[Federal Register Volume 84, Number 189 (Monday, September 30, 2019)]
[Notices]
[Pages 51578-51586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21253]
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GENERAL SERVICES ADMINISTRATION
[OMB Control No. 3090-0235; Docket No. 2019-0001; Sequence No. 1]
General Services Administration Acquisition Regulation;
Submission for OMB Review; Federal Supply Schedule Pricing Disclosures
and Sales Reporting
AGENCY: Office of Acquisition Policy, General Services Administration
(GSA).
ACTION: Notice of request for comments regarding an extension to an
existing OMB clearance.
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SUMMARY: Under the provisions of the Paperwork Reduction Act, the
Regulatory Secretariat Division is submitting a request to the Office
of Management and Budget (OMB) to review and approve an extension of a
previously approved information collection requirement regarding
Commercial Sales Practices disclosures and the General Services
Administration Acquisition Regulation (GSAR) clause regarding price
reductions. The information collected is used to establish and maintain
Federal Supply Schedule (FSS) pricing and price-related terms and
conditions. The extension has been renamed ``Federal Supply Schedule
Pricing Disclosures and Sales Reporting'' because it now includes a
burden estimate associated with the basic version of the GSAR clause
regarding industrial funding fee and sales reporting. GSA uses this
information to collect the Industrial Funding Fee and administer the
FSS program. This burden was included under a separate approved
information collection identified by OMB control number 3090-0121.
[[Page 51579]]
DATES: Submit comments on or before: October 30, 2019.
ADDRESSES: Submit comments identified by Information Collection 3090-
0235, Federal Supply Schedule Pricing Disclosures and Sales Reporting,
by any of the following methods:
Regulations.gov: http://www.regulations.gov. Submit
comments via the Federal eRulemaking portal by searching the OMB
control number. Select the link ``Submit a Comment'' that corresponds
with ``Information Collection 3090-0235, Federal Supply Schedule
Pricing Disclosures and Sales Reporting.'' Follow the instructions
provided at the ``Submit a Comment'' screen. Please include your name,
company name (if any), and ``Information Collection 3090-0235, Federal
Supply Schedule Pricing Disclosures and Sales Reporting'' on your
attached document.
Mail: General Services Administration, Regulatory
Secretariat Division (MVCB), 1800 F Street NW, Washington, DC 20405.
ATTN: Ms. Mandell/IC 3090-0235, Federal Supply Schedule Pricing
Disclosures.
Instructions: Please submit comments only and cite Information
Collection 3090-0235, Federal Supply Schedule Pricing Disclosures and
Sales Reporting, in all correspondence related to this collection. All
comments received will be posted without change to http://www.regulations.gov, including any personal and/or business
confidential information provided.
FOR FURTHER INFORMATION CONTACT: Mr. Matthew McFarland, Office of
Acquisition Policy, 301-758-5880 or [email protected].
SUPPLEMENTARY INFORMATION:
A. Purpose
GSA's Federal Supply Schedules, commonly known as GSA Schedules or
Multiple Award Schedules (MAS), are Government-wide contracts providing
federal agencies with a simplified process for acquiring commercial
supplies and services. The FSS program is the Government's preeminent
commercial contracting vehicle, accounting for about 10 percent of all
federal contract dollars with approximately $33 billion of purchases
made through the program in fiscal year 2018.
GSA establishes the pricing and terms of each GSA Schedule contract
with commercial contractors. Federal agencies then follow GSA's
competitive procedures when placing orders against these contracts and
thereby satisfy statutory competition requirements to provide ``the
lowest overall cost alternative to meet the needs of the Federal
Government.'' \1\ In turn, those agencies must pay an Industrial
Funding Fee (IFF) that covers GSA's costs of operating the FSS program.
The fee is currently set at 0.75 percent and is included in the prices
ordering activities pay contractors when purchasing from an FSS
contract.\2\ FSS contractors then report GSA Schedule sales data and
remit the IFF collected from ordering activities to GSA once a quarter.
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\1\ 41 U.S.C. 152(3)(B) requires FSS ordering procedures to
``result in the lowest overall cost alternative to meet the needs of
the Federal Government.''
\2\ The IFF for Schedule 599, Special Item Number 599-2 is $1.50
per transaction.
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There were a total of 16,215 GSA FSS contracts in fiscal year 2018.
This information collection pertains to the pricing disclosures and
sales reporting requirements for 14,152 of these contracts. The
remaining 2,063 contracts participated in the Transactional Data
Reporting (TDR) pilot and were subject to a separate information
collection identified by OMB control number 3090-0306.
GSA believes TDR offers a meaningful burden reduction for FSS
contractors. GSA estimates the combined burden of this information
collection is 49 percent more per contract than the TDR burden. If all
FSS contractors participated in TDR, rather than being subject to the
sales reporting and pricing disclosure requirements of this information
collection, they would realize an estimated annual burden reduction of
$30.8 million.\3\ On the other hand, contractors will absorb costs when
reverting back to the requirements of this information collection,
including costs associated with establishing a basis of award customer
and monitoring system for PRC compliance, if GSA ends the TDR pilot
without an alternative means of collecting the IFF, monitoring program
sales and establishing and monitoring contract pricing.
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\3\ The estimated burden for this information collection, which
applied to the 14,152 contracts not participating in the TDR pilot,
is estimated to be $94.2 million. This equates to a per-contract
burden of $6,662/year. The estimated burden for the TDR information
collection is $9.2 million/year for the 2,063 contracts
participating in the FSS pilot; this equates to a per-contract the
burden of $4,483/year. The estimated $30.8 million/year burden
reduction is calculated by taking the updated 3090-0235 burden
estimate ($94.2 million/year) and subtracting the product of the
number of contracts included in 3090-0235 multiplied by the average
per-contract burden of TDR (14,152 contracts x $4,483), which equals
$63.4 million/year ($94.2M--$63.4M = $30.8M). More information about
the TDR burden can be found under Information Collection 3090-0306
at http://www.reginfo.gov/public by searching ``ICR'' for ``3090-
0306''.
