Tuesday Insight – June 25th, 2024: FAR & Beyond: The Nexus Between Data Management Tools, Transparency and Procurement Policy

Jul 9, 2024

Data management tools, like pricing algorithms and artificial intelligence (AI), are playing an ever-larger role in Federal procurement as agencies look to streamline processes, increase efficiency, and improve contract outcomes. Just last month, at the Coalition’s Spring Training Conference, a panel of government and industry practitioners engaged in a fascinating discussion on how AI supports agency procurement operations. The potential is enormous. As AI evolves and algorithms are fine-tuned, agencies will increase the use of these tools, leading to new procurement strategies, practices, and analytics with the potential to enhance customer agency mission support for the American people.

Coalition members generally support the use of these new data management technologies. At the same time, current experience raises important policy considerations and questions for stakeholders across the procurement community. Transparency, data integrity, and compliance with the Federal Acquisition Regulation (FAR) all are foundational considerations in the use of AI and/or algorithms to support procurement operations. GSA’s current use of algorithms and pricing data is instructive in this regard.

Unpacking the Black Box of Price Analysis

Over the last several years, GSA has been using a series of data management tools to support the price evaluation of products under the Multiple Award Schedule (MAS) program. They include the Price Point Plus Portal (4P) tool, the Standardized Pricing Evaluation Logic (SPEL) tool, and, more recently, the FAS Catalog Platform (FCP). Underlying these tools is a price analysis algorithm that assesses or compares several pricing data points to generate a “market threshold” that can then be used to determine whether a proposed price is fair and reasonable based on the market information available to GSA.

To its credit, GSA has met with industry and outlined how it uses the algorithm to compare prices and establish a “range of fair and reasonable pricing” for a proposed product or set of products.  In addition, through the FCP, GSA now is providing Compliance and Pricing reports that call out relevant datapoints that the algorithm is looking at for evaluation purposes. The next logical step is to provide industry partners with direct access to the algorithm and pricing database. With this transparency, contractors would be able to use the tools to conduct their own analysis in support of their proposal preparation. (Of course, any access to this information would be contingent on ensuring the pricing data was sanitized to protect competitively sensitive pricing information.)
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