giving itself time to learn the answers to these and other questions. The rule is initially voluntary, and limited to the multiple award schedule contracts. GSA says the reporting burden will in fact be lighter. It postulates the current practice (price reduction and commercial sales practices rules) cost Federal Supply Schedule contractors $44 million. It estimates the new rule will carry first-year costs of $12 million, resulting in a cost reduction of $32 million.

Who really knows? But on the assumption that something had to give, GSA could be taking a step in the right direction.

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