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The Paperwork Reduction Act generally requires information
collections to be renewed every three years.\4\ Both this information
collection (OMB control number 3090-0235) and the Transactional Data
Reporting information collection (OMB control number 3090-0306) were
last approved in 2016, so GSA is now obtaining extensions to both
information collections. Additionally, GSA is consolidating a separate
information collection for IFF and sales reporting (OMB control number
3090-0121) with this information collection because the burdens are
interdependent.
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\4\ 44 U.S.C. 3507(g)
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This request for comments only pertains to the information
collection requirements associated with the basic version of GSAR
clause 552.238-80 and CSP and PRC disclosure requirements. GSA has also
published a separate notice requesting comments on the Transactional
Data Reporting information collection (OMB control number 3090-0306)
elsewhere in this issue of the Federal Register.
Sales Reporting
General Services Administration Acquisition Regulation (GSAR)
clause 552.238-80 Industrial Funding Fee and Sales Reporting is
included in every GSA Schedule contract. The basic version of the
clause requires contractors to report their FSS contract sales to GSA
within 30 days after the end of the quarter. GSA then calculates the
IFF due based on the total amount of sales reported and the contractor
must also remit that amount within 30 days after the end of the
quarter.\5\
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\5\ Alternate I of the clause applies to FSS contracts
participating in the TDR pilot and falls under the information
collection identified by OMB control number 3090-0306.
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FSS Pricing Disclosures
The basic version of GSAR clause 552.238-80 Industrial Funding Fee
and Sales Reporting also dictates the pricing procedures GSA will use
to establish contract pricing. These pricing procedures require GSA to
determine price reasonableness on its FSS contracts by comparing a
contractor's prices and price-related terms and conditions with those
offered to their other customers. Through analysis and negotiations,
GSA establishes a favorable pricing relationship in comparison to one
of the contractor's customers (or category of customers) and then
maintains that pricing relationship for the life of the contract. In
order to carry out this practice, GSA collects pricing information
through CSP disclosures and enforces the pricing relationship through
the PRC.
[[Page 51580]]
Commercial Sales Practices (CSP): In accordance with GSAR
515.408(a)(2), offerors must submit information in the Commercial Sales
Practices Format provided in the solicitation, following the
instructions at GSAR Figure 515.4-2, or submit information in their own
format. In addition to when an offer is submitted, CSP disclosures are
also required prior to executing bilateral modifications for exercising
a contract option period, adding items to the contract, or increasing
pricing under the Economic Price Adjustment clause (GSAR 552.216-70).
Price Reductions Clause (PRC): GSAR 538.273 (b)(2) prescribes the
PRC for use in all FSS solicitations and contracts. The clause is
intended to ensure the Government maintains its price/discount (and/or
term and condition) advantage in relation to the contractor's customer
(or category of customer) upon which the FSS contract is based. The
basis of award customer (or category of customer) is identified at the
conclusion of negotiations and noted in the contract. Thereafter, the
PRC requires FSS contractors to inform the contracting officer of price
reductions within 15 calendar days. Per GSAR 552.238-81(c)(1)a price
reduction shall apply to purchases under the contract if, after the
date negotiations conclude, the Contractor--
Revises the commercial catalog, pricelist, schedule or
other document upon which contract award was predicated to reduce
prices;
Grants more favorable discounts or terms and conditions
than those contained in the commercial catalog, pricelist, schedule or
other documents upon which contract award was predicated; or
Grants special discounts to the customer (or category of
customers) that formed the basis of award, and the change disturbs the
price/discount relationship of the Government to the customer (or
category of customers) that was the basis of award.
FSS ordering procedures are required by law to ``result in the
lowest overall cost alternative to meet the needs of the Federal
Government.'' \6\ CSP disclosures and the PRC provide GSA a mechanism
for meeting this objective by giving it insight into a contractor's
pricing practices, which is proprietary information that can only be
obtained directly from the contractor.
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\6\ 41 U.S.C. 152(3)(B)
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Information Collection Changes and Updates
The burden estimates from the previous approval have been adjusted
to include updates to sales reporting estimates previously included
under OMB control number 3090-0121; reflect actual participation in the
TDR pilot; revised labor rates used to calculate cost estimates; and
increases to the heavier lift burdens for PRC compliance systems, CSP
pre-award disclosures and CSP option disclosures. The number of
respondents and applicable actions has also been updated.
Industrial Funding Fee and Sales Reporting: The basic version of
the Industrial Funding Fee and Sales Reporting clause has traditionally
been associated with OMB control number 3090-0121, which was last
extended in June 2017. GSA determined this information collection
should be consolidated with the FSS Pricing Disclosures information
collection (OMB control number 3090-0235) because they apply to the
same population within the GSA Schedules program.
The estimation methodology for the sales reporting calculations is
the same as what was used for the 2017 renewal of OMB control number
3090-0121 except the sales categories were revised to align with those
used for the Transactional Data Reporting information collection (OMB
control number 3090-0306).
Adjustments for the Transactional Data Reporting Pilot: GSA
Schedule contracts included in the TDR pilot are no longer subject to
this information collection; the separate reporting requirements for
those contracts are covered by OMB control number 3090-0306.
The TDR pilot had yet to launch when these burden estimates were
previously calculated in 2016, so GSA based its estimates for the
number of contracts that would participate on the total number of
contracts under the Schedules and Special Item Numbers eligible for the
pilot:
The ratio of GSA Schedule contracts that would continue
under this information collection was estimated to be 56.8 percent,
which was based on the percentage of the program's sales in fiscal year
2015 for contracts that would not be eligible to participate in the TDR
pilot.
The ratio of GSA Schedule contracts slated to be included
in the TDR pilot was estimated to account for the remaining 43.2
percent.
