The agency sought to calm those apprehensions with a Feb. 7 roundtable outlining the benefits of the acquisition rule — which ditches the requirement that contractors disclose their commercial sales practices in favor of detailed monthly reports outlining all sales made under certain GSA contract vehicles.
The agency rolled out a pilot program to test the rule in August 2016, but despite GSA’s efforts to communicate TDR’s benefits for streamlining acquisition, industry stakeholders attending the roundtable signaled that they were just not that into the measure, yet.
Despite GSA reassurances about the effectiveness of TDR, the discussion centered on three issues:
The ‘Bob’s Discount Furniture’ effect
The key feature of TDR is ditching the requirement that vendors supply the commercial sales practices — used to ensure that the government is getting a fair price on contracts compared with private sector buyers — in favor of a model that relies on detailed government pricing across GSA contract vehicles.
The practice, also called horizontal pricing, relies on a baseline of pricing for similar items across the marketplace, using that measure to adjust the best price for a contract.
The problem, industry stakeholders said, is GSA may interpret the data in a way that would favor the lowest cost vendors and push out those offering better value for a higher price.
“There’s a room for Bob’s Discount Furniture in the marketplace,” said Larry Allen, president of Allen Federal Business Partners and a panel member discussing the rule. “But it doesn’t get back to the central part of acquisition, about GSA being the central provider for a host of government solutions.
“If all we are going to use the data for is to drive loss-leader pricing — and by extension vendors offering secure supply chains, socioeconomic diversity programs — you are going to lose that part of it and you are going to be left with is people who are comfortable operating a Bob’s furniture solution environment.”
But Federal Acquisition Service Deputy Commissioner Kevin Youel Page took issue with the discount furniture branding of TDR, saying the data could be used to pursue the lowest price, but contracting officers will still have an eye for value.
“The flip side of that argument is that part of value is always price,” he said. “I’m going to trust that they are going to make a better decision with the information than without the information.”
Protecting innovation ‘leakage’
Elliott Branch, deputy assistant secretary of the Navy for acquisition and procurement, expressed concerns that a centralized acquisition process through GSA could stifle innovation.
Citing the adoption by some agencies of PCs in the 1980s over the GSA-standard automatic data processors, Branch said that it was integral to leave some room in acquisition policies to allow for “leakage” of innovation that could occur with autonomy and delegation.
“I think that, as we optimize our buying behavior, that we have to be careful not to turn off that valuable leakage, because that is a source of innovation for both industry and government,” he said.
But Branch went further, saying that the use of data could move people out of a “fetal position” caused by the complexity of acquisition rules by understanding past trends, but that solutions often precede need, meaning leaders will also need to forecast future trends.
“My great fear though is that we will use data as an organizing axis not to seek innovation, but to stifle it,” he said.
Using data the right way
All parties agreed that the data itself was merely a tool and how it’s used would decide the effectiveness of the TDR.
When asked about the metrics GSA would use to determine success in the pilot program, Page said the agency was focused on four things:
- Impact on Schedule program volumes;
- Socioeconomic impact of small business contract numbers;
- Small business participation in TDR; and
- How category management teams use the data to inform better buying.
“This is just a way we are trying to bolster some evidence-based decision making, and more broadly, to line up industry’s capability to deliver with government’s need to consume,” Page said.
He added that the industry feedback on TDR was just as integral to success as the data it will produce.
The TDR pilot will run through the first quarter of 2017.