# General Services Administration Acquisition Regulation (GSAR); Transactional Data Reporting

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2016-14728

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** June 23, 2016
- **Citation:** 81 FR 41104

## Text

GENERAL SERVICES ADMINISTRATION
48 CFR Parts 501, 515, 516, 538, and 552
[GSAR Change 74; GSAR Case 2013-G504; Docket No. 2014-0020; Sequence No. 1]
RIN 3090-AJ51
General Services Administration Acquisition Regulation (GSAR); Transactional Data Reporting

AGENCY:

Office of Acquisition Policy, General Services Administration.

ACTION:

Final rule.

SUMMARY:

The General Services Administration (GSA) is amending the General Services Administration Acquisition Regulation (GSAR) to include clauses that require vendors to report transactional data from orders placed against certain Federal Supply Schedule (FSS) contracts, Governmentwide Acquisition Contracts (GWACs), and Governmentwide Indefinite-Delivery, Indefinite-Quantity (IDIQ) contracts.

Transactional data refers to the information generated when the Government purchases goods or services from a vendor. It includes specific details such as descriptions, part numbers, quantities, and prices paid for the items purchased. GSA has experimented with collecting transactional data through some of its contracts and found it instrumental for improving competition, lowering pricing, and increasing transparency. Accordingly, GSA will now test these principles on a broader base of its contracting programs. This move supports the Government's shift towards category management by allowing it to centrally analyze what it buys and how much it pays, and thereby identify the most efficient solutions, channels, and sources to meet its mission critical needs.

GSA will introduce a new Transactional Data Reporting clause to its FSS contracts in phases, beginning with a pilot for select Schedules and Special Item Numbers. Participating vendors will no longer be subject to the existing requirements for Commercial Sales Practices (CSP) disclosures and Price Reductions clause (PRC) basis of award monitoring, resulting in a substantial burden reduction. Stakeholders have identified the CSP and PRC requirements as some of the most burdensome under the Schedules program. These actions represent the most significant change to the Schedules program in the past two decades. GSA has also created a Transactional Data Reporting clause for all new GWACs and Governmentwide IDIQ contracts and may apply the clause to any existing contracts in this class that do not contain other transactional data requirements.

DATES:

This rule is effective June 23, 2016.

FOR FURTHER INFORMATION CONTACT:

Mr. Matthew McFarland, Senior Policy Advisor, GSA Acquisition Policy Division, at 202-690-9232 or
matthew.mcfarland@gsa.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Overview

II. Background

A. Category Management

B. Necessity and Value of Transactional Data

C. Imperative for Innovation

D. Transactional Data Reporting: Proposed Rule and Public Meeting

III. Final Rule Overview

A. Summary of Changes Made at the Final Rule Stage

B. Alternatives Analysis

IV. Final Rule Implementation

A. GWACs and Governmentwide IDIQs

B. FSS Contracts

C. Systems

D. Procedures

V. Public Comments Overview and Discussion

VI. Executive Orders 12866 and 13563

VII. Regulatory Flexibility Act

VIII. Paperwork Reduction Act

A. New Reporting Requirements

B. Annualized Public Burden Estimates

C. Annualized Federal Government Burden Estimates

D. Differences From the Previous Burden Estimates

E. Information Collection Supporting Statement

Exhibit A: List of Comment Letters Received

I. Overview

The purpose of the Transactional Data Reporting rule is to transform price disclosure and related policies for GSA's Federal Supply Schedule (FSS) contracts, Governmentwide Acquisition Contracts (GWACs), and Governmentwide Indefinite-Delivery, Indefinite Quantity (IDIQ) contracts, in order to improve the value taxpayers receive when purchases are made using these vehicles. The rule contains new clauses that require vendors to electronically report certain specific details on transactions under these GSA contracts, such as the descriptions of goods or services acquired, part numbers, quantities, and prices paid. GSA will use this added market intelligence to make smarter buying decisions and share the information with its agency customers so they can also make smarter buying decisions when utilizing GSA's contract vehicles.((

The rule also seeks to eliminate burden associated with current pricing disclosure and tracking requirements for thousands of entities, particularly small businesses that sell to agencies through the FSS program, the Government's largest purchasing channel for commercial products and services. In Fiscal Year 2015 alone, GSA's FSS contracts accounted for $33 billion in sales, or more than 7 percent of all federal contract spending. Accordingly, the rule provides for a measured and managed phase-out of disclosures and tracking currently required by the Commercial Sales Practices (CSP) format and the Price Reductions clause (PRC), and the associated practice of negotiating pricing based on a model where the Government strives to secure the vendor's most favored pricing and maintain this position for the life of the contract. Instead, GSA is adopting a more dynamic market driven pricing model, where vendors submit prices paid by Government customers through a new Transactional Data Reporting clause
1

and the Government uses this data, along with other pricing information, to ensure a vendor's offered price is competitive relative to other vendors selling the same or similar items or services.

1
GSAR clause 552.238-74, Industrial Funding Fee and Sales Reporting (Alternate I) (48 CFR 552.238-74 Alternate I).

The Transactional Data Reporting clause is being implemented under the Schedules program on a pilot basis, to begin not less than 60 days after the publication date of the rule. Participation in the pilot will initially be voluntary for existing Schedule contract holders, and those who participate and comply with the Transactional Data Reporting requirements will not provide CSPs or be subject to the PRC basis of award tracking customer provision. The pilot will involve eight Schedules, including the information technology Schedule 70 and the Professional Services Schedule (Schedule 00CORP), and will reach approximately 30 percent of GSA's FSS contracts that account for more than 40 percent of GSA the FSS sales volume.

FSS contracts managed by the Department of Veterans Affairs are not included in the pilot and therefore will not be impacted by changes made by this rule to waive application of the CSP and PRC tracking customer provision.

For GSA's non-FSS Governmentwide vehicles, a Transactional Data Reporting

clause
2

is immediately available. The new clause will be applied to solicitations for covered vehicles issued on or after the effective date of the rule. Existing contract vehicles containing other transactional data requirements have the option of incorporating the new clause through bilateral modifications.

2
GSAR clause 552.216-75, Transactional Data Reporting (48 CFR 552.216-75).

The Transactional Data Reporting final rule follows a proposed rule published by GSA in the
Federal Register
at 80 FR 11619, on March 4, 2015.
3

The proposed rule sought to eliminate the PRC tracking customer provision but retained the Government's right to request CSP disclosures. In response to the proposed rule, many public commenters concurred with the need for a change to Schedules pricing policies, as well as the need for a model that leverages modern analytics and 21st century technology, but a number of commenters asserted that GSA's projections of burden reduction were significantly overstated. They explained that the continued requirement to maintain the CSP, coupled with the Government's right to regularly demand updated information, would significantly limit the relief contractors would realize from waiver of the PRC's tracking requirements. Other commenters raised concern that elimination of these historical pricing tools would thwart GSA's ability to gauge how its prices relate to commercial sales, and as a result, put the Government at a greater risk of paying less competitive prices for commercial goods and services.

3
See GSAR Case 2013-G504; Docket 2014-0020; Sequence 1 (80 FR 11619 (Mar. 4, 2015)).

After careful review of the public comments, which are discussed in greater detail in Section V of this document,
4

and additional deliberation with Government stakeholders, GSA has modified the proposed rule to authorize in the final rule the phased elimination of both the CSP and the PRC tracking customer provision, as opposed to just the PRC's tracking requirements, as the proposed rule would have provided. Phase-out of these requirements will be subject to the results of a pilot, as was discussed in the preamble to the proposed rule. However, the pilot has been broadened to be more reflective of the varied goods and services offered and sold through the Schedules program, and will allow GSA to more effectively evaluate the likely impact of the intended transformation before making any final determinations.

4
See section V. Public Comments Overview and Discussion.

Transactional Data Reporting is an attempt to embrace modern technology while moving away from outmoded practices. When first introduced in the 1980s, the CSP and PRC helped GSA and its customer agencies maintain advantageous pricing from original equipment manufacturers that held the vast majority of FSS contracts. However, changes in what the Government buys and shifts in the federal marketplace have eroded the effectiveness of these tools over time. Additionally, vendors repeatedly single out these pricing tools as among the most complicated and burdensome requirements in federal contracting. By contrast, Transactional Data Reporting provides a less burdensome alternative. The rule adds a total of $15 million a year in costs for two classes of contracts, FSS ($12 million a year) and non-FSS ($3 million a year). FSS vendors are currently subject to the CSP and PRC reporting requirements that are being eliminated, resulting in a $44 million a year burden reduction. Factoring in the $12 million a year increase for new reporting requirements, this equates to a $32 million a year net burden reduction for those FSS vendors ($12 million−$44 million = −$32 million). However, non-FSS vendors are not subject to the CSP and PRC requirements and therefore are not receiving any burden reduction, but are seeing a $3 million a year reporting burden for the new requirements. As a result, the net burden reduction reduces to $29 million a year when accounting for all vendors subject to the rule ($12 million + $3 million−$44 million = −$29 million).

In all, the Transactional Data Reporting rule will result in an estimated burden reduction of $29 million a year, which consists of a projected $15 million a year compliance burden
5

minus the estimated $44 million a year burden for the CSP and PRC requirements being waived for vendors participating in the FSS pilot.
6

5
See Section VIII.B, Annualized Public Burden Estimates.

6
The CSP and PRC burden estimates are from Information Collection 3090-0235, FSS Pricing Disclosures. The annual public reporting burden for the CSP and PRC, excluding FSS vendors participating in the Transactional Data Reporting pilot, is $57.66 million. If FSS pilot vendors were still subject to the CSP and PRC reporting requirements, the total annual public reporting burden would be $101.69 million. The FSS pilot vendors' share of the total CSP and PRC reporting burden is based upon their share of the GSA FSS fiscal year 2015 sales volume, 43.2 percent. The annual $44.03 million reporting burden reduction attributed to this rule is 43.2 percent of the $101.69 million annual reporting burden if it were applied to the entire GSA FSS program. More information about Information Collection 3090-0235 can be found at
http://www.reginfo.gov/public
by searching “ICR” for “3090-0235”.

Equally important, GSA's experience using horizontal pricing techniques, where it compares a vendor's offered price to those offered by other vendors, has proved to be a more effective model. This includes a growing body of experience with transactional data that points to improved acquisition outcomes, from smarter demand management, to better pricing and reduced price variation, and opportunities to develop more effective buying strategies. Section II.B of this document provides several examples of how the Government has successfully employed transactional data-fueled horizontal pricing techniques.

To ensure a measured and manageable transition to use of transactional data in lieu of the CSP and PRC, the final rule will be implemented through a multi-layered phase-in process built around the pilot as follows:

• First, the pilot will be evaluated against a series of metrics that will include, but not be limited to, changes in price, sales volume, and small business participation, as well as macro use of transactional data by category managers and teams to create smarter buying strategies such as consumption policies. GSA's Senior Procurement Executive will regularly evaluate progress against these metrics in consultation with the Administrator for Federal Procurement Policy and other interested stakeholders to determine whether to expand, limit, or discontinue the program. No expansion of the pilot or action to make Transactional Data Reporting a permanent fixture on the Schedules will occur prior to the careful evaluation of at least one year of experience with the pilot.

• Second, Schedules will enter the pilot on a rolling basis. At least thirty days prior to applying the pilot to a Schedule or Special Item Number, vendors will be given notice on Interact, GSA's platform for exchanging information with Schedule vendors.
7

7
GSA Interact can be accessed at
https://interact.gsa.gov.

• Third, the new Transactional Data Reporting requirements will be mandatory only for new Schedule contracts awarded after the Schedule becomes subject to the pilot and at the time to extend the term of the Schedule contract. Initially, vendors holding existing contracts under pilot Schedules will be encouraged to enter via a bilateral contract modification so they can begin to take advantage of the

reduced burden of not having to comply with the CSP and PRC.