Consequently, the 2016 burden estimates for the CSP and PRC renewal
and the 2017 IFF and sales reporting renewal relied upon these TDR
pilot participation projections. However, pilot participation became
optional in 2017 and the number of contracts that eventually joined the
pilot was lower than anticipated in 2016. Of the 16,215 contracts that
were active in FY 2018,
14,152 contracts, or 87.28 percent of the total, are
subject to this information collection.
2,063 contracts, or 12.72 percent of the total,
participated in the TDR pilot.
Consequently, the revised participation figures resulted in
significantly higher burden estimates for this information collection
and lower burden estimates for the Transactional Data Reporting
information collection (OMB control number 3090-0306).
Revised Labor Rates: The previous burden estimates used a fully
burdened labor rate of $68/hour. This included a $50/hour base rate,
which was based on professional judgment, and 36 percent for fringe
benefits, which was rounded down from the 36.25 percent fringe benefit
factor included in OMB Circular A-76.\7\
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\7\ 36.25% overhead rate was used in reference to Office of
Management and Budget (OMB) Circular No. A-76. Circular A-76
requires agencies to use standard cost factors to estimate certain
costs of Government performance. These cost factors ensure that
specific government costs are calculated in a standard and
consistent manner to reasonably reflect the cost of performing
commercial activities with government personnel.
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The revised burden estimates attempt to align with the Department
of Defense's Regulatory Cost Analysis Tool (RCAT), which was developed
to prepare economic analyses in compliance with Executive Order 13771
and uses various Government labor category rates as the basis for cost
estimates. GSA determined--
The GS-14, Step 5 labor rate from the RCAT ($77.55/hour)
was the most appropriate for the tasks performed by contractors to
comply with CSP and PRC disclosure requirements and perform the initial
setup for sales reporting systems.
The GS-12, Step 5 labor rate from the RCAT ($55.19/hour)
was the most appropriate for the tasks performed by contractors for
quarterly sales reporting.
Increased Heavier Lift Burdens
GSA increased some of its heavier lift burden estimates in response
to public comments received in 2019. Previously, the heavier lift
calculations for PRC compliance systems and CSP pre-award and options
disclosures were generally 15-86 percent higher than the lighter lift
estimates for those functions. However, GSA now believes the disparity
between a lighter lift and a heavier lift is greater than previously
estimated and projects the heavier lift burden for those activities is
5 times greater than the lighter lift estimates. This change
[[Page 51581]]
increases the annual information collection burden estimate by
approximately $33 million.
B. Annual Reporting Burden
This information collection applies to GSA FSS contracts that
include the basic version of GSAR clause 552.238-80 Industrial Funding
Fee and Sales Reporting. In FY 2018, 13,828 contractors held a total of
16,215 GSA FSS contracts; 12,151 of these contractors held a total of
14,152 contracts containing the basic version of clause 552.238-80.\8\
These contracts accounted for approximately 77.8 percent of GSA FSS
sales in fiscal year 2018. The 2,063 GSA FSS contracts subject to
Alternate I of GSAR clause 552.238-80--those participating in the TDR
pilot--are covered by a separate information collection identified
under OMB control number 3090-0306.
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\8\ Some contractors hold multiple contracts and may have
contracts participating in the TDR pilot and other contracts that
are subject to CSP and PRC disclosure requirements.
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Cost Burden Calculation
Sales Reporting: The two primary activities associated with sales
reporting are initial setup and quarterly reporting. GSA calculated the
cost burden for each as follows:
Initial Setup: The duties required for these activities
will generally be completely by a senior-level subject matter expert.
For the purposes of establishing an hourly rate, GSA equates these
duties to those of a GS-14, Step 5 employee, whose hourly rate in 2019
for the ``Rest of U.S.'' locality is $56.92 an hour.\9\ When factoring
a 36.25 percent overhead rate for fringe benefits, the fully burdened
rate is $77.55 an hour.\10\
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\9\ General Schedule (GS) labor rates may be viewed on the
Office of Personnel Management (OPM) under Pay & Leave: Salaries and
Wages, SALARY TABLE 2019-RUS at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/19Tables/html/RUS_h.aspx
\10\ 36.25% overhead rate was used in reference to Office of
Management and Budget (OMB) Circular No. A-76. Circular A-76
requires agencies to use standard cost factors to estimate certain
costs of Government performance. These cost factors ensure that
specific government costs are calculated in a standard and
consistent manner to reasonably reflect the cost of performing
commercial activities with government personnel.
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Quarterly Reporting: The duties required for these
activities will generally be completed by mid-level personnel. For the
purposes of establishing an hourly rate, GSA equates these duties to
those of a GS-12, Step 5 employee, whose hourly rate in 2019 for the
``Rest of U.S.'' locality is $40.51 an hour. When factoring a 36.25
percent overhead rate for fringe benefits, the fully burdened rate is
$55.19 an hour.
Pricing Disclosures: The duties required for these activities will
generally be completed by a senior-level subject matter expert. For the
purposes of establishing an hourly rate, GSA equates these duties to
those of a GS-14, Step 5 employee, whose hourly rate in 2019 for the
``Rest of U.S.'' locality is $56.92 an hour. When factoring a 36.25
percent rate for fringe benefits, the fully burdened rate is $77.55 an
hour.
Heavier Lifts and Lighter Lifts
Due to the diversity among the FSS contractor population, the
burden associated with many of the CSP and PRC components of this
information collection cannot be equally attributed to all FSS
contracts. In these areas, GSA is categorizing contracts into those
with a ``heavier lift'' or ``lighter lift.''
FSS contracts are held by a diverse set of companies, which vary in
terms of business size, offerings, and FSS sales volume. For example,
in FY 2018:
30.7 percent, or 4,975 contracts had $0 in reported FSS
sales.
6.8 percent, or 1,100 contracts, accounted for about 80
percent of all FSS sales.
The top 20 percent of FSS contracts (in terms of FY 2018
sales) accounted for 94.6 percent of FSS sales.
