Contractors should consider weighing benefits and burdens in making the election.
Last week, the US General Services Administration (GSA) announced that it will make participation in its Transactional Data Reporting pilot program (TDR Pilot) voluntary for all GSA contractors. Previously, for Schedules and Special Item Numbers (SINs) included in the TDR Pilot, participation was voluntary for most existing contractors but mandatory for new offerors and those existing contractors approaching exercise of a five-year option period.
As we discussed in our June 2016 LawFlash, as implemented, the TDR rule requires that government vendors electronically submit a monthly report containing line-item transactional data (e.g., part number, price paid) for direct sales to the government. GSA has previously opined that the TDR rule should significantly reduce burdens to contractors—in particular, by exempting participating contractors from the requirements of submitting Commercial Sales Practices (CSP) disclosures and complying with the tracking customer requirements of the Price Reductions Clause (PRC).
While most contractors would agree that being relieved of CSP disclosures and PRC monitoring would be a welcome event, the burdens associated with implementing TDR will make determining whether to participate in the TDR Pilot a company-by-company decision.
Key takeaways from GSA’s announcement on the TDR Pilot include the following:
- Contractors may, at least for now, choose whether or not to participate in the TDR Pilot. Whether it is advantageous for an individual contractor to adopt the TDR Pilot’s reporting requirements—in exchange for eliminating CSP/PRC compliance obligations—turns upon a number of firm-specific considerations, including how easily the company can access the required data and how burdensome existing CSP/PRC requirements are.
- TDR imposes new and potentially burdensome reporting and monitoring obligations on participating contractors and may require implementing new systems to ensure accurate reporting. Notably, a survey of Coalition for Government Procurement Members estimated the burden of implementing TDR as much higher (approx. 1,200 hours to implement for medium/large contractors) than that estimated by GSA (6 hours).
- When considering whether to participate in the TDR Pilot—regardless of whether reporting pilot data using an existing system or by implementing a new one—contractors should perform a careful assessment of the sufficiency of its information systems to provide the particular data elements necessary to meet all government requirements.
- The TDR Pilot currently covers only certain GSA Schedules. Once the pilot ends, it is unclear what course of action GSA will take, or whether it may return to requiring CSP/PRC compliance, even by those that participated in the TDR Pilot. Accordingly, pilot participants should not wholly dismantle processes that were designed to meet CSP/PRC obligations.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Sheila A. Armstrong
Michael A. Cumming
Stephen E. Ruscus
Katelyn M. Hilferty