• Fourth, use of the transactional data will be introduced to federal buyers in stages, starting with category managers to provide them with insight into the assorted options available for satisfying common requirements and support smarter buying strategies, such as demand management, that promote the most efficient methods for meeting the Government's needs. The data will then be shared with FSS contracting officers, followed by agency ordering offices. Each of these buying groups will receive tailored training on the proper use of transactional data. In all cases, training will emphasize that prices paid information is just one information point that must be considered in conjunction with other factors such as total cost, quantity discounts, desired performance levels, unique terms and conditions or product attributes, delivery schedule, customer satisfaction, and other relevant information. Contracting officers will be encouraged to discuss with the offeror perceived variances between offered prices, transactional data, and existing contract-level prices, in order to evaluate whether other attributes (
e.g.,
superior warranties, quantity discounts,
etc.
) justify awarding higher prices.

Finally, GSA is amending its pricing instructions in the General Services Administration Acquisition Manual (GSAM) to place greater emphasis on price analysis when negotiating prices with Schedule vendors and, in particular, the need to specifically consider (i) offered prices on FSS contracts or Governmentwide contracts for the same or similar items or services, (ii) prices paid, as it becomes available under this rule, and (iii) commercial data sources providing publicly available pricing information. The GSAM guidance will also reiterate that the contracting officer is responsible for ensuring pricing is fair and reasonable. Accordingly, if a contracting officer is unable to make this determination based on data available to them through GSA's tools or available commercial pricing information, they will retain the right, as the Federal Acquisition Regulation (FAR) has always provided, to request additional pricing information, such as data other than certified cost and pricing data.

A fuller discussion of these issues is presented in the following sections of this document, including GSA's analysis of alternatives, an overview of the rule's implementation, a discussion of public comments, and an examination of the reporting burden.

GSA's primary statutory authorities for the FSS program are 41 U.S.C. 152(3), Competitive Procedures, and 40 U.S.C. 501, Services for Executive Agencies. For GWACs, GSA is an executive agent designated by the Office of Management and Budget pursuant to 40 U.S.C. 11302(e). Furthermore, 40 U.S.C. 121(c) authorizes GSA to prescribe regulations for its other multi-agency contracts, including Governmentwide IDIQ contracts. Finally, this rule is included in GSA's report under Executive Order 13563, Improving Regulation and Regulatory Review, which directs each federal agency to consider “how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome.” GSA's retrospective plan and updates to the plan can be found at
www.gsa.gov/improvingregulations.

II. Background

A. Category Management

Currently, the Federal Government acquires goods and services worth hundreds of billions in dollars through millions of individual transactions conducted by thousands of contracting units across hundreds of federal agencies and commissions. Most buying offices operate independently, conducting procurements without regard to the experiences of their counterparts. Functions such as industry outreach, market research, requirements development, negotiations, and contract award are repetitively performed, without coordination, across the acquisition landscape. Ongoing contract duplication leaves vendors navigating a diverse array of procedures and requirements, driving up administrative costs that ultimately manifest in higher prices.

In response, the Office of Federal Procurement Policy (OFPP) introduced a new vision for federal purchasing to fundamentally shift managing individual purchases and prices across thousands of procurement units to buying as one through category management.
8

The initiative entails grouping commonly-purchased goods and services into centrally coordinated categories. The Category Management Leadership Council (CMLC), established by OFPP, has defined the underlying principles of category management, which are supported by this rule:

8
See Office of Management and Budget memorandum, “Transforming the Marketplace: Simplifying Federal Procurement to Improve Performance, Drive Innovation and Increase Savings”, December 4, 2014, available at
http://www.whitehouse.gov/sites/default/files/omb/procurement/memo/simplifying-federal-procurement-to-improve-performance-drive-innovation-increase-savings.pdf
).

1. Optimizing existing contract vehicles (including replacement or elimination of duplicate or underperforming contracts) and driving more optimal use of contract vehicles.

2. Improving data collection efforts and analysis to drive improvements in categories of spend to increase savings and reduce duplication.

3. Leveraging industry/commercial intelligence and key partner relationships.

4. Maximizing customer insights and relationships to bring more spend under management and improve offerings and value.

5. Growing and sharing expertise.
9

9
See “Government-wide Category Management, Guidance Document, Version 1.0,” Office of Management Budget, May 2015, available at
https://hallways.cap.gsa.gov/information/Gov-wide_CM_Guidance_V1.pdf.

The CMLC has identified the following ten first-tier, or Level 1, categories that account for $270 billion, or approximately two-thirds, of total contract spending:

• Information Technology (IT).

• Professional Services.

• Security and Protection.

• Facilities & Construction.

• Industrial Products and Services.

• Office Management.

• Transportation and Logistics Services.

• Travel and Lodging.

• Human Capital.

• Medical.
10

10
See “Taking Category Management Government-Wide”, January 7, 2015, available at
https://www.whitehouse.gov/blog/2015/01/07/taking-category-management-government-wide-0.

To ensure Governmentwide harmonization, Level 1 categories will be led by a manager responsible for developing category-specific strategies. Within each Level 1 category are several Level 2 categories. For example, the Level 1 IT category includes Level 2 categories such as IT Software and IT Consulting. In concert with their respective category manager, Level 2 category teams will provide expert analysis, identify best-in-class sourcing solutions, and facilitate the dissemination of best practices, leading to smarter buying across the Government.
11

11
See “Government-wide Category Management, Guidance Document, Version 1.0,” Office of Management Budget, May 2015, available at
https://hallways.cap.gsa.gov/information/Gov-wide_CM_Guidance_V1.pdf.

For example, OFPP issued
Category Management Policy 15-1: Improving the Acquisition and Management of Common Information Technology: Laptops and Desktops.
In Fiscal Year 2014, agencies awarded more than 10,000 contracts and orders totaling $1.1

billion for laptops and desktops. In addition to contract duplication, price variation is also an issue since the prices paid for laptops of the same configuration could range from $450 to $1,300, or almost 300 percent. A category team led by the National Aeronautics and Space Administration (NASA), with subject matter experts from across the Government, was established and came up with the following requirements:

1. Standardize laptop and desktop configurations for common requirements. Through an extensive data analysis, the category team determined five standard configurations could satisfy 80 percent of the Government's laptop needs.

2. Reduce the number of contracts for laptops and desktops by consolidating purchasing and using a few number of high-performing—or best in class—contracts. With limited exceptions, all agencies are prohibited from issuing new solicitations for laptops and desktops, and civilian agencies must use NASA Solutions for Enterprise-Wide Procurement (SEWP), GSA Schedule 70, or National Institutes of Health (NIH) Chief Information Officer-Commodities and Solutions (CIO-CS).

3. Develop and modify demand management processes to optimize price and performance. Agencies are encouraged to adopt smarter buying strategies, such as adopting uniform refresh cycles and aggregating demand to support leveraged buying events.
12

12
See Office of Management and Budget Memorandum M-16-02, “Category Management Policy 15-1: Improving the Acquisition and Management of Common Information Technology: Laptops and Desktops”, October 16, 2015, available at
https://www.whitehouse.gov/sites/default/files/omb/memoranda/2016/m-16-02.pdf.

In another example, the Professional Services category team within GSA consolidated its offerings in two areas, the Professional Services Schedule (PSS) and the One Acquisition Solution for Integrated Services (OASIS) vehicle. The PSS is the result of combining eight separate Schedules under one umbrella, and in the process eliminating more than 700 duplicative contracts. This promotes efficiency in a number of ways. GSA can now focus its resources on improving the user experience under its contracts. Vendors, especially small businesses, now need to manage fewer contracts to fully access the professional services market, lowering their administrative burden. Finally, customers can meet their mission needs through a less fragmented purchasing channel. Likewise, OASIS provides flexibility for federal buyers seeking to streamline their acquisition strategies by eliminating duplicative contracts. In Fiscal Year 2015, GSA supported the Army and Air Force in moving more than $350 million in combined contract sales under the OASIS vehicle. OASIS has also allowed the Air Force to forgo extending five of its IDIQ contracts and the Department of Homeland Security has chosen OASIS as the successor to its Technical, Acquisition, and Business Support Services (TABSS) IDIQ contract.

The reduction in duplicative and inefficient contracts also removes barriers to entry into the federal marketplace, especially for small businesses. The Government Accountability Office (GAO) reports the costs of being on multiple contract vehicles ranged from $10,000 to $1,000,000 due to increased bid and proposal, and administrative costs.
13

Consequently, as category management streamlines procurement channels and vendors realize lower administrative costs, small businesses in particular will benefit from a leveling of the playing field. Small business participation is a key component of all category management strategies and care will be taken to ensure small businesses maintain access to the federal marketplace as duplicative contracts are eliminated.

13
See GAO report GAO-10-367, “Contracting Strategies, Data and Oversight Problems Hamper Opportunities to Leverage Value of Interagency and Enterprisewide Contracts,” April 2010, available at
http://www.gao.gov/new.items/d10367.pdf.

Nevertheless, as category management continues to permeate the acquisition landscape, a critical ingredient for its success must be obtained: Transactional data.

B. Necessity and Value of Transactional Data

A critical component of category management, and smarter buying in general, is the availability of transactional data, which shows the details of purchases at the line-item level. It includes details such as descriptions, quantities, and prices paid for the items purchased. More than providing leverage for Government buyers to negotiate lower prices, transactional data underlies the business intelligence used to inform smarter buying strategies.

Transactional data provides the Government insight into its purchasing patterns, allowing it to identify the most efficient solutions, channels, and sources to meet mission critical needs. As previously noted, two key category management principles are optimizing existing contract vehicles and reducing contract duplication.
14

With transactional data, the Government can analyze its consumption patterns, evaluate and compare purchasing channels, and identify best-in-class solutions. Thereafter, the Government can leverage its buying power to achieve taxpayer savings as it concentrates its purchases through fewer channels, which will in turn provide lower administrative costs for federal contractors.

14
See “Government-wide Category Management, Guidance Document, Version 1.0,” Office of Management Budget, May 2015, available at
https://hallways.cap.gsa.gov/information/Gov-wide_CM_Guidance_V1.pdf.

Category managers will also use transactional data to develop demand management strategies that offer more optimal solutions for satisfying common requirements. For example, GSA's Domestic Delivery Services 2 (DDS2) program illustrates how transactional data can provide valuable insight into purchasing patterns and offer opportunities to develop more effective procurement strategies. In Fiscal Year 2009, 90 percent of revenue through the Domestic Delivery Services contracts was for more expensive, express air shipments, with less costly ground shipments accounting for the remaining 10 percent. However, after analyzing the actual buying practices through transactional data, the Government was able to change its consumption behavior to spend less by foregoing unnecessary express air shipments. By Fiscal Year 2015, air shipments shrank to 60 percent of revenue and 46 percent of total shipments, while ground shipments grew to 40 percent of revenue and 54 percent of total shipments.

Transactional data can also be leveraged to reduce price variation and lower costs. As exhibited by the 300 percent laptop price variance, Government buyers often rely on asymmetric information, which results from one party possessing better information than the other. In response, GSA began pioneering transactional data reporting on several of its contract vehicles. Combined with sourcing strategies and enhanced competition, GSA successfully instituted dynamic pricing models, where prices are continually adjusted based on transactional data, resulting in less variation and lower prices. Examples of this success include:

• Office Supplies 2 (OS2) and Office Supplies 3(OS3), with direct savings increasing from 10 percent in Fiscal Year 2010 to nearly 30 percent by Fiscal Year 2015.

• Federal Strategic Sourcing Initiative (FSSI) Wireless: This contract delivered

a 21 percent savings rate in its first year of operation (Fiscal Year 2014), which then increased to 26 percent by its second year. Other agencies that adopted FSSI Wireless achieved savings up to 38 percent from their previous contract prices while reducing the number of devices managed.

• Commercial Satellite Communications (COMSATCOM): Customers save an average of 34 percent compared to GSA Schedule contract prices and better understand spend details. The availability of transactional data under COMSATCOM is already contributing to a reduction in duplicative contracts.