Only 19.7 percent of FSS contracts had more than $1
million in FSS sales.
68.7 percent of FSS contracts were held by small
businesses and had less than $1 million in FSS sales.
Small businesses held 81 percent of the FSS contracts but
accounted for 37 percent of FSS sales.
In general, a contractor's sales volume will have the greatest
effect on the associated burden of these requirements, although the
number and type of offerings, and business structure, can also be
significant factors. As previously shown, a relatively small number of
FSS contracts account for the vast majority of FSS sales and therefore
likely bear a heavier burden for these requirements. Conversely, the
majority of FSS contracts, which are typically held by small businesses
with lower sales volume, absorb less of the burden for these
requirements.
To account for the differences among FSS contracts, GSA is
utilizing the Pareto principle, or ``80/20 rule,'' which states 80
percent of effects comes from 20 percent of the population.
Accordingly, GSA is categorizing FSS contracts by those with a heavier
lift (20 percent) and those with a lighter lift (80 percent). Contracts
with heavier lifts are those with the characteristics leading to
increased burden--more sales volume, higher number of contract items,
more complex offerings, more transactions, more complex transactions,
and/or intricate business structures.
Sales Reporting
The basic version of the Industrial Funding Fee and Sales Reporting
clause requires contractors to report their total sales by Special Item
Number once a quarter in the 72A Reporting System.\11\ Contractors must
file these reports within 30 days after the end of each of the
following quarters:
\11\ https://72a.gsa.gov.
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January 1 to March 31
April 1 to June 30
July 1 to September 30
October 1 to December 31
After contractors report their sales, the 72A Reporting System
calculates the IFF due for the quarter. The system then prompts users
to ``Pay Now'' or ``Pay Later.'' Contractors can remit IFF payments via
credit card, online check, or paper check. Regardless of whether a
contractor remits the IFF at the time sales are reported or at a later
date, the IFF due must be remitted within the same 30 day deadline
following the end of the reporting quarters.
Categorization of Vendors by Quarterly Sales Revenue: Sales
reporting imposes a progressive burden--one that increases with a
contractor's sales volume. Quarterly reporting times will increase with
a contractor's applicable sales volume, as contractors with lower to no
reportable sales will spend little time on quarterly reporting, while
those with more reportable sales with face a higher reporting burden.
GSA separated contracts into categories based on reported annual
sales volume in order to account for the differences in reporting
burden. These categories are:
Category 1: No sales activity
Category 2: Sales between $0 and $25,000
Category 3: Sales between $25,000 and $250,000
Category 4: Sales between $250,000 and $1 million
Category 5: Sales over $1 million
The distribution of contracts by sales category is as follows:
[[Page 51582]]
Contracts by Sales Category
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FSS contracts FSS contracts
(count) (percentage)
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Category 1.............................. 4,657 33%
Category 2.............................. 1,188 8%
Category 3.............................. 3,469 25%
Category 4.............................. 2,168 15%
Category 5.............................. 2,670 19%
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
Total............................... 14,152 100%
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Automated vs. Manual Reporting Systems: Vendors subject to these
clauses must create systems or processes to produce and report accurate
data. Generally, contractors will use automated or manual systems to
identify the quarter's reportable sales. An automated system is one
that relies on information technology, such as an accounting system or
data management software, to identify and compile reportable data.
These systems can tremendously streamline the reporting process but
require upfront configuration to perform the tasks, such as coding the
sales types to be retrieved. Conversely, a manual system is one that
incorporates little to no automation and instead relies on personnel to
manually identify and compile the reportable data. An example of a
manual system would be an accountant reviewing invoices to identify the
reportable data and then transferring the findings to a spreadsheet. In
contrast to automation, a manual system requires relatively little
setup time but the reporting effort will generally increase with the
contractor's sales volume.
The likelihood of a contractor adopting an automated system
increases with their applicable sales volume. Vendors with little to no
reportable data are unlikely to expend the effort needed to establish
an automated reporting system since it will be relatively easy to
identify and report a limited amount of data. However, as a
contractor's applicable sales increase, they will be increasingly
likely to establish an automated system to reduce the quarterly
reporting burden. Consequently, contractors with higher reportable
sales will likely bear a higher setup burden to create an automated
system, or absorb a high quarterly reporting burden if they choose to
rely on manual reporting methods.
The following chart depicts the likelihood of the population of
contracts operating under manual and automated reporting systems:
Contracts by Reporting System Type
[Manual vs. Automated]
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Automated Manual system-- Automated
Manual system system vendor count system-- vendor
(percentage) (percentage) count
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Category 1.................................. 100 0 4,657 0
Category 2.................................. 100 0 1,188 0
Category 3.................................. 90 10 3,122 347
Category 4.................................. 50 50 1,084 1,084
Category 5.................................. 10 90 267 2,403
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Total Count of Contracts by System Type................................. 10,318 3,834
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Percentage of Contracts by System Type.................................. 73% 27%
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Initial Setup: Vendors with active FSS contracts already have
procedures in place to meet these longstanding reporting requirements.
However, new FSS contractors will absorb a one-time setup burden to
establish reporting systems. The estimated setup time varies between
automated and manual reporting systems. Vendors implementing a manual
system must acclimate themselves with the new reporting requirements
and train their staff accordingly, while those with automated systems
must perform these tasks in addition to configuring information
technology resources.
GSA estimates the average one-time setup burden is 8 hours for
contractors with a manual system and 40 hours for those with an
automated system. GSA also attributes the same system type
probabilities (manual system 73 percent, automated system 27 percent)
to the population of new contractors. These estimates apply to the
1,220 contractors awarded FSS contracts in fiscal year 2018.
