Tuesday Insight – June 22nd, 2021

GSA Set to Alter Cloud Buying Landscape with New Policy

Since agencies began to talk about moving to the cloud in 2010, public and private sector advocates played up the idea that programs could “pay by the drink” or buy services on a consumption basis.

The fact is, few if any agencies truly achieved this model.

After almost two-and-a-half years of work, the General Services Administration is about ready to unleash a new way to buy cloud services.

GSA released its second draft policy to industry in May that would let agencies buy cloud services “by the drink” through the schedule contract.

A second draft policy created by Jeff Koses, GSA’s senior procurement executive, outlines how this buying approach would work under the schedule contract, including not requiring the Price Reduction Clause, which mandates vendors give the government their lowest price at all times, and what type of contract and how the funding would work.

“GSA anticipates purchasing cloud computing on a consumption basis will increase competition, as the move towards commercial practices will encourage new entrants to the FSS program,” Koses wrote in the draft policy, which Federal news Network obtained. “With a contract structure more closely tied to real time demand, this approach also provides greater flexibility to take advantage of technology improvements and better support cyber security. Tying cloud computing procurements to commercial market prices will also provide cost transparency without burdening contractors with additional transactional price reporting requirements. Plus, this approach promotes cost efficiency as it reduces the need to lock into long term contracts in markets where falling prices are reasonably anticipated.”

“We hope the policy lays out a clear way to execute the pay by the drink execution strategy using the schedules,” said Nick West, GSA’s deputy director of the Office of Policy, Integrity and Workforce, during a panel at the recent Coalition for Government Procurement spring conference. “We hope to have some sort of language in the schedule contracts by the fall or maybe earlier, hopefully. We really are looking to build something that the CIOs will use and [industry] will offer solutions for them to use.”

Continued work to improve cloud buying SIN

GSA gave industry its first look at how it wanted to change this policy in January 2020.

West said the pandemic delayed the work on the final policy, but GSA did incorporate comments into this second draft policy.

Keith Nakasone, who recently retired after 32 years in government, including the last four-plus as the deputy assistant commissioner for acquisition in GSA’s Office of IT Category, said adding the pay-by-the-drink model to the schedules is another way the  Federal Acquisition Service is evolving the cloud special item number (518210C — previously 132-40).

The second draft memo offers more specifics than the first one. For instance, agencies would buy off of cloud service provider pricelists and receive any discounts as prices change. Agencies can incrementally fund task orders for cloud services instead of putting all of the money on contract at one time.

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