However, transactional data does not transform the federal acquisition system into a lowest-price procurement model. The Federal Acquisition Regulation (FAR) has a stated vision “to deliver on a timely basis the best value product or service to the customer, while maintaining the public's trust and fulfilling public policy objectives.”
15

The Government's preference will continue to be “best value,” or as defined in the FAR, “the expected outcome of an acquisition that, in the Government's estimation, provides the greatest overall benefit in response to the requirement.”
16

Transactional data is viewed in the context of each procurement, taking into account desired terms and conditions, performance levels, past customer satisfaction, and other relevant information. Using and understanding the data will help inform requirements definition and reduce excess consumption.

15
Federal Acquisition Regulation section 1.102 (48 CFR 1.102).

16
Federal Acquisition Regulation section 2.101 (48 CFR 2.101).

C. Imperative for Innovation

In Fiscal Year 2015, Government agencies ordered nearly $40 billion in goods and services through GSA's Federal Supply Schedules, Governmentwide Acquisition Contracts (GWACs), and Governmentwide Indefinite-Delivery, Indefinite-Quantity (IDIQ) contracts. GSA's Federal Supply Schedule program, commonly known as GSA Schedules or Multiple Award Schedules (MAS), accounted for approximately $33 billion of those sales, making it the Government's most used commercial-item purchasing channel. Consistent with the broader effort to transform the federal marketplace, GSA is innovating its suite of Governmentwide contract vehicles.

While GSA has a number of policies in place to help its buyers and agency users to secure best value for the taxpayer, and other regulatory actions in process to improve the Schedules program, two limitations in current pricing practices make achievement of this goal unnecessarily challenging: (1) Insufficient attention to “horizontal pricingI”—the ability to compare one vendor's pricing to that of other vendors—and (2) lack of visibility into prices paid by other customers.

Insufficient Attention to Horizontal Pricing:
GSA currently relies on a “vertical” pricing model to establish price reasonableness on its FSS contracts, which entails comparing a contractor's prices and price-related terms and conditions with those offered to their other customers. Through analysis and negotiations, GSA establishes a favorable pricing relationship in comparison to one of the contractor's customers or category of customers.

Until recently, when vendors first submitted an FSS offer, minimal consideration was given to the relative competitiveness of the vendor's prices to other vendors (
i.e.
, horizontal pricing). Instead, the FSS program primarily collects aggregate sales information through Commercial Sales Practices (CSP) disclosures, which include a broad disclosure of discounts vendors offer to commercial customers for similar products and services.
17

GSA's negotiation objective is to achieve a company's best price—
i.e.
, the price given to its most favored customer—who buys in quantities and under conditions similar to those of the Government.
18

Contractors are then required, under the Price Reductions clause (PRC), to monitor their pricing over the life of the contract and provide the Government with the same price reductions that they give to the class of the contractor's commercial customers upon which the original contract award was predicated.
19

In addition to the “tracking customer” requirement, the PRC allows vendors to voluntarily reduce prices to the Government and for the Government to request a price reduction at any time during the contract period, such as where market analysis indicates that lower prices are being offered or paid for the same items under similar conditions.

17
General Services Administration Acquisition Regulation section 515.408(a)(2) (48 CFR 515.408(a)(2)).

18
General Services Administration Acquisition Regulation section 538.270 (48 CFR 538.270).

19
General Services Administration Acquisition Regulation clause 552.238-75 (48 CFR 552.238-75).

Pricing disclosures, such as the CSP and its predecessors, along with the PRC, have served as the bedrock of the Schedules program pricing approach for at least as far back as the 1980s. With limited other means of data collection available, they served as a way to ensure fair and reasonable pricing through the life of a contract with the goal of achieving most favored customer pricing. For many years, CSP disclosures and the PRC tracking customer feature were critical mechanisms for achieving advantageous pricing from original equipment manufacturers (OEMs) that held the vast majority of FSS contracts. However, these tools predate the Federal Acquisition Streamlining Act of 1994 (FASA)
20

and the subsequent procedures in FAR part 12, which aim to “establish policies more closely resembling those of the commercial marketplace.”
21

For instance, FASA required the Government to only ask for information other than cost and pricing data as needed.

20
Public Law 103-355.

21
Federal Acquisition Regulation section 12.000 (48 CFR 12.000).

Moreover, a number of factors have eroded the effectiveness of these tools over time, including: (i) The significant growth of contracts held by resellers with little or no commercial sales against which to negotiate most favored customer pricing; (ii) the prevalence of sales for commercial-off-the-shelf products or other commercial items for which the Government is not a market driver; and (iii) the fact that these practices tie pricing for reductions to sales of single items and play little role in blanket purchase agreements and other higher-volume leveraged buying by agencies to achieve greater savings and reduce administrative costs.

When it comes to contract administration, the Government, and other customers in the category to which the Government is most typically aligned under the PRC, tends to receive voluntary price reductions from the vendor as a result of general market forces. In other words, prices are reduced under the voluntary provisions of the PRC as a result of competitive market forces, not under the mandatory tracking customer provisions.

Vendors have also singled out these pricing tools as among the most complicated and burdensome requirements in federal contracting, including during a 2014 national online dialogue sponsored by the Chief Acquisition Officers Council to identify ways of improving how the Government does business with its contractors. A number of contractors contended that the one-size-fits all application of these tools to all Schedules runs counter to

the spirit of the FASA and its implementing policies in FAR part 12, such as by requesting detailed pricing information only after determining that more readily available data is not sufficient to establish fair and reasonable pricing. Some noted that the proliferation of Schedule resellers has occurred, in part, out of an effort by OEMs to shield them from what they see as an overly complex and burdensome process that has created a punitive relationship between the Government and its suppliers.

GSA recognized the deficiencies of its vertical pricing model and has begun implementing horizontal pricing initiatives for its FSS contracts. For example, over the past year GSA has launched the Competitive Pricing Initiative (CPI) and the Contract Awarded Labor Category Tool (CALC):

• CPI aims to identify and address price variability across the Schedules program. The initiative is built around a Formatted Product Tool (FPT) that identifies pricing outside a range determined to be acceptable for identical items; vendors whose prices exceed the acceptable range are then notified of their comparative pricing. Currently, this initiative applies only to products, while services will be addressed at a later date. Moving forward, FSS contracting officers will utilize available horizontal pricing data from the FPT for certain categories of supplies when conducting price analysis, in addition to other price analysis techniques already employed in compliance with the FAR and GSAR. The FSS contracting officer's final determination will also take into account non-price elements, such as materially different terms, quantities, and market and economic factors. CPI will also allow FSS contracting officers to identify where a vendor's offered pricing is outside the range determined to be acceptable for identified products and services. After a vendor has been notified, they will be given the opportunity to use this market intelligence to make their offered pricing more competitive. Equally important, vendors will have the chance to advise if they have a unique value proposition, such as speedier deliveries, guarantees, or quantity that warrants a higher price.

• CALC is a market research tool that searches a database of awarded FSS contract prices for 48,000 labor categories from more than 5,000 FSS contracts under the Professional Services Schedule. Rather than sifting through contract files or searching GSA Advantage!® for comparable pricing, Government contracting professionals can now use CALC to return a multitude of comparable contract prices within a matter of seconds. Additionally, these search results can be filtered by relevant criteria such as years of experience and education level. Over time, greater enhancements are anticipated, such as adding geographic filters.

GSA has made tremendous progress on the horizontal price analysis front over the past year, but tools such as CPI and CALC only support segments of the FSS program and only analyze contract-level prices. Although GSA establishes fair and reasonable prices on its Governmentwide contracts, the program is designed with the intent of ordering activities negotiating further discounts at the time of the instant requirement. While in many respects this is a significant strength of the program, at times, the absence of good pricing information contributes to negative perceptions of the program, and as result, contract duplication. Consequently, transactional data is needed to perform a horizontal analysis of the actual prices paid for goods and services acquired through GSA contract vehicles.

Lack of transparency in prices previously paid:
The FAR has long emphasized the need for contracting officers to conduct price analysis as part of their responsibility to determine offered prices are fair and reasonable. Price analysis requires contracting officers to obtain and analyze data on the prices at which the same or similar items have been sold, but until recently, little effort was made to share prices previously paid by agencies throughout the Government. As a result, contracting officers generally lack critical information when making these important determinations.

Though the specifics vary, several of GSA's non-FSS contracts now require vendors to report transactional data, including Alliant, Alliant Small Business, Connections II, Custom SATCOM Solutions (CS2), Custom SATCOM Solutions—Small Business (CS2-SB), Office Supply Third Generation (OS3), and One Acquisition Solution for Integrated Services (OASIS). However, these requirements are applied through their respective solicitations without the benefit of a dedicated, standard GSAR clause, resulting in inconsistency.

Continuous innovation is imperative for the FSS program. In 2010, the Multiple Award Schedule (MAS) Blue Ribbon Advisory Panel, which included representatives from the Government's largest buying agencies—the Department of the Defense, Department of Homeland Security, Department of the Interior, Department of the Treasury, and Department of Education—and industry, recommended that “the GSA Administrator remove the Price Reduction Clause from the MAS program supply contracts for products in phases as the GSA Administrator implements recommendations for competition and price transparency at the Schedule contract level and the order level.” That same year, the Government Accountability Office (GAO) issued a report recommending GSA collect “prices paid” data on FSS orders and make this information available to FSS contract negotiators and customer agencies.
22

Over the next few years, GSA explored alternatives for collecting transactional data through the FSS program before ultimately deciding to pursue incorporating a transactional data reporting requirement in its FSS contracts.

22
See U.S. Government Accountability Office report GAO-10-367, “Data and Oversight Problems Hamper Opportunities to Leverage Value of Interagency and Enterprisewide Contracts,” April 2010, available at
http://www.gao.gov/products/GAO-10-367.

D. Transactional Data Reporting: Proposed Rule and Public Meeting

On March 4, 2015, GSA issued a proposed rule to require transactional data reporting on its FSS contracts and non-FSS contract vehicles—Governmentwide Acquisition Contracts (GWACs) and Governmentwide Indefinite-Delivery, Indefinite-Quantity (IDIQ) contracts. The rule proposed for non-FSS contracts would have been immediately implemented but rolled out on a pilot basis for the FSS program under select Schedules. For FSS contracts, the requirement would be paired with an alternate Price Reductions clause that did not include the tracking customer feature, although GSA would have had the right to request CSP disclosures at any time.
23

23
See GSAR Case 2013-G504 (80 FR 11619 (Mar. 4, 2015)).

On April 17, 2015, a public meeting was held at GSA headquarters in Washington, DC, to discuss the proposed rule. Nearly 200 companies, organizations, Government agencies, and interest groups were represented. In general, industry representatives opposed the transactional data reporting requirement but supported the proposed PRC changes. Government procurement representatives supported the rule, while oversight entities expressed concern with the potential reporting burden and PRC changes.
24

24
See the public meeting transcript at
http://www.regulations.gov/#!documentDetail;D=GSA-GSAR-2014-0020-0024.

Following an extension to the public comment period,
25

GSA received 26 comment letters on the proposed rule, including comments from industry associations, contractors, individuals, Government stakeholders, and other interested groups.

25
See GSAR Case 2013-G504 (80 FR 25994 (May 6, 2015)).

III. Final Rule Overview

GSA is adopting new requirements for transactional data reporting on its FSS, GWAC, and Governmentwide IDIQ vehicles:

• For FSS contracts, a new transactional data reporting clause, GSAR Alternate I, 552.238-74 Industrial Funding Fee and Sales Reporting (Federal Supply Schedule), will be paired with changes to FSS pricing disclosure requirements. Specifically, FSS vendors subject to the Transactional Data Reporting rule will no longer provide CSP disclosures and will no longer be subject to the PRC tracking customer provision. These changes will be initially implemented for select Schedules and Special Item Numbers on a pilot basis.

• For GWACs and Governmentwide IDIQs, a new clause, GSAR 552.216-75 Transactional Data Reporting, will apply to all new GWACs and Governmentwide IDIQs and may be applied to any existing contracts in this class that do not contain other transactional data clauses.