Quarterly Reporting: Vendors are required to report sales within 30
calendar days after the end of each quarter. The average reporting
times vary by system type (manual or automated) and sales volume. GSA
estimates contractors using a manual system have average quarterly
reporting times ranging from 15 minutes (0.25 hours) per quarter for
contractors with $0 sales to an average of 8 hours per quarter for
contractors with quarterly sales over $1 million. On the other hand,
GSA projects contractors with automated systems will have reporting
times of 2 hours per quarter, irrespective of quarterly sales volume,
as a result of efficiencies achieved through automated processes. The
following table shows GSA's projected quarterly reporting times per
sales category and system type:
[[Page 51583]]
Quarterly Reporting Hours by System Type and Category
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Automated
Manual systems systems
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Category 1.............................. 0.25 2.00
Category 2.............................. 1.00 2.00
Category 3.............................. 2.00 2.00
Category 4.............................. 4.00 2.00
Category 5.............................. 8.00 2.00
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Annualized Public Burden Estimates for Sales Reporting: The burden
estimates consist of quarterly reporting times for all 14,152
participating contracts and a one-time setup burden for the 1,220 new
contracts:
Quarterly Reporting
Annual Burden (Hours): 90,945.
Annual Burden (Cost): $5,019,255.
Initial Setup
Annual Burden (Hours): 20,336.
Annual Burden (Cost): $1,577,078.
Price Reductions Clause
GSA attributes the PRC-related burden to training, compliance
systems, and notifying GSA of price reductions within 15 calendar days
after their occurrence.
Training: FSS contractors provide training to their employees to
ensure compliance with FSS pricing disclosure requirements. GSA is
basing these burden estimates on the number of contractors, not the
number of contracts, because contractors with multiple contracts
subject to this requirement will likely not have to provide separate
training for each contract.
In FY 2018, there were 12,151 contractors subject to PRC
notification requirements, 2,830 (20 percent) with a heavier lift and
9,721 (80 percent) with a lighter lift. Vendors within the heavier lift
category may need to develop formal training programs and conduct
training for numerous divisions and offices, while contractors in the
lighter lift category may have no need for training design and
administration due to having as few as one person responsible for PRC
compliance.
Training--Heavier Lift
Total Annual Responses: 2,430.
Average Hours per Response: 40.
Total Time Burden (Hours): 97,200.
Total Cost Burden: $7,537,860.
Training--Lighter Lift
Total Annual Responses: 9,721.
Average Hours per Response: 20.
Total Time Burden (Hours): 194,420.
Total Cost Burden: $15,077,271.
Compliance Systems: FSS contractors must develop systems to control
discount relationships with other customers/categories of customer to
ensure the basis of award pricing relationship is not disturbed. In
public comments submitted on this information collection renewal in
2016, a respondent stated PRC monitoring burden should be 1,290 hours
to establish a compliance system in the first year and 1,100 hours each
year thereafter for monitoring activities. However, GSA believes the
amount of investment into a compliance system is inversely related to
the amount of time needed to carry out ongoing monitoring activities.
Specifically, contractors making high upfront investments, such as
programming a quotation tool to control discounts, will have a lower
ongoing monitoring reporting burden. On the other hand, contractors not
making upfront investments to establish a compliance system will have a
higher ongoing reporting burden.
GSA previously adopted an average burden of 1,290 hours but
allocated it across the 20-year life of a contract for heavier lift
contractors using automated systems to carry out monitoring activities,
resulting in an annual burden of 65 hours. GSA estimated heavier lift
contractors that spend less time implementing an automated system would
incur a similar burden for monitoring activities, meaning GSA estimated
the same 65 hour/year burden for those contractors. For lighter lift
contractors, GSA attributed an average burden of 700 hours for the 20-
year life of the contract, which equates to 35 hours a year.
However, GSA decided in 2019 to increase its heavier lift burden
estimates after considering public comments. GSA now believes the
disparity between a lighter lift and a heavier lift is greater than
previously estimated and projects the heavier lift burden for those
activities to be 5 times greater than the lighter lift estimates.
Compliance Systems--Heavier Lift
Total Annual Responses: 2,430.
Average Hours per Response: 175.
Total Time Burden (Hours): 425,250.
Total Cost Burden: $32,978,138.
Compliance Systems--Lighter Lift
Total Annual Responses: 9,721.
Average Hours per Response: 35.
Total Time Burden (Hours): 340,235.
Total Cost Burden: $26,385,224.
Price Reduction Notifications: 1,035 price reduction modifications
were completed in FY 2018, with each modification requiring a
notification from the contractor. In a survey conducted among GSA FSS
contracting officers, respondents estimated it took an average of 4.25
hours to complete a price reduction modification. GSA believes FSS
contractors bear a similar burden for this task and is therefore using
the same burden estimate.
Price Reduction Notifications
Total Annual Responses: 1,035.
Average Hours per Response: 4.25.
Total Time Burden (Hours): 4,399.
Total Cost Burden: $341,123.
Commercial Sales Practices Disclosures
The CSP burden results from disclosures required of any contractor
submitting an offer for an FSS contract or modifying an FSS contract to
increase prices, add items and Special Item Numbers, or exercise
options.
The burden estimates for CSP disclosures are based upon the
estimates provided by respondents to the GSA FSS contracting officer
survey. The 77 survey respondents provided estimates regarding the
amount of time it takes FSS contracting officers to complete CSP-
related tasks and GSA believes these responses can be used as a
benchmark for contractor burden estimates.
In calculating these burden estimates, GSA acknowledges a
contractor's tasks are more complex than simply comparing offered
prices to discounts given to other categories of customers. In addition
to collecting and analyzing data, GSA expects offerors to provide data
that is current, accurate and complete. GSA recognizes this due
diligence places an additional burden on offerors. Also, similar to the
PRC, factors such as sales volume, the number of contract items,
complexity of offerings, and business structures has a significant
effect on the burden but can
[[Page 51584]]
vary widely from contractor to contractor. Consequently, GSA is using
the heavier lift and lighter lift methodology for the CSP burden
estimates.
