GSA OIG releases audit report

GSA announces TDR pilot program is on track and eligible for expansion: GSA OIG says not so fast

On June 24, 2021 the General Services Administration Office of Inspector General (GSA OIG) released an  audit report of the current status and implementation of the Transactional Data Reporting (TDR) pilot just two months after the General Services Administration (GSA) announced that the pilot was “on track” to meet its objectives and would be eligible for expansion.

The TDR final rule was established by GSA on June 23, 2016 and requires participating vendors to report transaction data from orders placed against GSA’s Federal Supply Schedule (FSS) program. With the issuance of the final rule, GSA commented that the purpose of TDR is to reshape how FSS contract pricing is established, with the intent of centralizing purchasing decisions, reducing contract duplication and lowering acquisition costs.

The results of the audit offer a stark contrast to GSA’s FY 2020 evaluation of the TDR pilot, which found the program to be “meeting or exceeding targets.” GSA OIG concluded that the TDR pilot is “not meeting its intended purpose of improving taxpayer value.”

The following article summarizes GSA OIG’s findings:

TDR pilot audit report summary

GSA OIG has monitored the TDR pilot program since GSA’s Federal Acquisition Service (FAS) released the proposed rule in 2014 and included this audit in their Fiscal Year 2019 Audit Plan. The intent of this audit was to assess the TDR pilot’s current status and determine if FAS has achieved its objective of improving taxpayer value. GSA OIG performed the audit between February 2019 and June 2020. The Office of Government-wide Policy’s (OGP’s) positive FY 2020 evaluation was published after GSA OIG conducted the exit conference associated with their audit of the TDR program, but they still included their assessment of the evaluation findings within their audit report. Ultimately, GSA OIG determined that the TDR pilot was not meeting the stated objectives of the program.  A summary of OIG’s findings are as follows:

TDR data is inaccurate and unreliable

GSA FAS has been collecting data from TDR pilot participants for over four years and as directed by GSA’s TDR Data Management Plan they are required to maintain data integrity and ensure the collected data is reliable, accurate and complete. Since inception, the TDR program has been plagued with data issues. While FAS has made improvements related to data completeness, GSA OIG found that they do not have adequate procedures to ensure the data input is accurate and reliable.

GSA FAS indicated that verifying the accuracy of TDR data is done during Contract Assessments (CAs) conducted by Industrial Operations Analysts (IOAs). Through interviews with IOA’s, GSA OIG found that the only inquiry regarding TDR was a simple yes or no question of whether the contractor is participating in the TDR pilot. This led GSA OIG to conclude that IOAs are unaware of their responsibility to validate the accuracy of TDR data.

FAS contracting personnel are not using TDR data

Since the TDR final rule was released in 2016, FAS has collected almost seven million lines of transactional data; however, GSA OIG concluded that FAS contracting personnel not only lacked understanding and access to the TDR data, but also that the data was not being used to affect pricing because of data quality issues. GSA OIG discovered that the required training course for FAS contracting personnel to gain access to TDR data included instruction to not utilize transaction data for any type of price analysis or market research due to the validity of the data. FAS’s current policy notes that contracting personnel should consider TDR data during price negotiations, which is a direct contradiction to GSA’s July 2018 TDR Data Management Plan training. GSA OIG notes that after their audit exit conference they were provided a September 2020 TDR Data Management Plan in which the above mentioned training is no longer necessary to access TDR data.

GSA OIG found that the vast majority of contracting personnel who administered TDR contracts not only lacked an understanding of TDR data, but either did not have access to the data, or for those that did have access, they had never actually accessed the data. Additionally, GSA did not train contracting personnel on how to use TDR data, and indicated that they expected FAS employees would know how to “apply it to their jobs.” Overall GSA OIG is “concerned that, given the data integrity issues, the TDR data could lead to erroneous conclusions and flawed decision making if it is used for pricing or buying decisions.”