A. Summary of Changes Made at the Final Rule Stage

The following is a summary of changes made in response to public comments regarding the proposed rule:

CSP Disclosures:
FSS vendors will no longer provide CSP disclosures for contracts subject to the new Transactional Data Reporting clause, 552.238-74 Alternate I. This is in addition to pairing the new reporting clause with the new Price Reductions clause (552.238-75) Alternate II, which does not include the basis of award tracking customer requirement. The GSAR sections requiring CSP disclosures and clauses 552.238-75 and 552.238-75 Alternate I (the PRC versions that include the tracking customer provision) have been updated to exclude contracts subject to the new FSS reporting clause, 552.238-74 Alternate I.

GSA has also concluded the horizontal pricing ability afforded by Transactional Data Reporting would not only exceed the PRC tracking customer provision benefits, it could also alleviate the need for CSP disclosures when combined with automated commercial data sources, new data analytic tools, and improved price analysis policy. For the Schedules pilot, pairing Transactional Data Reporting with a removal of CSP disclosures and the PRC tracking customer provision will result in an average annual burden reduction of approximately $32 million for participating FSS vendors.
26

Furthermore, implementing the FSS pilot without the existing CSP and PRC requirements lowers the Government's burden by about $3 million a year.
27

26
$32 million does not include costs for non-FSS contracts. It is the result of the FSS burden of the initial pilot implementation ($12.41 million), minus the share of the combined CSP and PRC burden allocated to the FSS pilot vendors ($44.03 million). The total CSP and PRC burden from Information Collection 3090-0235, if it were applied to all GSA FSS vendors, including those participating in the Transactional Data Reporting pilot, would be $101.69 million. The share of that burden allocated to the FSS pilot vendors ($44.03 million) is based on the percentage of the overall FY15 FSS sales accounted for by the FSS pilot vendors (43.2 percent).

27
$3 million is the result of the Government's annual burden for this rule ($2.34 million) minus the share of the combined CSP and PRC burden for the Government allocated to the FSS pilot contracts ($5.58 million).

Data Reporting and Fee Remittance Timelines:
Both Transactional Data Reporting clauses (552.216-75 and 552.238-74 Alternate I) now require vendors to report transactional data within 30 calendar days after the last day of the calendar month. Additionally, the non-FSS clause (552.216-75) now states a GSA representative will provide the contractor with specific written procedural instructions on remitting the Contract Access Fee (CAF) within 60 days of award or inclusion of this clause in the contract, including the deadline by which the contractor must remit the CAF, although the deadline specified in the written procedural instructions will be no less than 30 days after the last day of the month. Previously, GSA proposed for contractors subject to both clauses to report transactional data within 15 calendar days after the end of the calendar month. Non-FSS contractors were to remit any CAF due within 15 calendar days after the end of the calendar month. FSS contractors were to remit any Industrial Funding Fee (IFF) due within 30 calendar days after the end of each quarter.

GSA increased the monthly reporting window from 15 to 30 calendar days in response to comments stating the proposed 15-day window did not allow enough time to compile, analyze, and report transactional data. GSA opted to not require monthly IFF remittance because doing so would disproportionately harm small businesses, many of whom remit fees based on accrued billings before they actually receive payments from their Government customers. The non-FSS clause (552.216-75) does not specify CAF remittance frequency—those instructions will be provided within 60 days after award or inclusion of the clause in the contract—but ensures contractors have at least 30 days after the last day of the month to remit the CAF.

Clause Language:
GSA made several revisions to the clause language for 552.216-75 and 552.238-74 Alternate I, including a data element “fill-in” for additional elements that requires approval from GSA's Senior Procurement Executive.

Paperwork Reduction Act:
GSA increased its Transactional Data Reporting burden estimates. For the proposed rule, GSA's public burden estimates included an average initial setup time of 6 hours and average ongoing monthly reporting times ranging from 2 minutes to 4 hours, depending on a vendor's sales volume.
28

In contrast, the final rule burden estimates include initial average setup times of 8 hours for vendors using manual systems and 240 hours for vendors using automated systems, and average ongoing monthly reporting times ranging from 15 minutes to 48 hours, depending on a contractor's sales volume and reporting system type.

28
See GSAR Case 2013-G504; Docket 2014-0020; Sequence 1 [80 FR 11619 (Mar. 4, 2015)].

B. Alternatives Analysis

GSA determined it is necessary to obtain and analyze transactional data for purchases made through its contract vehicles in order to support the Government's category management vision and improve acquisition outcomes in general. However, following the April 17, 2015 public meeting and subsequent receipt of the public comments, GSA was compelled to further evaluate the spectrum of alternatives for Transactional Data Reporting, ranging from withdrawing the rule in favor of different approaches for obtaining the data to applying the new reporting clauses without corresponding changes to existing disclosure requirements. Ultimately, the decision to proceed hinged on considerations including, but not limited to, alternatives for collecting transactional data; the burden associated with reporting transactional data; opportunities to reduce burden through changes to existing disclosure requirements, and the associated

impacts of those changes; effects on small businesses; and the benefits of collecting transactional data for non-standard products and services.

The Initial Regulatory Flexibility Analysis published with the proposed rule included an evaluation of alternatives for obtaining transactional data—internal applications; GSA ordering platforms such as eBuy and GSA Advantage!®; the SmartPay credit card purchase program; and upgrades to the Federal Procurement Data System. GSA previously concluded these options would not provide the breadth of data needed to support the Government's objectives or would be unable to do so in the foreseeable future. Since the publication of the proposed rule, GSA reevaluated those alternatives and reached similar conclusions. Additionally, the Government's electronic invoicing initiative
29

was assessed as a potential alternative. However, following meetings regarding electronic invoicing implementation with representatives from the Department of Defense, Department of Energy, Department of Transportation, Department of Treasury, and Department of Veterans Affairs, it was determined these electronic invoicing platforms will not provide a Governmentwide transactional data reporting solution in the near term. Consequently, GSA continued to evaluate solutions that relied on contractor-provided transactional data.

29
See Office of Management and Budget memorandum M-15-19, “Improving Government Efficiency and Saving Taxpayer Dollars Through Electronic Invoicing”, July 17, 2015, available at
https://www.whitehouse.gov/sites/default/files/omb/memoranda/2015/m-15-19.pdf.

The most common concern, in terms of the number of respondents to the proposed rule, regarded the associated burden of reporting transactional data. In general, commenters felt the burden was underestimated and/or the requirement was too burdensome. To address the concerns with its Transactional Data Reporting burden estimates, GSA reevaluated its methodology and significantly increased its burden estimates.
30

These higher burden projections were a significant concern and reinforced the need to couple Transactional Data Reporting with other significant forms of burden reduction.

30
See Section VIII.B for a discussion of the burden estimates in accordance with Paperwork Reduction Act requirements.

A notable concern expressed by industry stakeholders was the retention, and potential increase, of CSP disclosures. GSA noted in the proposed rule it “. . . would maintain the right throughout the life of the FSS contract to ask a vendor for updates to the disclosures made on its commercial sales format (which is used to negotiate pricing on FSS vehicles) if and as necessary to ensure that prices remain fair and reasonable in light of changing market conditions.”
31

In response, industry stakeholders indicated retaining CSP disclosures would undercut any burden reduction achieved by eliminating the PRC tracking customer requirement. Specifically, respondents were concerned CSP disclosures will still force them to monitor their commercial prices, which ultimately causes the associated burden for both disclosure requirements.

31
See GSAR Case 2013-G504 (80 FR 25994 (May 6, 2015)).

In the summer of 2015, GSA also began preparing its request to renew the PRC information collection, which is identified under OMB Control Number 3090-0235. The Paperwork Reduction Act requires federal agencies to seek public comment on proposed collections of information from the public and then submit an information collection request (ICR) to the OMB Office of Information and Regulatory Affairs (OIRA). After receiving clearance to proceed, federal agencies must seek public comment and OIRA approval for renewal of these information collections, typically every three years. Since the PRC information collection was last approved in 2012, GSA needed to begin preparing its request to renew the information collection shortly after publishing the Transactional Data Reporting proposed rule. While GSA would have proceeded with a renewal request regardless, the timing did allow for the consideration of the Transactional Data Reporting comments. In particular, GSA agreed with the general industry comment that burdens of the PRC and CSP are related and therefore decided to include CSP disclosure burden estimates with the PRC ICR. GSA also opted to change the name of Information Collection 3090-0235 from “Price Reductions Clause” to “Federal Supply Schedule Pricing Disclosures” to more accurately reflect the scope of the information collected.

Following two
Federal Register
notices requesting comments on the FSS Pricing Disclosures ICR,
32

GSA increased its annual burden estimates for GSA FSS vendors, including those who would participate in the Transactional Data Reporting pilot, from $59 million
33

to $102 million.
34

Yet, Transactional Data Reporting alleviates the need for these FSS pricing disclosures when combined with automated commercial data sources, new data analytic tools, and improved price analysis policy. As a result, GSA decided to pair Transactional Data Reporting with the removal of CSP disclosures and the PRC tracking customer provision, resulting in an average annual burden reduction of $32 million for participating FSS vendors.
35

Furthermore, implementing the FSS pilot without the existing CSP and PRC requirements lowers the Government's burden by about $3 million a year.
36

32
See 80 FR 72060 (Nov. 18, 2015) and 81 FR 21346 (Apr. 11, 2016).

33
The 2012 information collection did not provide a cost burden estimate, but if the same hourly rate ($68) was applied to the 2012 time burden, the 2012 cost burden would have been $59,086,560.

34
The annual public reporting burden for the CSP and PRC, excluding FSS vendors participating in the Transactional Data Reporting pilot, is $57.66 million. If FSS pilot vendors were still subject to the CSP and PRC reporting requirements, the total annual public reporting burden would be $101.69 million. The FSS pilot vendors' share of the total CSP and PRC reporting burden is based upon their share of the GSA FSS fiscal year 2015 sales volume, 43.2 percent. The annual $44.03 million reporting burden reduction attributed to this rule is 43.2 percent of the $101.69 million annual reporting burden if it were applied to the entire GSA FSS program. More information about Information Collection 3090-0235 can be found at
http://www.reginfo.gov/public
by searching “ICR” for “3090-0235”.

35
$32 million does not include costs for non-FSS contracts. It is the result of the FSS burden of the initial pilot implementation ($12.41 million), minus the share of the combined CSP and PRC burden allocated to the FSS pilot vendors ($44.03 million). The total CSP and PRC burden from Information Collection 3090-0235, if it were applied to all GSA FSS vendors, including those participating in the Transactional Data Reporting pilot, would be $101.69 million. The share of that burden allocated to the FSS pilot vendors ($44.03 million) is based on the percentage of the overall FY15 FSS sales accounted for by the FSS pilot vendors (43.2 percent).

36
$3 million is the result of the Government's annual burden for this rule ($2.34 million) minus the share of the combined CSP and PRC burden for the Government allocated to the FSS pilot contracts ($5.58 million).

Streamlining the existing pricing disclosure requirements is particularly beneficial for small businesses. The current CSP and PRC disclosure requirements are constant, meaning vendors, especially those with a higher number of FSS contract offerings, must bear the burden even if they have little to no sales through their FSS contracts. Thus, small businesses are disproportionately impacted because they account for the bulk of lower volume contracts. Moreover, small businesses, which generally have fewer resources to devote to contract management, will no longer be subjected to the complex CSP and PRC pricing disclosure requirements.

