Government Contracts Monitor

What Price is the Government Paying? Federal Supply Schedule Pricing Procedures May Finally Be Changing

May 18, 2015

By: Eric Whytsell

The comment period recently closed on a General Services Administration (GSA) proposed rule amending the GSA Acquisition Regulation (GSAR) to require vendors to report transactional data from orders and prices paid by ordering activities. Described as part of the ongoing move to improve federal purchasing through Government-wide category management (announced here and discussed here), the proposed new GSAR clause will ultimately be supplemented with changes to the basis of award monitoring requirement of the existing price reductions clause. The GSA hopes to reduce the burden for participating Federal Supply Schedule (FSS) contractors while simultaneously improving GSA’s ability to conduct price analysis and effectively and efficiently determine fair and reasonable pricing.

The clause will apply to orders placed against both FSS contract vehicles (except for Department of Veterans Affairs FSS contracts) and GSA’s non-FSS contract vehicles (Governmentwide Acquisition Contracts and Governmentwide Indefinite-Delivery, Indefinite-Quality contracts).

Under the proposed new transactional data reporting clause, contractors would report prices paid by Government buyers for products and services delivered during the performance of the contract, including under orders and blanket purchase agreements using what is described as "a user-friendly, online reporting system." The information to be reported includes transactional data elements such as unit measure, quantity of item sold, universal product code (if applicable), prices paid per unit, and total price. In addition to giving the GSA a better understanding of the prices previously paid by Government buyers for similar products and services under similar terms and conditions, this approach is intended to provide GSA’s customers a way to more effectively compare prices prior to placing orders under its vehicles.

Rather than applying the clause across-the-board at once, GSA proposes to stagger its application over time, beginning immediately with GSA’s government-wide non-FSS vehicles in which transactional data is not already collected through other methods. Then the clause will be applied to FSS contracts in phases, starting with a pilot program for select products and commoditized services.

Under the pilot, contractors would not be subject to current price reductions clause provisions that require them to monitor the prices they charge and maintain the agreed-upon relationship between their pricing for "basis-of-award" customers and those provided to the government. Instead, FSS customers would establish the prices they pay using the transactional data and the more rigorous order-level competition it generates. GSA would ensure the resulting prices paid under the pilot remain competitive by evaluating them against commercial benchmarks, other available commercial pricing data, and, where available, prices paid prior to the pilot. In addition, GSA would reserve the right to obtain updates to a contractor’s disclosures on its commercial sales practices (which were used to negotiate the original contract) in the event available commercial benchmarks and pricing data are insufficient to establish price reasonableness.

GSA believes there are multiple benefits to its proposed approach, including: better pricing; administrative savings; increased opportunities for small business participation; and standardization of practice. It plans to have assessment metrics in place before the pilot’s launch so it can test that hypothesis. GSA also intends to seek contractor feedback comparing the experience with the transactional data clause to the tracking requirements of the price reductions clause. Together with the Office of Management and Budget, GSA would then consider all relevant information and analysis to determine whether to expand the pilot to other goods and services or instead revert to using the current price reductions clause. Additional details regarding the scope of the pilot are to be announced through an open dialog on GSA’s Interact platform at interact.gsa.gov.

GSA held public meetings on the proposed rule in mid-April and then extended the comment period by a week to allow time for additional input from interested parties. We will monitor and report on further developments as the GSA considers the way forward.

Attorneys