FAR has long emphasized the need for contracting officers to conduct price analysis as part of their responsibility to establish that 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. Collection of such information has rested largely on the shoulders of each contracting officer. Until recently, little effort was made to share prices previously paid by agencies throughout the Government. Over the years, this lack of transparency contributed to large price disparities, where one agency may pay a significant amount more for the exact same product or commoditized service as another agency under the same or similar terms and conditions, sometimes even from the same vendor.
GSA has proposed to address this weakness through the use of a transactional data reporting clause. Under the clause, contractors would be required to report historical information encompassing the products and services delivered during the performance of the contract, including under orders and BPAs. Contractors would be required to electronically report contract sales monthly through an on-line reporting system. The report would include transactional data elements such as unit measures, quantity of items sold, universal product codes if applicable, price paid per unit, and total price.
GSA believes there would be multiple benefits to the use of the transactional data reporting clause including
- better pricing
- administrative savings
- increased opportunities for small business participation, and
- standardization of practice.
GSA estimates that it will take contractors six hours to figure out how to use the system and 30 minutes per month thereafter to prepare and submit reports. Like most Government estimates, these estimates are probably significantly understated. Six hours and 30 minutes per month may not sound like much but the cost to contractors for just FSS (Federal Supply Service) contracts works out to $15 million for the first year and $7.5 million for each year thereafter.
To read more about this proposed rule including directions for providing comments, click here.