GSA Issues Final Rule on Transactional Data Reporting and Proposed Rule on Access to Reported Data

Starting
with a phase-in pilot program on July 1, 2016, the recently issued General
Services Administration (“GSA”) final rule will require contractors to report a
minimum of eleven elements of transactional data (including contract and order
numbers, deliverable descriptions, manufacturer and part number, unit measure, quantity
sold, and prices paid per unit for items and services, as well as total price
(“TD”)) on orders issued under covered FSS, GWAC or IDIQ contract vehicles.   The new TDR clause is intended to help the
Federal government improve competition, lower prices and increase
transparency.  However, the new rule may
mean increased risks and exposure for Federal contractors.

The new
clause would apply to all new contracts under these FSS, GWAC and IDIQ contract
vehicles, and by bilateral modifications to existing FSS contracts.  The clause will be phased in, starting with a
pilot program phase that will cover eight FSS areas (Schedule 70 General
Purpose Information Technology  Equipment, Software and Services [selected
SINs]; Schedule 00CORP Professional Engineering Services; Schedule 03FAC Facilities
Maintenance and Management; Schedule 51 V Hardware Superstore; Schedule 58 I
Professional Audio/Video, Telemetry/Tracking, Recording/Reproducing and Signal
Data Solutions; Schedule 72 Furnishing and Floor Coverings; Schedule 73 Food
Service, Hospitality, Cleaning Equipment and Supplies, Chemicals and Services).  These eight areas comprise 30% percent of
GSA’s FSS contracts and 43% of the volume of GSA Schedules sales.  Total GSA Schedules sales accounted for more
than $33 billion in FY 2015.  Phase in to
make the pilot permanent or to expand to other FSS areas is not expected for at
least one year.  The rulemaking states
that the new TDR clause is part of an Administration initiative to
fundamentally shift government management of individual purchases and prices
across the Federal government to “buying as one through category
management.” 

Significantly,
under the pilot program, vendors will be required to report their TD monthly,
and GSA, category management personnel and buying officials across the Federal
government will be able to use and share the TD furnished by these vendors to
negotiate and leverage lower prices for purchases not only from these vendors,
but from other vendors that would sell the same or similar supplies and
services.  GSA plans to employ automated
analysis techniques, such as the new Formatted Product Tool (“FPT”), to
facilitate its identification of comparative vendor pricing and to use that data to notify vendors
where proposed pricing is “outside a range determined to be acceptable for
identical items.”   It also intends to use the TD reported to analyze
the pricing of similar items or services, and to plan its future strategic
sourcing needs. 

The
government seeks to encourage existing vendors to accept the clause (and therefore
the contractor’s requirement to report and the government’s ability to use the TD)
by eliminating the Price Reductions Clause’s (“PRC’s”) price protection
provision and current quarterly Commercial Sales Practices (“CSP”) disclosures required
by the Most Favored Customer (“MFC”) clause, in favor of monthly reporting of
TD by covered contractors participating in the pilot program.  If after the first-year of the pilot, GSA
determines that the TD rule does not result in beneficial savings to
government, it could end the program and resume use of the PRC and MFC CSP
provisions.  Alternatively, it could
expand the program.  Either way, the
contractor must bear the significant burden of establishing a system,
electronic or manual, to accumulate, track and report the identified TD
elements monthly.  It also must face the
risk that the government will change or increase the reporting and elements to be
captured and reported, and that the government will still require the provision
of additional pricing data if the Contracting Officer (“CO”) is unable to make
a determination of whether the proposed price is fair and reasonable.   Since GSA plans to issue data extracts to provide
vendors, and the public, transparency into the range of pricing for the same or
similar products, it and the other customers using the GSA FSS, GWACs and IDIQ
vehicles are likely to expect vendors to submit offers that take this horizontal
market insight into account.   While it does not intend that the new TD rule
will turn the acquisition system into “a lowest-price procurement model”, GSA
expects the government to save billions of dollars as it leverages the TD to be
provided by contractors under the new final rule.

In complement
to the final TD rule, on July 7, 2016, GSA issued a new Notice, soliciting
comments by August 29, 2016, regarding the contractor-reported TD that GSA
plans to release to the public.  The GSA
seeks to provide “valuable market intelligence” to the public, including a
contractor’s competitors, and to promote transparency “to the maximum extent
allowable”.  Accordingly, it is seeking
input on how far it can go in the release of TD elements being reported.  At this point in time, the Notice only
identifies two of the eleven elements to be reported (quantity sold and price
per unit) to be exempt from release under the Freedom of Information Act (FOIA)
and through a public “data extract”.  It
is likely that GSA, in soliciting comments, is seeking justification to
publicly report this data as well.

Takeaways:

  • The new TD rule requires contractors to provide the eleven TD
    elements at no additional cost to the Government.  Whether you have a new contract or would
    accept a bilateral modification to include the clause in your existing
    contract, you need to develop a compliant system.  Plan ahead to address the requirements and
    costs that will arise due to the change.
  • The new TD rule requires reporting of TD on all supplies and
    services delivered by the contractor during the performance of the orders
    issued against covered contracts, and apparently not just the supplies or
    services SINs that are part of the pilot program.
  • Because this is a new way of assessing pricing, the GSA is
    issuing new GSA Acquisition Manual guidance for government procurement
    officials.  These personnel will need to
    be trained to understand the uses and limits on the TD being reported. 
  • Given the GSA’s recently issued Notice and request for
    comments on the releasability of TD data elements, contractors and vendors
    should make sure that they vigilantly mark and protect their proprietary data
    from unauthorized use, release and disclosure.  They may also consider commenting on this
    Notice. 
  • Given the recent Supreme Court case on implied certification,
    Universal Health Services, Inc. v.
    Escobar,
    reporting under the final rule may be considered an implied certification.  Exercise care to ensure you maintain a
    consistent and accurate accounting method for tracking and reporting your
    transactional data, and paying your industrial funding fee (“IFF”) and/or
    Contract Access Fee (“CAF”).

 

The new clauses are scheduled to be included
in contracts starting as early as July 1. 
And the Notice is out for comment until August 29, 2016.  Please forward this information to your
personnel involved in GSA FSS, GWACs, IDIQ contracting and subcontracting.  If you have questions about the new rule, or
compliance matters, contact Susan Ebner, or your Fortney Scott counsel.