There is a maxim of business that an organization cannot manage what it does not measure. At a basic level, this maxim recognizes the importance of data, like information surrounding performance, production activities, and distribution, to the success of a business. Given that competitive markets are dynamic, accessing such data and understanding it allows businesses to respond to market changes by adjusting various inputs to meet them. Readers will recall recent FAR & Beyond blogs (here and here) where the Coalition for Government Procurement discussed the evolution and utility of Transactional Data Reporting (TDR) and where we noted, in part, that TDR “focuses on transactions at the order level, the most relevant, actionable data for GSA, customer agencies, and MAS contractors.” In this blog, we delve into this point to discuss the important role TDR plays in providing the General Services Administration (GSA) relevant data to improve contract performance continuously.
Under TDR, in addition to contract identifier information, contractors are required to provide, among other things, a description of deliverables, including part numbers and units delivered, along with the quantity of items sold, the price paid per unit, and the total price paid. By providing such information, contractors can avoid current program requirements, including the reporting of Commercial Sales Practices (CSP), the establishment of Most Favored Customer (MFC) commercial pricing/Basis of Award (BOA) customer benchmarks and pricing, tracking and aligning BOA/MFC pricing with prices given to GSA, and compliance with the Price Reductions Clause based on that tracking, where a price reduction for GSA could be triggered when BOA/MFC pricing and GSA prices are out of an agreed-to alignment.
At first glance, one immediately sees a critical distinction between the use of TDR and the use of BOA/MFC benchmarking and pricing: data quality. Even under the best of circumstances, the use of BOA/MFC benchmarking involves referencing old data based on old variables. TDR, in contrast, utilizes data that is updated frequently, reflecting changes in the market for the goods and services involved. Further, because BOA/MFC benchmarks are set at a given point in time, they take on an almost hypothetical quality, leaving the Government to validate its price reasonableness with low data quality audits somewhat detached from market realities. In effect, instead of leveraging updated data for management purposes, the focus of government and contractor administrative activity, which can be significant, changes from an analysis of price reasonableness to a simple analysis of compliance with a potentially stale benchmark.