On June 23, 2016, the U.S General Services Administration (GSA) released a final rule that significantly alters the GSA's approach for monitoring and ensuring fair and reasonable pricing under its various contracting programs, including the Federal Supply Schedule (FSS) program. While this program does away with the difficult and onerous basis of award approach and the price reduction clause (as currently constructed), it does open the door to a host of new questions and issues.
On July 26, 2016, GSA released additional information and guidance on the transactional data reporting (TDR) pilot program.
GSA explained that the goals of TDR are to:
- Significantly reduce burden to industry partners by eliminating the Commercial Sales Practices and Price Reduction Clause tracking requirements from Schedule contracts participating in the TDR pilot;
- Reduce contract administration burden for TDR pilot vendors once TDR is implemented;
- Provide business intelligence to strengthen "best value" decision-making by ordering activities, which will allow customers to take full advantage of the wide variety and complexity of products and services offered by Schedule Partners and pass on savings to the taxpayer;
- Improve competition and increase transparency; and
- Support category management and promote smarter buying.
GSA also set out the schedule for the roll-out of this pilot program, identifying Schedule 72 as the first Schedule to enter the program, and the timing on when transactional data reports would be due to GSA after opting into the program. Further, in some instances, there are no current plans to include all special item numbers (i.e., products or services) in the program. Thus, it is conceivable that while you can opt in for some products and services, you cannot for others, thereby potentially leaving contractors to conform with both sets of requirements (the old basis of award and price reduction clause methodology and the new transactional data reporting methodology).
In order to ease the transition from the current 72A reporting database to the TDR reporting module, the requirement for commencement of reporting will not begin the date the modification is signed; rather, reporting will begin at the beginning of the next full business quarter as shown below.
Click here to view table.
To read about some of the "Draft Significant Changes" that GSA included, please click here.
The following provisions (many of which are quite onerous) would be deleted from participating contractors' GSA Schedule contracts:
- 552.212-70 Preparation of Offer (Multiple Award Schedule)
- 552.215-72 Price Adjustment – Failure to Provide Accurate Information
- 552.216-70 Economic Price Adjustment – FSS Multiple Award Schedule Contracts – Alternate I – Deviation
- 552.238-74 Industrial Funding Fee and Sales Reporting
- 552.238-75 Price Reductions
- 552.238-81 Modification (Federal Supply Schedule) – Alternate I – Deviation
- CSP-1 Commercial Sales Practices Format
- CI-FSS-151-N Additional Evaluation Factors for Award to New Offerors
- CI-FSS-151-S Additional Evaluation Factors for Award to Successful FSS Program Contractors
- I-FSS-969 Economic Price Adjustment – FSS Multiple Award Schedule – Alternate I
- SCP-FSS-001-N Instructions Applicable to New Offerors – Alternate II
- SCP-FSS-001-S Instructions Applicable to Successful FSS Program Contractors – Alternate I
These new clauses would be added:
- 552.216-70 Economic Price Adjustment – FSS Multiple Award Schedule Contracts – (DEVIATION II - JUL 2016)
- 552.238-74 Industrial Funding Fee and Sales Reporting – (JAN 2016) (ALTERNATE I - JUN 2016)
- 552.238-75 Price Reductions – (MAY 2004) (ALTERNATE I - JUN 2016)
- 552.238-81 Modification (Federal Supply Schedule) – (APR 2014) (ALTERNATE II - JUN 2016) (DEVIATION - JUN 2016)
- CI-FSS-151-N Additional Evaluation Factors for Award to New Offerors – Alternate I
- CI-FSS-151-S Additional Evaluation Factors for Award to Successful FSS Program Contractors – (OCT 2015) (ALTERNATE I - JUN 2016)
- I-FSS-969 Economic Price Adjustment – FSS Multiple Award Schedule – (OCT 2014) (ALTERNATE II - JUN 2016)
- SCP-FSS-001-N Instructions Applicable to New Offerors – (OCT 2015) (ALTERNATE V) - JUN 2016)
- SCP-FSS-001-S Instructions Applicable to Successful FSS Program Contractors – (MAR 2016) (ALTERNATE III - JUN 2016)
Notably, the new clauses address many of the initial questions this author had regarding the pilot program, particularly how the pilot program would handle price increases (previously addressed with the Economic Price Adjustment clause) and price reductions (previously addressed with the Price Reduction clause). As is now clear, GSA will remove the existing versions of these clauses and replace them with deviated versions, which provide in pertinent part that:
- Price adjustments include price increases and price decreases. Adjustments will be considered as follows:
- Contractors may submit price decreases any time during the contract period in which they occur. Price decreases will be handled in accordance with the provisions of the Price Reduction Clause.
- Further the revised Price Reduction Clause provides, simply, that:
- The Government may request from the Contractor, and the Contractor may provide to the Government, a temporary or permanent price reduction at any time during the contract period.
- The Contractor may offer the Contracting Officer a voluntary price reduction at any time during the contract period.
Finally, GSA also provided frequently asked questions, some of which are particularly helpful, explaining the scheduled roll-out, the data elements to be reported, as well as changes to how a contractor's Industrial Funding Fee may be paid:
How will IFF payments be remitted?
Answer: Vendors will now have the option to remit IFF payments on a monthly basis rather than waiting until the end of the quarter. Payments will be made via the FAS Sales Reporting Portal through www.pay.gov. The Pay.gov website will allow payments by electronic check, debit card, or credit card. The use of paper checks for payment of the IFF can no longer be accommodated.
As well as GSA's plan for getting vendors to adopt the pilot program:
How long will vendors have to accept the modification?
Answer: Vendors are encouraged to accept the modification as soon as possible, preferably within 90 days of receipt. This should allow sufficient time to prepare for reporting transactional data in the new system. Vendors should note that while the mod is not mandatory at this time, future options may not be extended if the modification has not been accepted.
Notably, GSA appears to indicate that it may not be a choice to opt in when renewing your Schedule contract.
Lastly, GSA explains that training on the new program will be made available:
What training will be available for vendors on the new reporting system?
Answer: There will be Web Based Training located on the FAS Sales Reporting Portal which vendors can access. This training will be divided into different sections that the vendor can review. There will also be an online user manual with search capability available as well. In addition to training provided on the TDR site, there will also be vendor training available in various venues (i.e., in person, recorded online, webinars, etc.) that vendors can take advantage of.
Given the foregoing, GSA has given Schedule contractors a lot to digest in considering whether to participate in the pilot program. It is important that contractors review this information and/or speak with knowledgeable professionals on these changes and how they might impact your business.