Unlike the existing CSP and PRC disclosure requirements, Transactional Data Reporting imposes a progressive burden—one that increases with a vendor's sales volume. Namely, monthly reporting time will increase with a vendor's applicable sales volume, as vendors with lower to no reportable sales will spend little time on monthly reporting, while those businesses with more reportable sales with will face a higher reporting burden. Likewise, setup costs will be a major driver of the new reporting burden, but vendors with little to no activity on their FSS contracts will likely forgo investments in new reporting systems because the reporting burden will not be significantly more than that of the current quarterly sales reporting requirements. Thus, tying the burden to sales volume is particularly beneficial for small businesses, as they hold 80 percent of the total contracts but account for only about 39 percent of the sales.
37

37
Based on fiscal year 2015 Federal Supply Schedule contract data.

Finally, consideration was given to whether Transactional Data Reporting should be applied to all of GSA's Governmentwide contract vehicles. Most of GSA's non-FSS Governmentwide vehicles currently have transactional data reporting requirements that exceed those created through this rule, but the new applicable Transactional Data Reporting clause (GSAR clause 552.216-75) will provide a consistent reporting mechanism for future non-FSS vehicles, or for current vehicles that adopt the new clause. For FSS contracts, an analysis was conducted to determine whether Transactional Data Reporting should be considered for all FSS contracts, or only those that include products or services that would allow straightforward comparisons, such as commodities with standard part numbers. The second-most common comment area questioned the utility of collecting transactional data for Schedules where “apples-to-apples” comparisons cannot be made, such as contracts for professional services and complex solutions. While transactional data is most useful for price analysis when comparing like items, it does not mean the data is not useful when perfect comparisons cannot be made. Government buyers and FSS contracting officers will use the data for price analysis and market research, and category managers will use the data for consumption analysis to form demand management strategies, regardless of whether the data can be used for perfect comparisons. An example is the ability to compare labor rates across contract vehicles, which is beginning to bear fruit in the form of reduced contract duplication. Consequently, GSA decided not to limit the prescription of Transactional Data Reporting to certain Schedules or Special Item Numbers.

IV. Final Rule Implementation

A. GWAC and Governmentwide IDIQ Contracts

GSAR clause 552.216-75 Transactional Data Reporting is immediately available for GSA's GWACs and non-FSS Governmentwide IDIQ contracts. It will be applied to all new vehicles in this class—those vehicles with solicitations issued on or after the effective date of this rule—but the current contract vehicles with alternative transactional data provisions may opt to continue using existing reporting requirements. The clause requires contractors to report eleven standard data elements and includes a “fill-in” for additional data elements. However, GSA's Senior Procurement Executive must approve any data elements beyond the standard elements in order for them to be included with a tailored version of the clause. The determination regarding additional data elements will consider the benefits, alternatives, burden, and need for additional rulemaking.

B. FSS Contracts

The new FSS Transactional Data Reporting clause (GSAR clause 552.238-74, Alternate I), along with the corresponding changes to existing pricing disclosure requirements, will be introduced in phases, beginning with a pilot for select Schedules and Special Item Numbers (SINs). The clause requires vendors to report eleven standard data elements and includes a “fill-in” for additional data elements. However, GSA's Senior Procurement Executive must approve any data elements beyond the standard elements in order for them to be included with a tailored version of the clause. The determination regarding additional data elements will consider the benefits, alternatives, burden, and need for additional rulemaking.

The pilot will begin no sooner than July 1, 2016—details will be released at a later date—and will include the following Schedules and SINs:

• Schedule 03FAC, Facilities Maintenance and Management: All SINs.

• Schedule 51 V, Hardware Superstore: All SINs.

• Schedule 58 I, Professional Audio/Video, Telemetry/Tracking, Recording/Reproducing and Signal Data Solutions: All SINs.

• Schedule 72, Furnishing and Floor Coverings: All SINs.

• Schedule 73, Food Service, Hospitality, Cleaning Equipment and Supplies, Chemicals and Services: All SINs.

• Schedule 75, Office Products: All SINs.

• Schedule 00CORP, The Professional Services Schedule: Professional Engineering Services (PES) SINs.

• Schedule 70, General Purpose Information Technology Equipment, Software, and Services: SINs 132 8 (Purchase of New Equipment); 132 32, 132 33, and 132 34 (Software); and 132 54 and 132 55 (Commercial Satellite Communications (COMSATCOM)).

The new reporting clause and corresponding pricing disclosure changes will be applied to newly-awarded contracts for the applicable Schedules/SINs. Existing contracts for the pilot Schedules/SINs will adopt the new reporting clause and corresponding pricing disclosure changes after the execution of a bilateral modification between the vendor and Government.

For the two pilot Schedules that include only select SINs—The Professional Services Schedule and Schedule 70—contracts subject to the Transactional Data Reporting that include those SINs will report transactional data for all SINs under those contracts. For example, a vendor holding a Schedule 70 contract consisting of SINs 132 33 (Perpetual Software License), 132 34 (Maintenance of Software as a Service), and 132 51 (Information Technology Professional Services) will be subject to the Transactional Data Reporting pilot because of the inclusion of Software SINs 132 33 and 132 34. However, this vendor will report transactional data for all SINs—132 33, 132 34, and 132 51. Likewise, vendors holding Professional Services Schedule contracts that include a Professional Engineering Services SIN in conjunction with other SINs under that Schedule (
e.g.
, Environmental Services, Mission Oriented Business Integrated Services,
etc.
) will report transactional data for all SINs under the contract.

The initial pilot will reach approximately 30 percent of GSA's FSS contracts, including Schedules/SINs covering a wide array of goods and services that account for approximately 43 percent of the GSA Schedules sales volume. This scope will enable GSA to evaluate the effectiveness of Transactional Data Reporting before deciding whether to expand, limit, or discontinue the program. Evaluation

metrics will include, but not be limited to, changes in price, sales volume, and small business participation, as well as macro use of transactional data by category managers and teams to create smarter buying strategies such as consumption policies. GSA's Senior Procurement Executive will regularly evaluate progress against these metrics in consultation with the Administrator for Federal Procurement Policy and other interested stakeholders to determine whether to expand, limit, or discontinue the program. No expansion of the pilot or action to make Transactional Data Reporting a permanent fixture on the Schedules will occur prior to the careful evaluation of at least one year of experience with the pilot.

C. Systems

Vendors subject to the new Transactional Data Reporting clauses will be required to electronically report the data, as outlined in the applicable clauses, thirty (30) days after the end of the preceding month; reporting instructions will be posted on the Vendor Support Center Web site (
https://vsc.gsa.gov
). To facilitate Transactional Data Reporting, GSA is launching a new portal that has several differences from the existing 72A Sales Reporting System,
38

including the following:

38
See the 72A Sales Reporting System, accessible at
https://72a.gsa.gov.

• A single sign-on for all contracts. The current system requires a different sign-on for each contract.

• Electronic Data Interchange (EDI) upload capability.

• A spreadsheet template that can be downloaded, filled, and uploaded in lieu of manual data entry.

• Vendors with $0 sales during a reporting period can now click a single field to complete the report, as opposed to the current 72A requirement of submitting $0 for each SIN.

The new FSS Transactional Data Reporting clause (552.238-74 Alternate I) requires monthly reporting but quarterly fee remittance, which will also be processed through the new portal. As sales are reported, the portal will calculate a running balance and remind users to submit payment within 30 days after the end of the quarters ending March 31, June 30, September 30, and December 31. However, vendors will have the option to pay-as-you-go, meaning they can voluntarily remit the fees as sales are reported, rather than doing so on a quarterly basis. Portal instructions and training will be posted to GSA's Vendor Support Center.
39

39
See the Vendor Support Center, accessible at
https://vsc.gsa.gov.

Transactional data collected through the portal will be accessible only by authorized users and protected in accordance with GSA's information technology security policies. Additionally, GSA intends to share transactional data to the maximum extent allowable to promote transparency and competition while respecting that some data could be exempt from disclosure. Accordingly, a public data extract, containing information that would otherwise be releasable under the Freedom of Information Act (FOIA), will be created for use by the general public;
40

details about the public data extract will be released through a forthcoming notice in the
Federal Register
. The data released to the public will provide valuable market intelligence that can be used by vendors for crafting more efficient, targeted business development strategies that incur lower administrative costs. This will be particularly beneficial for small businesses, which often do not have the resources to invest in dedicated business development staff or acquire business intelligence through third-parties.

40
5 U.S.C. 552.

D. Procedures

GSA, like other agencies, will use transactional data to support its contracting officers in making smarter decisions when purchasing goods and services. However, GSA's FSS contracting officers will also take this data into consideration when awarding FSS contracts and evaluating requests to adjust pricing and add new items to current contracts. As a result, GSA is developing training for Government buyers and implementing new procedures for its FSS contracting officers. Training and guidance deployed in connection with this rule emphasizes the importance of considering the best overall value (not just unit price) for each procurement, taking into account desired terms and conditions, performance levels, past customer satisfaction, and other relevant information.

Training:
GSA is updating relevant courseware on the Federal Acquisition Institute (FAI) and Defense Acquisition University (DAU) portals to educate both customers and GSA contracting officers on how to use the data. Similarly, the courseware on how to use the FSS program and other non-FSS GWACs and multi-agency IDIQs will be updated to educate customers on the new requirements and how they can use the data collected to buy smarter. The external courseware will also highlight the additional value transactional data offers to GSA's FSS and non-FSS contracting programs and emphasize it must be viewed in the context of each procurement, taking into account desired terms and conditions, performance levels, past customer satisfaction, and other relevant information.

Additionally, FAS also has an internal training course aimed at GSA contracting officers awarding and administering FSS contracts—this course will be updated to educate contracting officers on how to conduct analysis on transactional data, as well as how to use these analyses to achieve better pricing on the contracts.

Guidance:
FSS contracting officers follow policy from GSA's supplement to the FAR, the General Services Administration Acquisition Manual (GSAM), when evaluating offers for FSS contracts. This includes the GSAR, GSA's regulatory FAR supplement, and non-regulatory acquisition policy, commonly referred to as GSAM guidance.
41

Regulations, such as the GSAR, require formal rulemaking, while non-regulatory policy, like GSAM guidance, does not.
42

For example, GSA contracting officer responsibilities are found at the non-regulatory GSAM 501.602,
43

while the regulatory CSP instructions are found at GSAR 515.408.
44

41
See General Services Administration Acquisition Manual section 501.170, available at
https://www.acquisition.gov/?q=browsegsam.

42
41 U.S.C. 1707.

43
See General Services Administration Acquisition Manual section 501.602, available at
https://www.acquisition.gov/?q=browsegsam.

44
48 CFR 515.408.

In addition to the regulatory changes made through this final rule, non-regulatory instructions for GSA category managers and FSS contracting officers are being incorporated into the GSAM. The category manager guidance will include instructions to use transactional data for category analysis, as well as approval requirements for adding data elements to the new Transactional Data Reporting clauses, including approvals by the head of contracting activity and GSA's Senior Procurement Executive and coordination with the applicable category manager. The FSS contracting officer guidance will give instructions for evaluating offers for FSS contracts when transactional data is available.

One of the objectives of the new FSS contracting officer guidance is to align

FSS offer evaluation procedures with the FAR. Accordingly, FSS contracting officers will be instructed to evaluate the data in the context of each offer, taking into account desired terms and conditions, quantity discounts, unique attributes, socio-economic considerations, and other relevant information. Contracting officers are encouraged to discuss with the offeror perceived variances between offered prices, transactional data, and existing contract-level prices, in order to evaluate whether other attributes (
e.g.,
superior warranties, quantity discounts,
etc.
) justify awarding higher prices.

The new guidance will include an order of preference for information to be used when evaluating FSS offers and establishing negotiating objectives, including the following:

1. Using data that is readily available, in accordance with FAR 15.404-1(b)(2)(ii),
45

including prices paid information on contracts for the same or similar items; contract-level prices on other FSS contracts or Governmentwide contracts for the same or similar items, and commercial data sources providing publicly available pricing information.

45
Federal Acquisition Regulation 15.404-1(b)(2)(ii) (48 CFR 15.404-1(b)(2)(ii)).

2. Performing market research to compare prices for the same or similar items in accordance with FAR 15.404-1(b)(2)(vi).
46

46
Federal Acquisition Regulation 15.404-1(b)(2)(iv) (48 CFR 15.404-1(b)(2)(iv)).

3. Requesting additional pricing information such as “data other than certified cost or pricing data” (as defined at FAR 2.101
47

) from the offeror in accordance with FAR 15.404-1(b)(2)(vii)
48

when the offered prices cannot be determined to be fair and reasonable based on the data found from other sources.

