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Focus on Regulation

GSA Holds Public Meeting to Discuss Proposed Rule to Eliminate the Price Reductions Clause

The General Services Administration (GSA) held a public meeting on Friday, April 17, 2015, to discuss its recently proposed rule that, if implemented, would do away with the Price Reductions Clause (PRC) and replace it with a requirement that vendors report their pricing and other transactional data for covered government sales on a monthly basis. The proposed rule would establish a pilot program that would apply to orders placed against covered Federal Supply Schedule (FSS) contracts as well as GSA non-FSS contract vehicles. The rule would not apply, at least initially, to FSS contracts administered by the Department of Veteran Affairs (VA).

Overall, the comments raised at the meeting fell in line with anticipated concerns of the participants. Representatives from industry championed the removal of the PRC, but generally opposed the rule as drafted, expressing concern over the burdens associated with aggregating sales data and the potential for repeated post-award requirements for Commercial Sales Practices (CSP) data disclosures. From industry’s perspective, GSA has significantly underestimated the administrative burdens posed by the proposed monthly reporting and increased CSP disclosure requirements.

Not surprisingly, neither the GSA nor the VA Offices of Inspector General (OIGs) expressed support for the proposed rule. The GSA OIG opposed elimination of the PRC, arguing that the proposed transactional data reporting requirement falls short of the price protections afforded by that clause. The GSA OIG also expressed concern that reliance on government sales data could cause government buyers to be satisfied with prices that would compare favorably with established government pricing, but that might not be in keeping with commercial pricing.

The GSA OIG agreed with industry concerns that the proposed rule underestimates the burden and resources necessary for monthly contractor data reporting. Also, the OIG expressed concern regarding the resources required for the government’s use of the data and GSA’s enforcement of the reporting requirements.[1] Noting that contractor burden estimates were understated, the GSA OIG deferred to industry for more accurate cost estimates.

Although the rule, as currently proposed, would not directly affect VA FSS schedule-holders, the VA OIG spoke out against it in no uncertain terms, identifying the PRC as a useful tool that should be made more robust rather than less. The OIG’s message was clear—it will be a long, hard fight before any similar rule is implemented at the VA. Specifically, the VA OIG expressed concern that transactional data provides neither a substitute for the price protection afforded by the PRC nor insight into non-price-related terms and conditions that may prove more beneficial to VA.

The deadline for comments on the proposed rule is May 4th.

[1] Brian Gibson, Transactional Data Reporting: GSAR Case 2013-G504, Public Meeting Presentation, April 17, 2015, available at http://www.gsaig.gov/?LinkServID=C82E3F6B-D054-1D53-16D86346751A2527&showMeta=0.