Pre-award Disclosures: In fiscal year 2018, contractors submitted
2,503 offers for FSS contracts with CSP disclosure requirements. GSA
recognizes the complexity of this task varies with the type and number
of offerings, business structure, and expected revenue, so for this
burden estimate, these offers are separated between offerors with
heavier lifts (20 percent or 501 offers) and those with lighter lifts
(80 percent or 2,002 offers).
GSA previously based its burden estimates for this function
directly on the results from the FAS survey of its FSS contracting
officers in 2016. However, after receiving public comments in 2016
stating the pre-award disclosure burden for contractors exceeds that
for contracting officers, GSA doubled its contractor estimates,
resulting in increases for heavier lift contractors from 41.48 hours/
year to 82.96 hours/year and for lighter lift contractors from 32.41
hours/year to 64.82 hours/year.
In 2019, GSA once again chose to increase its heavier lift burden
estimates after considering public comments. GSA now believes the
disparity between a lighter lift and a heavier lift is greater than
previously estimated and projects the heavier lift burden for those
activities to be 5 times greater than the lighter lift estimates.
Pre-award Disclosures--Heavier Lift
Total Annual Responses: 501.
Average Hours per Response: 324.10.
Total Time Burden (Hours): 162,374.
Total Cost Burden: $12,592,111.
Pre-award Disclosures--Lighter Lift
Total Annual Responses: 2,002.
Average Hours per Response: 64.82.
Total Time Burden (Hours): 129,770.
Total Cost Burden: $10,063,636.
Price Increase Modifications: In FY 2018, 1,457 price increase
modifications were processed, including 492 (20 percent) with a heavier
lift and 1,967 (80 percent) with a lighter lift. The time burden for
these modifications varies mainly with the type and number of
offerings. GSA is basing its burden estimates for this function
directly on the results from the FAS survey of its FSS contracting
officers.
Price Increases--Heavier Lift
Total Annual Responses: 492.
Average Hours per Response: 10.45.
Total Time Burden (Hours): 5,141.
Total Cost Burden: $398,716.
Price Increases--Lighter Lift
Total Annual Responses: 1,967.
Average Hours per Response: 9.71.
Total Time Burden (Hours): 18,037.
Total Cost Burden: $1,398,800.
Adding Items and Special Item Numbers (SINs): In FY 2018, 4,209
addition modifications were processed, including 1,275 (20 percent)
with a heavier lift and 5,099 (80 percent) with a lighter lift. The
time burden for these modifications varies with the type and number of
offerings. GSA is basing its burden estimates for this function
directly on the results from the FAS survey of its FSS contracting
officers.
Addition Modifications--Heavier Lift
Total Annual Responses: 1,275.
Average Hours per Response: 11.13.
Total Time Burden (Hours): 14,191.
Total Cost Burden: $1,100,493.
Addition Modifications--Lighter Lift
Total Annual Responses: 5,099.
Average Hours per Response: 10.65.
Total Time Burden (Hours): 54,304.
Total Cost Burden: $4,275,363.
Exercising Options: In FY 2018, 2,468 option modifications were
processed, including 494 (20 percent) with a heavier lift and 1,974 (80
percent) with a lighter lift. The time burden for these modifications
varies with the type and number of offerings, business structure, and
expected revenue.
GSA previously based its burden estimates for this function
directly on the results from the FAS survey of its FSS contracting
officers because while the associated tasks with processing an option
CSP are similar to that of a pre-award CSP, the option CSP requires
less time because of familiarity and precedents created during the
preceding contract period.
However, GSA decided in 2019 to increase its heavier lift burden
estimates after considering public comments. GSA now believes the
disparity between a lighter lift and a heavier lift is greater than
previously estimated and projects the heavier lift burden for those
activities to be 5 times greater than the lighter lift estimates.
Option Modifications--Heavier Lift
Total Annual Responses: 494.
Average Hours per Response: 111.60.
Total Time Burden (Hours): 55,130.
Total Cost Burden: $1,000,605.
Option Modifications--Lighter Lift
Total Annual Responses: 1,974.
Average Hours per Response: 22.32.
Total Time Burden (Hours): 44,060.
Total Cost Burden: $3,416,828.
GSA Office of Inspector General Audits
The GSA Office of Inspector General (OIG) regularly audits GSA
Schedule contracts for compliance with PRC and CSP requirements. The
GSA OIG performed 48 contract audits in FY 2018.\12\ Survey responses
included with public comments submitted for the 2012 renewal of this
information collection noted contractors estimated spending
approximately 440-470 hours preparing for audits involving the PRC.
This burden still applied in 2018, so GSA is taking the median point of
that range (455) and multiplying it by 48 audits, to reach the sum of
21,840 hours expended preparing for audits.
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\12\ The GSA OIG's audit findings are outlined in their
Semiannual Reports to the Congress. The report covering October 1,
2017 to March 31, 2018 stated the OIG performed 21 contract audits
and the report covering April 1, 2018 to September 30, 2018 stated
the GSA OIG performed 27 contract audits.
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GSA OIG Audits
Total Annual Responses: 48.
Average Hours per Response: 455.
Total Time Burden (Hours): 21,840.
Total Cost Burden: $1,226,316.
Total Annual Burden
The total estimated burden imposed by Federal Supply Schedule
pricing disclosures is as follows:
Estimated Annual Time Burden (Hours)
Sales Reporting: 111,281.
Price Reductions Clause: 1,061,504.
CSP Disclosures: 483,008.
GSA OIG Audits: 21,840.
Total Annual Time Burden: 1,247,865.
Estimated Annual Cost Burden
Sales Reporting: $6,596,333.
Price Reductions Clause: $82,319,616.
CSP Disclosures: $37,457,248.
GSA OIG Audits: $1,693,692.
Total Annual Cost Burden: $128,066,888.