47
Federal Acquisition Regulation 2.101 (48 CFR 2.101).

48
Federal Acquisition Regulation section 15.401-1(b)(2)(vii) (48 CFR 15.404-1(b)(2)(vii)).

Traditionally, GSAR section 538.270, Evaluation of multiple award schedule (MAS) offers, has instructed FSS contracting officers to require pricing information through the CSP format and seek the offeror's best price. As these instructions are included in the regulatory portion of the GSAM, this case includes new language for these instructions to specify their use only when the CSP format is included in the solicitation (
i.e.,
for the Schedules and SINs not included in the pilot program). The new offer evaluation instructions belong in the non-regulatory section of the GSAM because they provide supplementary guidance to the FAR and do not impose a regulatory burden on the public. However, even though the GSAM guidance is not subject to public comment and is not included with the regulatory changes of this rule, it will be viewable in tandem with the corresponding GSAR policy on
Acquisition.gov
.
49

49
See the General Services Administration Acquisition Manual, available at
https://www.acquisition.gov/?q=browsegsam
.

V. Public Comments Overview and Discussion

GSA received 26 comment letters in response to the proposed rule.
50

The breakdown along commenter categories is as follows:

50
See GSAR Case 2013-G504; 80 FR 11619 (Mar. 4, 2015).

Vendors

9

Industry Associations

8

Individuals

5

Government Stakeholders

2

Other Groups

2

All comments filed were considered, many of which led to the changes described in Section III of this document.
51

The following is an overview of these comments and GSA's responses, organized into groupings that are sorted by the number of commenters, with the first grouping containing the most commenters. GSA's responses to these comments are contained within each grouping.

51
See Section III.A, Summary of Changes Made at the Final Rule Stage.

Burden.

Nineteen commenters provided comments related to the compliance burden.
52

Several questioned GSA's burden projections, stating the compliance estimates were understated and the projected burden reduction was overstated. Multiple commenters stated the Government is shifting the burden of gathering transactional data onto vendors, with some suggesting the burden will lead to higher prices or that vendors should be reimbursed for costs incurred.

52
See
e.g.,
ABA Letter, Abt Associates Letter, Allen Letter, ARA Letter, CGP Letter, CODSIA Letter, EA Letter, Experian Letter, GSA OIG Letter, immixGroup Letter, IOPFDA Letter,
Insite.rr.com
Letter, Johnson & Johnson Letter, NDIA Letter, POGO Letter, RTI Letter, SBA Letter, Shepra Letter, SIA Letter.

The proposed rule contained burden estimates in accordance with the Paperwork Reduction Act, including a one-time average initial setup burden of 6 hours and an average monthly reporting burden of approximately .52 of an hour, or 31 minutes. The ongoing reporting burden for FSS vendors, following a first-year burden for implementation, was estimated to $7.6 million a year. However, the proposed rule coupled the new reporting requirement with the removal of the PRC tracking customer provision, which would have resulted in an estimated burden reduction of $51 million a year if applied to the entire GSA Schedules program.
53

53
The $51 million burden reduction was the ongoing FSS reporting burden ($7.6 million) minus the PRC burden of $58.5 million from the 2012 PRC information collection (OMB Control Number 3090-0235). The $7.6 million FSS reporting burden did not include the burden for one-time implementation. The $51 million burden reduction applied to the entire GSA Schedules program and was not adjusted to only account for vendors participating in the FSS pilot.

Most of the commenters weighing in on the burden stated the estimates were significantly underestimated. For example, one association compared the proposed rule's burden estimates with the results of a survey it conducted among some of its members to assess the costs of implemented the requirements set forth in the proposed rule. It reported the following for setup time:

When asked about the estimated number of hours that their company would require for initial startup to comply with the proposed rule, small business respondents reported that it would take on average 232 hours. Large and medium size contractors estimated that it would take on average 1192 hours. In the context of an average work week, small businesses estimated that it would take nearly 6 weeks for initial setup, which would require limited resources to be diverted to this effort. Large and medium size businesses reported that it would take nearly 8 months on average to setup these systems. The proposed rule suggests that contractors should undertake this compliance burden at “no cost to the government.”
54

54
See CGP Letter.

That association also reported much higher figures for its monthly reporting estimates:

In the survey contractors also report a significantly higher number of hours required to do the monthly transactional data reporting than estimated in the proposed rule. Respondents were asked in the survey to estimate the number of hours it would take their company to report the transactional data on a monthly basis. GSA estimated that it would only take 31 minutes per month. However, small businesses reported that it would take 38 hours per month on average. Large and medium size businesses estimated that it would take an average of 68 hours per month—nearly 2 weeks to conduct the reporting.
55

55

Ibid.

One commenter also questioned GSA's and ordering agencies' ability to use the data, and GSA's capability to enforce the reporting requirements.”
56

Multiple commenters stated they would not realize a net burden reduction when the PRC tracking customer provision is removed. For example, one commenter

noted the PRC only requires disclosures when a price reduction is triggered, while this rule will require monthly reporting.
57

56
See GSA OIG Letter.

57
See immixGroup Letter.

Finally, multiple commenters stated Government is shifting the burden of gathering transactional data onto vendors. Some commenters said this will force industry to charge higher prices to recoup their costs, while others argued vendors should be directly reimbursed for reporting costs.

Response:
As a result of these comments, GSA reevaluated its estimation methodology and recalculated the burden based on whether vendors use automated or manual systems to identify and report transactional data. An automated system is one that relies on information technology, such as an accounting system or data management software, to identify and compile reportable data. These systems can tremendously streamline the reporting process but require upfront configuration to perform the tasks, such as coding the data elements to be retrieved. Conversely, a manual system is one that incorporates little to no automation and instead relies on personnel to manually identify and compile the reportable data. An example of a manual system would be an accountant reviewing invoices to identify the reportable data and then transferring the findings to a spreadsheet. In contrast to automation, a manual system requires relatively little setup time but the reporting effort will generally increase with the vendor's sales volume.

The likelihood of a vendor adopting an automated system increases with their applicable sales volume. Vendors with little to no reportable data are unlikely to expend the effort needed to establish an automated reporting system since it will be relatively easy to identify and report a limited amount of data. In Fiscal Year 2015, 32 percent of FSS vendors reported $0 sales, while another 34 percent reported average sales between $1 and $20,000 per month. If the rule were applied to the entire Schedules program, approximately two-thirds, or nearly 11,000 vendors, would have a lower reporting burden. However, as a vendor's applicable average monthly sales increase, they will be increasingly likely to establish an automated system to reduce the monthly reporting burden. Consequently, vendors with higher reportable sales will likely bear a higher setup burden to create an automated system, or absorb a high monthly reporting burden if they choose to rely on manual reporting methods.

This renewed analysis led GSA to increase its burden estimates.
58

For FSS contracts in particular—

58
See Section VIII.B for a discussion of the burden estimates in accordance with Paperwork Reduction Act requirements.

• The projected setup time for an automated system increased from an average of 6 hours
59

to an average of 240 hours, and

59
The proposed rule setup time estimates did not differentiate between manual and automated reporting systems.

• The projected monthly reporting time range grew from 0.3 minutes-4 hours to 0.25 hours-48 hours.

However, GSA's estimates are still considerably lower than the estimates provided through the public comments,
60

primarily because—

60
See CGP Letter.

• At least two-thirds of the potential Transactional Data Reporting participants will have a relatively lower burden (
e.g.,
vendors with lower or no sales), and

• Vendors with higher reporting volume will face lower setup times with a higher monthly reporting burden, or higher setup times with a lower monthly reporting burden. In other words, vendors will not face a higher setup burden and a higher monthly reporting burden to comply with the rule.

This increase in the burden estimates reinforced the need to evaluate existing pricing disclosure requirements that could be rendered obsolete once transactional data is collected. After evaluating these comments and submitting the Federal Supply Schedule Pricing Disclosures information collection request (OMB control number 3090-0235),
61

GSA concluded Transactional Data Reporting would not only exceed the PRC tracking customer provision benefits, it would also alleviate the need for CSP disclosures when combined with automated commercial data sources, new data analytic tools, and improved price analysis policy. Even with the increased Transactional Data Reporting burden estimates, GSA projects an average annual burden reduction of approximately $32 million for FSS pilot vendors when the new Transactional Data Reporting requirements are paired with the removal of CSP disclosures and the PRC tracking customer provision.
62

As noted in Section III of this document, this proposal is particularly advantageous for small businesses.
63

In order to enter the federal marketplace through the Schedules program, small businesses have traditionally been required to absorb the burden of gathering CSP disclosures and developing robust PRC compliance systems before making even a dollar in revenue through their Schedule contracts. However, under the Transactional Data Reporting model, small businesses entering the Schedules program would not, in most cases, be likely to make significant upfront investments because they will only be impacted after they have won a Schedule order. Additionally, unlike information compiled to populate CSPs, which is created specifically for GSA, the transactional data reported each month is readily available data used to generate invoices.

61
More information about Information Collection 3090-0235 can be found at
http://www.reginfo.gov/public
by searching “ICR” for “3090-0235”.

62
$32 million does not include costs for non-FSS contracts. It is the result of the FSS burden of the initial pilot implementation ($12.41 million), minus the share of the combined CSP and PRC burden allocated to the FSS pilot vendors ($44.03 million). The total CSP and PRC burden from Information Collection 3090-0235, if it were applied to all GSA FSS vendors, including those participating in the Transactional Data Reporting pilot, would be $101.69 million. The share of that burden allocated to the FSS pilot vendors. ($44.03 million) is based on the percentage of the overall FY15 FSS sales accounted for by the FSS pilot vendors (43.2 percent).

63
See Section III.B, Alternatives Analysis.

Regarding the ability of GSA and ordering agencies to use the data, new systems are being deployed to leverage the information. Transactional data reported in accordance with the new clauses will be shared with authorized users to craft smarter buying strategies. GSA is also developing data visualization tools to make the data more user friendly. Within GSA, FAS has established a data analytics team that will assist in the establishment and ongoing analysis of contract-level prices. In terms of oversight, FAS will use many of the same resources it currently deploys to ensure compliance with the existing GSAR clause 552.238-74, Industrial Funding Fee and Sales Reporting.
64

64
General Services Administration Acquisition Regulation clause 552.238-74 (48 CFR 552.238-74).

GSA is pursuing this initiative because obtaining transactional data from its industry partners is the most feasible path the Government can take to implement smarter buying strategies and promote taxpayer value. GSA recognizes the burden that comes with this rule and will continually evaluate ways to minimize the data collection. However, this rule will not lead to higher costs and subsequently higher prices because the changes to the CSP and PRC requirements provide a net burden reduction. To the contrary,

Transactional Data Reporting, as shown by the results shared in Section II of this document, will lead to lower prices.
65

65
See Section II.B, Necessity and Value of Transactional Data.

Using Transactional Data for Imperfect Comparisons

Fifteen commenters provided comments related to whether transactional data is useful for making imperfect comparisons.
66

The proposed rule noted, “[f]or FSS vehicles, the clause would be introduced in phases, beginning with a pilot for select products and commoditized services.”
67

Following publication of the proposed rule, FAS posted a proposed list of Schedules to be included in the Transactional Data Reporting pilot; the Schedules chosen primarily contained products that generally have standard part numbers, enabling direct comparisons between like items.
68

However, the proposed rule was clear the reporting requirements could expand to all Schedules, including those for services and complex solutions.

66
See
e.g.,
ABA Letter, Abt Associates Letter, Allen Letter, ARA Letter, Atkins Letter, CGP Letter, CODSIA Letter, EA Letter, GSA OIG Letter, immixGroup Letter, NDIA Letter, NMFTA Letter, RTI Letter, Shepra Letter, SIA Letter.

67
See GSAR Case 2013-G504; 80 FR 11619 (Mar. 4, 2015).

68
GSA proposed five Schedules in a GSA Interact posting following publication of the proposed rule. Those Schedules were 51 V, Hardware Superstore; 58 I, Professional Audio/Video, Telemetry/Tracking, Recording/Reproducing and Signal Data Solutions; 72, Furnishing and Floor Coverings; 73, Food Service, Hospitality, Cleaning Equipment and Supplies, Chemicals and Services; and 75, Office Products.