Use of other FAS pricing tools

Through their interviews with contracting personnel, GSA OIG found that pricings tools such as Contract-Awarded Labor Category (CALC), GSA Advantage! and Price Point Plus Portal (4P) were used for pricing analysis and market research. This finding is concerning to GSA OIG as they have previously reported that the use of the above mentioned pricing tools has led to flawed methodologies and practices when performing pricing analysis. GSA OIG’s December 2019 report notes that “FAS contracting officers relied either solely or primarily on pricing tools to establish price reasonableness, inappropriately based pricing comparisons on labor categories that were not the “same or similar,” used inconsistent sampling methods and used an inappropriate basis to establish acceptable price ranges.”

The above findings led GSA OIG to conclude that the TDR pilot has not met its intended purpose to improve value to the taxpayers. This determination is due to unreliable and inaccurate data, lack of access to TDR data and use by contracting personnel and the use of flawed pricing tools. Throughout the audit report, GSA OIG addresses GSA’s recent FY 20 evaluation results and directly contradicts their assessment that the TDR pilot is meeting or exceeding targets.

GSA OIG recommendations and GSA response

GSA OIG is clear that they want to see the TDR program come to an end. Their recommendations to the FAS Commissioner include taking immediate action to restrict new or existing contractors from joining the TDR pilot and restrict access and use of TDR data. GSA OIG’s second recommendation goes a step further and suggests the development and implementation of an exit strategy to transition TDR contractors out of the pilot program.

The final report includes the FAS Commissioner’s response, and notes that the commissioner indicated that GSA agreed with many of the findings and that action has been or will be taken to address these issues. While the FAS Commissioner generally agreed with the findings, he disagreed with the recommendations and conclusion that the TDR pilot was not meeting its purpose. GSA OIG is clearly concerned that despite all the apparent deficiencies with the TDR pilot program, GSA FAS is determined to continue and expand the program without truly addressing the issues.

Drastically different conclusions between GSA FAS and GSA OIG

Since the inception of TDR, GSA OIG has voiced its concerns about the program. In 2015, GSA OIG provided comments to the proposed GSAR rule and has continued to provide regular assessments of the program. In addition to this current audit report, GSA OIG issued an audit report in 2018. A theme that runs through the assessments and audits is GSA OIG’s concern that TDR eliminates critical price protections for FSS contracts through the elimination of the Price Reductions Clause and Commercial Sales Practices disclosure. GSA OIG continues to criticize all aspects of the TDR pilot while GSA FAS is optimistic that the program can lead to better informed contracting personnel and reduced contractor burden. The two often agree on findings but then come to drastically different conclusions. 

What should GSA Schedule contractors be thinking about following the release of the report?

  1. Pricing pressure on the horizon? The audit report is critical of GSA’s apparent inability to leverage the collected data in GSA Schedule contract negotiations. As GSA continues to improve its use of the information, it is possible that TDR vendors will begin seeing more aggressive pricing negotiations as GSA pushes to achieve positive value metrics and to strengthen its case for the program’s expansion. 
  2. Work closely with contracting officers: One of the more surprising details from the audit report was the lack of understanding from contracting officers of the information collected. As TDR vendors begin encountering the use of transactional data in contract negotiations, they should be prepared to help educate these individuals on how to interpret the information so that they are not making flawed determinations. Within the context of the Schedules consolidation, where contracting officers are working more frequently with disparate market offerings, this is likely to be more important than ever..
  3. Increased competition: Category management defines Tier 3, Best-in-Class vehicles as contracts that feature data reporting as a key requirement. In effect, a CSP does not allow GSA to claim the schedules as Best-in-Class. Data reporting is a choice by GSA to achieve BIC status.  As GSA commits to this model further in the future, the barrier to entry is lower. Contractors may find increased competition on the schedules program, which could force their attention to other more specialized vehicles. Paying close attention to the acquisition landscape, and how it changes, will be as important as ever.  
  4. GSA OIG may shift compliance focus: The GSA Schedules may not be as fertile a noncompliance territory for the enforcement community in the future. According to the GSA OIG, Consolidation of Schedules led to the expansion of TDR without actually expanding the program.  Where does the OIG go as audit matters if pricing related noncompliance matters begin to dwindle in the future? GSA contractors should be aware that other areas of GSA compliance may receive more focus (labor qualifications, Trade Agreements Act, information security, supply chain assurance, etc.).

For more information on TDR, or to learn how Baker Tilly specialists can help – please contact us:

Leo Alvarez
Julia Smith
Jeff K. Clayton
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