C. Public Comments
An initial notice of request for comments regarding the extension
of this information collection was published in the Federal Register at
84 FR 24517 on May 28, 2019. GSA sought comments regarding (1) whether
FSS pricing disclosures are necessary and have practical utility, and
(2) if GSA's estimates of the collection burden are accurate, and based
on valid assumptions and methodology. GSA received comment letters
covering a variety of topics from two respondents, the GSA Office of
Inspector General (GSA OIG) and the Coalition for Government
Procurement (The Coalition).
[[Page 51585]]
The GSA OIG's letter, dated July 26, 2019, provided comments for
this information collection and the Transactional Data Reporting
information collection (OMB control number 3090-0306). The Coalition's
letter, dated July 29, 2019, is limited to this information collection,
although they provided a separate letter with comments on the
Transactional Data Reporting information collection. GSA is providing
responses to the Transactional Data Reporting comments in the documents
associated with the extension of OMB control number 3090-0306.
Both respondent's comments, as they relate to this information
collection, concentrated on CSP and PRC disclosures. The following are
summaries of those comments, grouped by subject matter, and GSA's
responses:
Reporting Burden
Comments: Both respondents provided comments about GSA's burden
calculations. The GSA OIG stated the burden is overstated, noting 16 of
the 36 FSS contractors they audited in FY 2018 had insufficient
commercial sales to disclose and therefore did not have to monitor PRC
compliance. The GSA OIG explained these contractors had sales over $1
million and therefore would fall into the ``heavy lift'' category of
GSA's burden methodology, despite having no compliance burden.
Conversely, the Coalition stated the burden estimates are too low
and estimate the annual FSS pricing disclosures burden to be $1.1
billion. They stated:
GSA's estimate of CSP-related activities being twice as
burdensome for a contractor as the Government is true for a single
contractor employee, but seven to ten contractor employees often
participate in CSP preparation. Therefore, the CSP burden estimates
should be increased by a factor of seven.
The estimated contractor labor rate of $77.55/hour for PRC
compliance activities does not account for the rates of professionals
such as lawyers, accountants, and consultants, and contractors also
frequently rely on outside resources for these activities. As such, the
actual rates fall between $105/hour and $471/hour for an average of
$288/hour.
GSA's PRC compliance system burden estimate, which is
adopted from an earlier Coalition study but allocated across 20 years,
is an annual cost and should not be divided across 20 years.
Additionally, the GSA OIG stated the estimated 455-hour audit
preparation burden should not be included in the burden estimates
because those activities are included in the CSP and PRC disclosure
activities for which GSA has already provided a burden estimate.
Finally, the Coalition noted three calculation discrepancies:
The compliance systems (lighter lift) burden was noted as
35 hours but later included a burden of 30 hours per contractor.
The stated labor rate was $77.25/hour but $77.55/hour was
used in calculations.
There is an arithmetical error in the pre-award
disclosures (heavier lift) calculation.
GSA Response: The diverging opinions around the FSS pricing
disclosure burden underscore GSA's decision to use a ``heavier lift''
and ``lighter lift'' methodology for many of the components of this
information collection. While numerous contractors incur a significant
burden for these activities, many others incur little to no burden, and
these examples residing at either end of the burden spectrum should not
be treated as indicative of all affected contractors.
GSA notes a contractor's sales volume is not the sole determiner of
whether they are classified as heavier lift in the burden estimation
methodology. As noted in the Federal Register notice, contracts with
heavier lifts are those with the characteristics leading to increased
burden--more sales volume, higher number of contract items, more
complex offerings, more transactions, more complex transactions, and/or
intricate business structures. In other words, no single factor, such
as sales volume, results in a contractor having a heavier lift.
Instead, GSA's intention was to show that 20 percent of contractors
have a relatively heavier lift than the other 80 percent of
contractors. As such, the 16 contractors highlighted by the GSA OIG
would belong in the lighter lift category and provide an example of why
a lighter lift contractor would have a relatively low burden.
Regarding the Coalition's burden estimates, GSA increased some of
its heavier lift burden estimates in response to their comments.
Previously, the heavier lift calculations for PRC compliance systems
and CSP pre-award and options disclosures were generally 15-86 percent
higher than the lighter lift estimates for those functions. However,
GSA believes the disparity between a lighter lift and a heavier lift is
greater than previously estimated and now estimates the heavier lift
burden for those activities is 5 times greater than the lighter lift
estimates. This change increases the annual information collection
burden estimate by approximately $33 million.
Yet, GSA is not aligning the remaining burden estimates with the
Coalition's because GSA does not believe those estimates are
representative of most contractors. As illustrated in the first Federal
Register notice, FSS contracts are held by a diverse set of companies,
which vary in terms of business size, offerings, and FSS sales volume.
For example, in FY 2018:
30.7 percent, or 4,975 contracts had $0 in reported FSS
sales.
6.8 percent, or 1,100 contracts, accounted for about 80
percent of all FSS sales.
The top 20 percent of FSS contracts (in terms of FY 2018
sales) accounted for 94.6 percent of FSS sales.
Only 19.7 percent of FSS contracts had more than $1
million in FSS sales.
68.7 percent of FSS contracts were held by small
businesses and had less than $1 million in FSS sales.
Small businesses held 81 percent of the FSS contracts but
accounted for 37 percent of FSS sales.
GSA also believes the labor rates provided by the Coalition are
significantly higher than those typically paid by contractors to
fulfill these functions. GSA believes these functions are typically
performed by contract administrators with occasional assistance from
higher-paid professionals, such as attorneys and consultants. The most
comparable labor category to a contract administrator that was analyzed
by the Bureau of Labor Statistics (BLS) is a compliance officer (13-
1041). BLS's most recently published hourly rate for this type of
professional was $34.86/hour; \13\ when factoring a 36.25 percent
overhead rate for fringe benefits, the fully burdened rate is $47.50 an
hour.\14\ However, GSA chose to use the higher $77.55/hour rate to
account for the occasional involvement of higher-paid professionals.
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\13\ See the Bureau of Labor Statistics Occupational Employment
and Wages for Compliance Officers, available at https://www.bls.gov/oes/current/oes131041.htm.