Commenters expressed concern that transactional data would eventually be collected and used for goods and services that do not lend themselves to perfect comparisons. Multiple commenters noted it will be difficult, and in some cases impossible, to make one-to-one comparisons for professional services and complex or customizable products, such as laptops. For example, one commenter noted complex service offerings are “priced according to very specific circumstances related to risk, security requirements, geographic area of performance, and the qualifications of the individuals performing the work.”
69

Two commenters stated GSA will have difficulty standardizing labor categories in order to make comparisons for service-related transactional data.
70

One commenter suggested the pilot include a professional services Schedule to allow implementation to proceed “in a controlled manner allowing for continuous feedback from contractors and reconsideration of the true intent and usability of the data that GSA is trying to gather.”
71

Additionally, one commenter stated GSA is relying on the reported success of the Office Supplies 2 (OS2) contract as validation for transitioning to a horizontal pricing model, which is not a representative sample of the Schedules program.
72

69
See NDIA Letter.

70
See
e.g.,
EA Letter, GSA OIG Letter.

71
See Abt Letter.

72
See GSA OIG Letter.

Multiple commenters stated concerns with how the Government will use prices paid data when conducting a horizontal price analysis. One commenter noted FAR section 15.404-1(b)(2)(ii) allows the “comparison of proposed prices to historical prices paid . . . for the same or similar items” but that paragraph (A) of this FAR section states:

The prior price must be a valid basis for comparison. If there has been a significant time lapse between the last acquisition and the present one, if the terms and conditions of the acquisition are significantly different, or if the reasonableness of the prior price is uncertain, then the prior price may not be a valid basis for comparison.
73

74

73
Federal Acquisition Regulation section 15.404-1(b)(2)(ii) (48 CFR 15.404-1(b)(2)(ii)).

74
See CGP Letter.

Other commenters gave examples of other factors that should be taken into account when making comparisons, such as differing quantities or terms and conditions. For example, one commenter was concerned the data would create a false expectation for the lowest reported prices, as deep discounts can be offered on a one-time based or in response to special promotions, ease of service, volume, or geographic location.
75

75
See SIA Letter.

Response:
GSA gave consideration as to whether Transactional Data Reporting should be considered for all FSS contracts or only those that include products or services that would allow straightforward comparisons, such as commodities with standard part numbers. GSA agrees transactional data is most useful for price analysis when comparing like items, but disagrees with the notion that the data is not useful when perfect comparisons cannot be made. Namely, the FAR allows comparisons of prices paid for similar items and data for dissimilar items is useful when conducting market research or performing the consumption analysis that underlies the formation of demand management strategies.

Transactional data will assist Government buyers and FSS contracting officers in using the price analysis techniques found in FAR section 15.404-1(b)(2)(ii), as transactional data is necessary to make a comparison of “proposed prices to historical prices paid . . . for the same or similar items.” Although paragraph (A) of FAR section FAR section 15.404-1(b)(2)(ii) notes the prior price is not a valid basis of comparison if “there has been a significant time lapse between the last acquisition and the present one, if the terms and conditions of the acquisition are significantly different, or if the reasonableness of the prior price is uncertain . . . ,” it does allow for some variance in factors when making comparisons. Furthermore, paragraph (B) of FAR section 15.404-1(b)(2)(ii) not only allows, but requires, a prior price to “be adjusted to account for materially differing terms and conditions, quantities and market and economic factors.” In other words, when there has been no significant time lapse, the terms and conditions of an acquisition are similar to previous purchases, and the reasonableness of the prior price is certain, transactional data is valid for comparisons of, if not identical, at least similar items and can be adjusted to account for materially different terms and conditions, quantities, and market and economic factors.

Transactional data will also be instrumental for informing buying decisions and crafting overarching demand management strategies, regardless of whether the data is too dissimilar for price comparisons. For instance, the availability of transactional data will provide buyers visibility into the variables that drive costs, which is key to defining requirements and developing accurate cost estimates. Likewise, category managers will gain insight into the assorted options available for satisfying common requirements, and then use the lessons learned to form demand management strategies that promote the most efficient methods for meeting the Government's needs.

Regarding the differences between the Schedules program and OS2, GSA agrees that the success of the Federal Strategic Sourcing Initiative (FSSI), which includes OS2, was an important factor in GSA's decision to pursue Transactional Data Reporting for the larger Schedules program. While GSA anticipates Transactional Data Reporting will be successful, it recognizes its assumptions should be tested, and therefore opted to begin with a pilot. GSA does not expect this pilot to replicate or exceed the discounts achieved through FSSI—often up to 30 percent lower than the comparable Schedule prices—partly because of the

stated differences between the Schedules program and FSSI.

In response to the suggestion that a professional services Schedule be included in the pilot before expanding the requirements across the program, GSA has decided to include the Professional Engineering Services SINs from the Professional Services Schedule in the pilot. The pilot will also now include software SINs under Schedule 70, in order to collect data for more complex solutions. The initial pilot will now reach approximately 30 percent of GSA's FSS contracts, including Schedules/SINs covering a wide array of goods and services that account for 43 percent of the Schedules sales volume. This scope will enable GSA to evaluate the effectiveness of Transactional Data Reporting before deciding whether to expand, limit, or discontinue the program.

Finally, GSA recognizes the complexities of employing horizontal price analysis, whether it is through Transactional Data Reporting or other initiatives. For example, the new CPI initiative is built around a tool that identifies contract-level pricing outside a range determined to be acceptable for identical items; vendors whose prices exceed the acceptable range are then notified of their comparative pricing. It is important to reiterate that a range is identified because GSA appreciates the varying circumstances that can contribute to price variation. For CPI, the FSS contracting officer's final determination will take into account non-price elements, such as materially different terms, quantities, and market and economic factors. The GSAM guidance for FSS contracts, which will be viewable on
Acquisition.gov,
instructs FSS contracting officers to make fair and reasonable, not lowest-price-regardless, determinations. Contracting officers placing orders against GSA's Schedules and other multi-agency vehicles will continue to follow the procedures required by the FAR, including a preference for “best value” solutions.
76

Also, GSA is deploying data visualization tools that provide context for the transactional data for a particular good or service.

76
Federal Acquisition Regulation section 1.102 (48 CFR 1.102).

Public Disclosure of Transactional Data

Thirteen parties provided comments related to public disclosure of transactional data.
77

The proposed rule stated, “GSA also plans to implement an [application programming interface (API)] for buyers to benefit from using transactional data. Through the API, GSA will make this information accessible online for all Government buyers.”
78

GSA did not address in the proposed rule whether this data would be shared with the public. Most of the commenters opposed publicly releasing the data and stated GSA must explain how it intends to protect it.

77
See
e.g.,
ABA Letter, Abt Associates Letter, Allen Letter, ARA Letter, CODSIA Letter, CGP Letter, EA Letter, immixGroup Letter, IOPFDA Letter, NDIA Letter, NMFTA Letter, SIA Letter.

78
See GSAR Case 2013-G504; Docket 2014-0020; Sequence 1 (80 FR 11619 (Mar. 4, 2015)).

One commenter asked whether GSA will share the transactional data with vendors,
79

while another commenter suggested vendors should have the same access to the data as Government buyers.
80

Ten commenters opposed the release of the data to the public because it will contain proprietary and confidential business information, with most stating vendors will face adverse impacts if the data is shared and requesting GSA explain how it intends to protect the data from unauthorized disclosure.
81

The SBA Office of Advocacy also stated small businesses are concerned about how the data will be protected.
82

Four commenters stated this type of data is protected from disclosure under FOIA, which states the following are exempted: “trade secrets and commercial or financial information obtained from a person and privileged or confidential.”
83 84

One commenter noted the transactional data currently reported under GSA's non-FSS contracts cannot be attributed to a specific vendor.
85

Finally, one vendor stated the rule should provide remedies for vendors in the event of improper disclosure.
86

79
See ARA Letter.

80
See immixGroup Letter.

81
See
e.g.,
ABA Letter, Abt Associates Letter, Allen Letter, CODSIA Letter, CGP Letter, EA Letter, IOPFDA Letter, NDIA Letter, NMFTA Letter, SBA Letter, SIA Letter.

82
See SBA Letter.

83
5 U.S.C. 552(b)(4)

84
See
e.g.,
ABA Letter, Allen Letter, EA Letter, NMFTA Letter.

85
See CGP Letter.

86
See ABA Letter.

Response:
Transactional data reported in accordance with this rule will be accessible only by authorized users. GSA intends to share the transactional data with the public to the maximum extent allowable while respecting that some data could be exempt from disclosure. Consequently, a data extract will be created for use by the general public, containing information otherwise releasable under FOIA;
87

details about the public data extract will be released through a forthcoming notice in the
Federal Register
.

87
5 U.S.C. 552.

Transparency will support a dynamic marketplace by providing vendors with the business intelligence needed to identify customers, determine which products should be included on their contract pricelists, and ascertain whether their prices are competitive. This will be particularly beneficial for small businesses, which often do not have the resources to invest in dedicated business development staff or acquire business intelligence through third-parties.

However, GSA recognizes some information may be protected from public release, which led to the decision to create a public data extract, as opposed to allowing the public the same access as authorized users. The data extract will provide the public a filtered view of the data, including information that is releasable under FOIA, while protecting information that is not.

Finally, GSA is not including remedies in this rule for unauthorized disclosure of data. GSA is taking precautions to prevent unauthorized disclosures of data, but in the event of such an occurrence, GSA will address remedies at that time based on the specific circumstances and in accordance with applicable statutes and regulations.

The Government Already Possesses the Data

Thirteen commenters stated the Government already possesses this data.
88

Several commenters stated the Government should develop systems to collect its own data, with some arguing this will be a difficult task for vendors to undertake. Commenters also suggested alternatives to requiring vendors to report the data.

88
See
e.g.,
Allen Letter, ARA Letter, Atkins Letter, CODSIA Letter, CGP Letter, Falcone Letter, immixGroup Letter, IOPFDA Letter, Mcdonald Letter, NDIA Letter, NMFTA Letter, RTI Letter, Shepra Letter.

Transactional data is generated when a transaction is made between a buyer and seller. As such, the parties of the transaction will produce and possess this data. For federal contracting, these parties are the Government ordering agency and the vendor. On the Government side, this data is often found in contract writing systems and financial systems. However, these systems are not shared across agencies; in fact, many agencies use multiple versions of these systems. Moreover, systems that do provide transactional data tend to cover a narrow scope of federal spending. For instance, GSA possesses data for transactions

completed through GSA Advantage!®, but it only accounts for about 1 percent of Schedule sales. Hence, no mechanism exists to compile and analyze transactional data from a wide-range of purchases made across the Government.

Several commenters objected to GSA requiring vendors to report data that originates from the Government. For example, one commenter stated the Government needs to make investments in automated systems that can provide the data without burdening vendors, and that this rule only delays those eventual investments.
89

89
See NDIA Letter.

Commenters also stated it will not be easier for vendors to provide the data. One commenter stated many vendors do not keep this type of data as a matter of practice, but for the vendors that do, their reporting systems may not be compatible with GSA's reporting site.
90

90
See CODSIA Letter.

Finally, commenters suggested alternatives to vendor-provided transactional data. Two commenters stated GSA should obtain data from the Federal Procurement Data System (FPDS);
91

two commenters questioned why GSA could not pull data from its GSA eLibrary and GSA Advantage!® sites;
92

two commenters said GSA should rely on data collected from Government purchase card transactions;
93

one commenter proposed GSA use free, price comparisons sites available to the general public;
94

and one commenter stated GSA should already have the ability to obtain the data from other agencies, or otherwise should not be pursuing the rule.
95

91
See
e.g.,
Atkins Letter, Shepra Letter.

92
See Atkins Letter, RTI Letter.

93
See
e.g.,
Allen Letter, Mcdonald Letter.

94
See CGP Letter.

95
See NMFTA Letter.

GSA Response:
GSA does not have the systems capability to collect transactional data from other agencies. The Initial Regulatory Flexibility Analysis published with the proposed rule included an evaluation of alternatives for obtaining transactional data—internal applications; GSA ordering platforms such as eBuy and GSA Advantage!®; the SmartPay credit card purchase program; and upgrades to the FPDS. GSA previously concluded these options would not provide the breadth of data needed to support the Government's objectives or would be unable to do so in the foreseeable future. Since the publication of the proposed rule, GSA reevaluated those alternatives and reached similar conclusions. Particularly, in regards to relying on purchase card data, doing so would limit the Government to a small, non-representative sample of data that would be ineffective for the broader goals of category management and smarter buying strategies. Although one commenter suggested the Government should increase its purchase card usage in order for purchase card data to be a viable solution, doing so would require numerous regulatory, procedural, and security changes to implement, which could not be accomplished in the near future and therefore would not support the Government's immediate needs.

