The General Services Administration (GSA) is scheduled to expand a 2016 rule this November, but faces significant opposition from within its own agency due to questionable data from a pilot program. On June 23, 2016, GSA published a final rule requiring contractors to report transactional data for both products and services provided under Multiple Award Schedule (MAS) contracts. The rule sought to collect the data necessary to allow the government to make smarter buying decisions, promote industry-wide competitiveness, and reveal buying patterns, but also to reduce the administrative and transactional burden on government contractors, eliminating barriers to entry – especially for small businesses – as it eliminated Commercial Sales Practices (CSP) and Price Reduction Clause (PRC) reporting.
In a 2016 GSA Blog post, Federal Acquisition Service (FAS) Commissioner Tom Sharpe, extolled the rule as offering “great value to the American taxpayer” while jointly “creat[ing] tremendous advantages for the vendor community.” The rule was launched as a three-year pilot program and was subsequently extended by GSA a couple times. Now, GSA is set to expand the implementation of the rule to the entire MAS program this November, however a significant obstacle stands in its way: GSA’s own Office of Inspector General (OIG).
Since the rulemaking process, the OIG has been a consistent opponent to the Transactional Data Reporting (TDR) expansion due to “inaccurate and unreliable data” and the fact that “FAS contracting personnel are not using the data to negotiate or make pricing decisions.” Following a 2021 audit, the OIG recommended GSA abandon the program. GSA disagreed with the OIG’s recommendations and continued with its plans to expand the program’s implementation by November 1, 2022.
On July 18, 2022, the OIG issued an Alert Memorandum arguing the expansion “could place government agencies at further risk of overpaying for products and services when ordering from FAS’ MAS contracts.” The memo highlights three principal concerns that suggest the program is not ready for prime time.
First, the data entered by contractors is often inaccurate. An audit of FY 2022 TDR data found that 64% – totaling about $1.6 billion – of all TDR product sales list part numbers that are different from the contractor’s price lists rendering the data “unusable” for price analysis. While FAS has stated it is in the process of fixing the issue, the OIG says other inaccuracies abound. For example, the OIG found that different contractors have listed the exact same product differently making “comparing the same products virtually impossible and risks inaccurate pricing decisions.”
Potentially most notably, the OIG has found “TDR data for professional services is almost completely unusable and was never included in any GSA evaluations, even though the expansion of TDR will include professional service-based contracts.” In 2021, service-based contracts accounted for 75.5% of GSA sales. The problem is an inherently difficult one to cure as labor categories have no standard part number. FAS states that contractors are ultimately responsible for entering accurate information; however, with reporting inaccuracies seemingly the norm, FAS is risking decisions informed by inaccurate data. The OIG argues “it is incumbent for GSA to either ensure that the data is accurate and reliable or discontinue the pilot.”
Lastly, OIG contends it is premature to expand the program because FAS has not yet allowed contracting personnel to use the data to make procurement decisions. Therefore, FAS has not had the opportunity to learn how contracting personnel use the data and evaluate the results of their procurement decisions.
It is important to note, the OIG does benefit from opposing the TDR expansion. The total elimination of CSP and PRC reporting would eliminate the OIG pre-award audit framework which sometimes results in notable findings. OIG believes the expansion of the TDR to all FAS MAS contracts would fundamentally violate the stated objective of the TDR: to “fulfill the CSP and PRC contract-level pricing negotiation function while lowering industry reporting burden.” Regardless, FAS is moving forward with the expansion and the elimination of CSP reporting rules makes participating particularly attractive.
For more information on the firm’s Government Contracts Practice, and specifically, assistance on the GSA MAS contracts and TDR expansion, contact the author at toverman@bassberry.com.