.png "Patrick Morgans")
In 2016, the General Services Administration (GSA) rolled out a program that allows Transactional Data Reporting (TDR) on GSA Schedule orders for contractors who opt in (and are eligible). As TDR has become more established in the GSA Schedules program, more and more contractors have been opting into TDR and are experiencing the benefits it provides. Now that GSA has expanded TDR to an additional 67 Special Item Numbers (SINs), I would like to help you make an informed decision regarding whether or not you should opt into TDR by providing an overview of both the benefits and potential drawbacks of switching to TDR. Let’s jump into finding how switching to TDR would affect maintenance of your GSA Schedule.
Why Was TDR Established?
Before we launch into the elements of Transactional Data Reporting, let's talk about why GSA started this program in the first place. GSA wanted to gather more informative data on actual line item sales and the prices paid so they can have a better picture of the Multiple Award Schedule (MAS) program as a whole. The data produced in TDR can serve as a resource for GSA Contracting Officers (COs) analyzing prices, and these pricing insights can be shared across the government. For industry, the hope is TDR will reduce overhead and supply chain costs, and in turn, reduce taxpayer costs as well as annual reporting costs for contractors.
To accomplish this, GSA Schedule holders who opt into TDR exchange additional data when reporting on sales through GSA contracts for less burdensome regulatory compliance. This is seen as a win-win by GSA since it provides them with more data on government purchasing decisions in exchange for allowing greater discounting flexibility on GSA contracts.
Now, let's talk about what TDR looks like if you were to opt in for your contract.
You Will No Longer Need to Disclose Your Commercial Sales Practices with TDR
The biggest change for GSA Schedule holders who opt into TDR is that you no longer have to disclose your Commercial Sales Practices (CSP) to GSA. Under the legacy CSP system, GSA has generally required that GSA contracts receive at least the same discount that the GSA Schedule holders gives to the commercial customer that receives the greatest discount, known as the Most Favored Customer (MFC).
There are some exceptions where the MFC may not be the Basis of Award (BOA) customer, but the BOA, whether or not it is the MFC, is the customer that establishes the GSA Schedule’s pricing discount relationship. This means that the established pricing on a GSA Schedule usually must be the lowest price provided to any customer for that product or service, with little flexibility.
TDR Allows for More Pricing Flexibility
The fact that TDR allows GSA Schedule holders to avoid disclosing Commercial Sales practices allows for pricing flexibility and generally saves contractors a lot of time during the negotiations process, as the Contracting Officer (CO) needs to review and confirm that the discounts being proposed are in line with your Commercial Sales Practices (if you are not under TDR). This can get complicated quickly as you have to distinguish different types of discounts for which customers/classes of customers they apply.
Contractors under TDR do not have to fill out a CSP Chart or CSP-1 Commercial Sales Practices document to disclose their discounts. For contractors who offer a variety of discounts to different customers and customer classes, this is a huge time saver both during the preparations process and during negotiations since it removes an area of scrutiny by GSA.
Since TDR GSA Schedules do not require CSP disclosures, contractors are also not required to provide pricing support in the form of invoices to prove what prices they have sold items at to commercial customer previously.
TDR Allows You to Reduce Compliance Risk
As mentioned in the previous section, not having to disclose your CSP greatly reduces the compliance risk of your GSA Schedule. Since you have not disclosed your CSP or designated an MFC or BOA customer, you are not bound to the Price Reductions Clause, which requires you to maintain the same discount delta between your BOA customer and your GSA discount.
For contractors under the legacy CSP standard, if your disclosed discount for your BOA customer is 5% and you offer GSA an 8% discount, you will need to maintain that three percent 3% discount difference. For example, if you increase the discount for the BOA customer to 7%, you will need to increase the GSA discount to 10%. This means that GSA Schedule holders who have not accepted TDR run a major compliance risk of accidentally triggering the Price Reductions Clause if they provide a commercial customer a greater discount than they have disclosed as their BOA pricing for an item.
Once you have your GSA Schedule, you have to update your CSP information through a modification if your commercial discounts change to make sure you remain in compliance. GSA can also seek damages if they determine that a GSA Schedule holder overcharged a customer through their GSA contract relative to their disclosed BOA discount.
TDR Eliminates the Burden of the Price Reductions Clause
As you can see, the Price Reductions Clause can be a compliance nightmare that requires GSA Schedule holders to continuously monitor all their sales, both GSA and commercial, in order to avoid getting in trouble with GSA and the potential of an Office of Inspector General (OIG) audit.
You may think GSA may not find out about minor deviations, but GSA holds regular assessments with GSA contractors in which they ask you to provide a sample of commercial and GSA invoices, which can uncover inconsistencies between your GSA pricing and your disclosed CSP. Under TDR, this area of compliance risk is removed. Removing the requirement to provide internal pricing history of your offerings thus saves a lot of time and headaches.
Potential Drawbacks of TDR
While most GSA Schedule holders with the option to TDR happily do so and don’t regret it, it is important to be clear that TDR does involve a tradeoff. While you are generally making it easier to obtain and modify your GSA Schedule and lowering your risk of non-compliance, you are also agreeing to take extra steps every time you need to submit your sales reporting.
Reporting Data on Each Transaction
Remember that TDR stands for Transactional Data Reporting, which means you have to report data on each transaction. For non-TDR GSA Schedules, the contractor only has to report the aggregate total of sales on GSA contracts per each of their Special Item Numbers (SINs). If you opt into TDR, you have to report additional data on each transaction, 11 elements to be exact. This means that TDR works best if you have a sales tracking system that accurately captures information like unit measure, quantity of item sold, prices paid per unit, and total price. GSA has recently added 4 new optional elements to the reporting process, and while they remain optional now they may become mandatory over time.
For many GSA Schedule holders, they can pull all or most of this information directly from their sales tracking system. If you are not able to currently, I would strongly recommend putting systems and procedures in place to do so, even if you decide not to opt into TDR, since this will help your track and avoid noncompliance issues such as triggering the Price Reductions Clause as mentioned above.
Reporting Sales Monthly
GSA Schedule holders under TDR also must report their sales monthly rather than quarterly, though Industrial Funding Fee (IFF) remittance is still only due quarterly. The template used to report sales under TDR can be found under “Data Submissions at the FAS SRP as “FAS SRP Excel Template” and looking at this template, which contains a helpful Instructions tab, will likely give you a good idea of whether or not you will be able to compile this information for the items sold through your GSA Schedule and report 30 days after the end of each month as required.
While this reporting process may seem like it takes up more time on the outset, GSA estimates that contractors save 22 labor hours annually opting into TDR over CSP.
Consider Switching to TDR
As a consultant in the federal contracts space, I know that reducing compliance risks and cutting through red tape is a goal for all federal contractors. While there are additional requirements in terms of sales reporting, most GSA Schedule holders find switching over to TDR a worthwhile change and don’t look back. The reduction in compliance risk and simplification of the proposal and negotiation process are usually well worth the tradeoff of providing transactional data to GSA.
Now that TDR is open to 132 SINs instead of 65, there is a lot more opportunity for contractors to opt in.
That being said, if you have any questions about TDR and how it would affect your GSA contracts, feel free to reach out to Winvale and we would be happy to provide assistance in determining whether or not you would benefit from switching over to TDR.