Additionally, the Government's electronic invoicing initiative
96

was assessed as a potential alternative. However, following meetings regarding electronic invoicing implementation with representatives from the Department of Defense, Department of Energy, Department of Transportation, Department of Treasury, and Department of Veterans Affairs, it was determined these electronic invoicing platforms will not provide a Government-wide transactional data reporting solution in the near term.

96
See Office of Management and Budget memorandum M-15-19, “Improving Government Efficiency and Saving Taxpayer Dollars Through Electronic Invoicing”, July 17, 2015, available at
https://www.whitehouse.gov/sites/default/files/omb/memoranda/2015/m-15-19.pdf
.

Lastly, GSA will consider changes, or even rescind Transactional Data Reporting, as new data systems come online that improve the Government's ability to aggregate and analyze its purchasing data. Also, GSA is exploring ways to synchronize its transactional data intake system with other applications that share common attributes in order to reduce the number of vendor-reported data elements.

Order-Level Competition Ensures Best Value

Nine commenters stated GSA should rely on order-level competition to ensure the Government is receiving the best value.
97

The general sentiment is rather than requiring pricing disclosures or Transactional Data Reporting, GSA should promote order-level competition to meet its pricing objectives. Many of these comments were in response to the following passage from the proposed rule
Federal Register
notice:

97
See
e.g.,
ABA Letter, Allen Letter, CODSIA Letter, CGP Letter, EA Letter, immixGroup Letter, IOPFDA Letter, NDIA Letter, RTI Letter.

The Government, and other customers in the category to which the government is most typically aligned under the price reductions clause, tend to receive voluntary price reductions from the vendor as a result of general market forces (
e.g.,
intense competition and small profit margins within the IT hardware arena that cause vendors to lower their prices for all customers voluntarily to maintain market share). In other words, prices are reduced under the voluntary provisions of the price reduction clause as a result of market rate pricing changes, not under the mandatory tracking customer provisions. GSA recently analyzed modifications issued between October 1, 2013 and August 4, 2014 under nine of its [Schedules] . . . GSA found that only about 3 percent of the total price reductions received under the price reduction clause were tied to the “tracking customer” feature. The vast majority (approximately 78 percent) came as a result of commercial pricelist adjustments and market rate changes, with the balance for other reasons.
98

98
See GSAR Case 2013-G504; Docket 2014-0020; Sequence 1 (80 FR 11619 (Mar. 4, 2015)).

Six of those commenters expressed support for the proposed PRC changes in the context of the general statement that order-level competition is the most effective method for driving down prices.
99

99
See
e.g.,
ABA Letter, Allen Letter, CODSIA Letter, immixGroup Letter, NDIA Letter, RTI Letter.

Response:
Competition at the task order level is essential for the Government to ensure it receives the best value, which is one of the reasons GSA is pursuing Transactional Data Reporting. In fact, transactional data has a proven history of driving competition, which is illustrated by the examples shown in Section II.
100

These successes, along with emerging technology, led to the decision to pursue Transactional Data Reporting in lieu of continuing to require CSP and PRC disclosures. Furthermore, this initiative promotes objectives that are not facilitated by order-level competition, such as transparency, demand management, and reducing contract duplication.

100
See Section II.B, Necessity and Value of Transactional Data.

Commercial Sales Practices (CSP) Disclosures

Nine parties submitted comments related to the proposed rule's retention of CSP disclosures.
101

While the proposed rule included the removal of the PRC tracking customer provision, it retained CSP disclosures while noting:

101
See
e.g.,
Abt Associates Letter, ABA Letter, CODSIA Letter, EA Letter, Experian Letter, immixGroup Letter, Johnson & Johnson Letter, RTI Letter, SIA Letter.

[V]endors would still be subject to the commercial sales disclosure requirements, including the requirement to disclose commercial sales practices when requesting a contract modification for additional items or additional Special Item Numbers. In addition, GSA would maintain the right throughout the life of the FSS contract to ask a vendor for updates to the disclosures made on its commercial sales format (which is used

to negotiate pricing on FSS vehicles) if and as necessary to ensure that prices remain fair and reasonable in light of changing market conditions.

Nine commenters stated removing the PRC tracking customer feature does not relieve vendors of the burden of tracking commercial pricing, which will still be necessary to provide CSP disclosures.
102

Five commenters stated the proposed rule language would lead to more requests for CSP disclosures.
103

For example, one commenter noted the burden reduction achieved through the PRC changes would be in some cases more than offset by Transactional Data Reporting requirements and increased CSP disclosures.
104

102
See
e.g.,
Abt Associates Letter, ABA Letter, CODSIA Letter, EA Letter, Experian Letter, immixGroup Letter, Johnson & Johnson Letter, RTI Letter, SIA Letter.

103
See
e.g.,
Abt Associates Letter, ABA Letter, CODSIA Letter, EA Letter, SIA Letter.

104
See CODSIA Letter.

Response:
GSA did not intend for the proposed rule language relating to CSPs to increase disclosures. However, these comments did lead to a reevaluation of the CSP disclosure burden and ultimately the removal of CSP disclosures for FSS vendors subject to the Transactional Data Reporting requirement.

As noted in Section III of this document, GSA also began preparing its routine renewal request for the PRC information collection, identified under OMB Control Number 3090-0235, in the summer of 2015.
105

Since the PRC information collection was last approved in 2012, GSA needed to prepare its information collection renewal request after publishing the Transactional Data Reporting proposed rule. While GSA would have proceeded with a renewal request regardless, the timing did allow for the consideration of the Transactional Data Reporting comments. In particular, GSA agreed with the general industry comment that burdens of the PRC and CSP are related and therefore decided to include CSP disclosure burden estimates with the PRC information collection request (ICR). GSA also opted to change the name of Information Collection 3090-0235 from “Price Reductions Clause” to “Federal Supply Schedule Pricing Disclosures” to more accurately reflect the scope of the information collected.

105
See Section III.B, Alternatives Analysis.

Following two
Federal Register
notices requesting comments on the FSS Pricing Disclosures ICR,
106

GSA increased its annual burden estimates for GSA FSS contractors, including those who would participate in the Transactional Data Reporting pilot, from $59 million
107

to $102 million.
108

These higher burden projections, coupled with the increased Transactional Data Reporting burden estimates calculated in response to the public comments, were a significant concern and reinforced the need to pair Transactional Data Reporting with other significant forms of burden reductions. Therefore, GSA is removing CSP disclosures in addition to the PRC tracking customer provision for FSS vendors subject to the new Transactional Data Reporting clause, resulting in an average annual burden reduction for FSS pilot contractors of approximately $32 million.
109

Additionally, implementing the FSS pilot without the existing CSP and PRC requirements lowers the Government's burden by about $3 million a year.
110

106
See 80 FR 72060 (Nov. 18, 2015) and 81 FR 21346 (Apr. 11, 2016).

107
The 2012 information collection did not provide a cost burden estimate, but if the same hourly rate ($68) was applied to the 2012 time burden, the 2012 cost burden would have been $59,086,560.

108
The annual public reporting burden for the CSP and PRC, excluding FSS vendors participating in the Transactional Data Reporting pilot, is $57.66 million. If FSS pilot vendors were still subject to the CSP and PRC reporting requirements, the total annual public reporting burden would be $101.69 million. The FSS pilot vendors' share of the total CSP and PRC reporting burden is based upon their share of the GSA FSS fiscal year 2015 sales volume, 43.2 percent. The annual $44.03 million reporting burden reduction attributed to this rule is 43.2 percent of the $101.69 million annual reporting burden if it were applied to the entire GSA FSS program. More information about Information Collection 3090-0235 can be found at
http://www.reginfo.gov/public
by searching “ICR” for “3090-0235”.

109
$32 million does not include costs for non-FSS contracts. It is the result of the FSS burden of the initial pilot implementation ($12.41 million), minus the share of the combined CSP and PRC burden allocated to the FSS pilot vendors ($44.03 million). The total CSP and PRC burden from Information Collection 3090-0235, if it were applied to all GSA FSS vendors, including those participating in the Transactional Data Reporting pilot, would be $101.69 million. The share of that burden allocated to the FSS pilot vendors ($44.03 million) is based on the percentage of the overall FY15 FSS sales accounted for by the FSS pilot vendors (43.2 percent).

110
$3 million is the result of the Government's annual burden for this rule ($2.34 million) minus the share of the combined CSP and PRC burden for the Government allocated to the FSS pilot contracts ($5.58 million).

Transactional Data Reporting negates the need for CSP disclosures when used in conjunction with automated commercial data sources, new data analytic tools, and improved price analysis policy. As discussed in Section IV of this document,
111

GSA is releasing new GSAM guidance, which will be viewable on
Acquisition.gov,
that provides instructions to FSS contracting officers on how to evaluate offers and establish negotiating objectives without relying on CSP disclosures. For example, the new guidance provides the following order of preference for information:

111
See Section IV.D, Procedures.

1. Use data that is readily available, in accordance with FAR 15.404-1(b)(2)(ii),
112

including prices paid information on contracts for the same or similar items; contract-level prices on other FSS contracts or Governmentwide contracts for the same or similar items, and commercial data sources providing publicly available pricing information.

112
Federal Acquisition Regulation section 15.404-1(b)(2)(ii) (48 CFR 15.404-1(b)(2)(ii)).

2. Perform market research to compare prices for the same or similar items in accordance with FAR 15.404-1(b)(2)(vi).
113

113
Federal Acquisition Regulation section 15.404-1(b)(2)(iv) (48 CFR 15.404-1(b)(2)(iv)).

3. Request additional pricing information such as “data other than certified cost or pricing data” (as defined at FAR 2.101
114

) from the offeror in accordance with FAR 15.404-1(b)(2)(vii)
115

when the offered prices cannot be determined to be fair and reasonable based on the data found from other sources.

114
Federal Acquisition Regulation 2.101 (48 CFR 2.101).

115
Federal Acquisition Regulation section 15.401-1(b)(2)(vii) (48 CFR 15.404-1(b)(2)(vii)).

Small Business Impacts

Multiple commenters addressed small businesses in other comments, but six commenters stated there are certain aspects of the rule are especially impactful on small business.
116

In the proposed rule, GSA did not create separate requirements for small businesses or other classes of vendors. Additionally, the burden analysis separated FSS vendors into categories based on Schedule sales volume but did not calculate separate burden estimates for small or other-than-small businesses.

116
See
e.g.,
ABA Letter, CGP Letter, Falcone Letter, Insite.rr.com Letter, RTI Letter, SBA Letter.

Three commenters noted that this rule will make it more difficult for small businesses to compete against other-than-small businesses in the federal marketplace,
117

citing an overemphasis on pricing over value-added services. Two of those commenters stated GSA did not adequately address small business impacts.
118

Additionally, four commenters expressed concern over small businesses' ability to absorb the costs associated with the new reporting requirements, which creates a barrier to

entry into the federal marketplace.
119

Lastly, one commenter stated the Initial Regulatory Flexibility Analysis did not provide a clear understanding of the legal framework for requiring Transactional Data Reporting.
120

117
See
e.g.,
ABA Letter, CGP Letter, SBA Letter.

118
See
e.g.,
ABA Letter, SBA Letter.

119
See
e.g.,
ABA Letter, Falcone Letter, Insite.rr.com Letter, RTI Letter.

120
See SBA Letter.

Response:
GSA was especially mindful of small business concer

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2016-14728. Public record. Not legal advice.