\14\ 36.25% overhead rate was used in reference to Office of
Management and Budget (OMB) Circular No. A-76. Circular A-76
requires agencies to use standard cost factors to estimate certain
costs of Government performance. These cost factors ensure that
specific government costs are calculated in a standard and
consistent manner to reasonably reflect the cost of performing
commercial activities with government personnel.
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With respect to the Coalition's assertion that their compliance
estimate should be attributed to a single year, GSA will continue to
allocate the burden over a 20-year period because contractors will not
establish a new compliance system each year. GSA
[[Page 51586]]
maintains many of the contractors with complex PRC monitoring
requirements use automated compliance systems to relieve the ongoing
compliance burden. These automated systems, which typically use price
discount controls to assure PRC compliance, require high upfront effort
but significantly decrease the ongoing burden for PRC compliance. On
the other hand, contractors that forego automated systems in favor of
manual, ad hoc monitoring activities will have higher ongoing
monitoring burdens. GSA believes the high investment costs and low
ongoing monitoring burden for contractors using automated systems is
comparable over a 20-year period to the minimal investment effort and
higher ongoing compliance burden for contractors using manual
processes.
Regarding the GSA OIG audit burden, GSA will continue to capture
this burden separately from other CSP and PRC-related burdens because
that burden would not exist if those contractors were not subject to
CSP and PRC disclosure requirements. As such, it should be accounted
for when considering the burden absorbed by contractors complying with
the CSP and PRC.
Finally, GSA corrected the errors identified by the Coalition; the
compliance systems (lighter lift) burden is 35 hours, the correct labor
rate is $77.55, and the arithmetical error in the pre-award disclosures
(heavier lift) calculation was corrected. Additionally, the underlying
calculations for the burden estimates included decimals that were not
displayed in the Federal Register notice; as a result, some of the
figures in the underlying calculations now use whole numbers to avoid
rounding errors.
Utility of CSP and PRC Disclosures
Comments: Both respondents commented on the utility of CSP and PRC
disclosures. The GSA OIG stated the benefits of these disclosures far
exceed the estimated burdens but the Coalition posited these
disclosures have no practical utility and are no longer necessary.
The GSA OIG stated the burdens of the CSP requirements and GSA OIG
audits are considerably less than the estimated burdens, noting that
since October 1, 2017 they had identified over $550 million in
potential cost savings for upcoming contract periods based on
commercial pricing information. Additionally, they stated they had
identified over $15 million in unreported price reductions over the
same time period despite auditing just 70 contracts.
Conversely, the Coalition recommends GSA eliminate the PRC and
reform the CSP. They stated the PRC is a ``restraint of trade'' and it
``increases prices and operational costs while hindering innovation and
competition in the commercial market.'' Moreover, they argue the PRC
inhibits contractors' ability to compete in the private sector because
it limits their ability to offer discounts to commercial customers
without affecting their FSS pricing relationship. Regarding the CSP,
the Coalition states it contains several undefined terms, raising GSA
OIG audit and False Claims Act action risks if those terms are
misunderstood. All told, the Coalition notes many contractors choose
not to hold GSA Schedule contracts because of the CSP and PRC.
GSA Response: In respect to the GSA OIG's comment, GSA is solicited
comments as part of its request to the Office of Information and
Regulatory Affairs (OIRA). These comments supporting the value of CSP
and PRC disclosures will be included in materials GSA is providing OIRA
to justify the continuation of CSP and PRC disclosures.
Regarding the Coalition's comments, GSA understands contractors
have regularly singled out these pricing tools as among the most
complicated and burdensome requirements in federal contracting. As
such, GSA will continue to investigate methods for reducing the
information collection burden on its industry partners and increasing
its reliance on internal Government systems for transactional data.
Ultimately, GSA's reliance on contractor-reported data is a necessary
bridge for ensuring the Government's continual access to the
information it needs to make the best possible buying decisions for the
taxpayer while it works towards developing internal capabilities.
Incomplete Analysis
Comments: Lastly, both respondents stated GSA's analysis was
incomplete. The GSA OIG said GSA's burden estimates ``do not include
the significant benefit those requirements bring to federal agencies
and taxpayers alike.'' The Coalition argued GSA's analysis ``did not
include an analysis of either the benefits of or the alternatives to
these requirements . . .''
GSA Response: The Federal Register notice is only one facet of the
process for requesting an extension of an existing information
collection. Agencies requesting such extensions must also prepare a
``supporting statement'' that provides information including why the
agency thinks the information collection is necessary, how the
information is used, and consequences for the Government if the
information is not collected or is collected less frequently.
Requesters may obtain a copy of the information collection
documents from the General Services Administration, Regulatory
Secretariat Division (MVCB), 1800 F Street NW, Washington, DC 20405,
telephone 202-501-4755. Please cite OMB Control No. 3090-0235, Federal
Supply Schedule Pricing Disclosures and Sales Reporting, in all
correspondence. The supporting statement will also be posted on the
Office of Information and Regulatory Affairs' website (https://www.reginfo.gov) if the information collection is approved.
Finally, additional public comments are particularly invited on:
Whether this collection of information is necessary and whether it will
have practical utility; whether our estimate of the public burden of
this collection of information is accurate, and based on valid
assumptions and methodology; ways to enhance the quality, utility, and
clarity of the information to be collected.
Obtaining Copies of Proposals: Requesters may obtain a copy of the
information collection documents from the General Services
Administration, Regulatory Secretariat Division (MVCB), 1800 F Street
NW, Washington, DC 20405, telephone 202-501-4755. Please cite OMB
Control No. 3090-0235, Federal Supply Schedule Pricing Disclosures and
Sales Reporting, in all correspondence.
Jeffrey A. Koses,
Senior Procurement Executive, Office of Acquisition Policy, Office of
Government-wide Policy.
[FR Doc. 2019-21253 Filed 9-27-19; 8:45 am]
BILLING CODE 6820-61-P