When GSA created a TDR pilot program, it was to reduce the administrative burden of the Basis of Award/Most Favored Customer discount relationship. TDR sought to unhitch the discount relationship restriction and allow vendors some flexibility commercially, while still providing federal agencies a competitive price.
The program was released as a pilot in 2018 but has been continuously evaluated as a positive change for both the federal government and industry. GSA’s own evaluation determined that “data completeness, contract-level pricing, and small business metrics all exceeded targets.” The evaluation demonstrated that allowing vendors to compete on pricing provided agencies better contract level pricing, especially for small businesses.
GSA is now internalizing the data to broaden their strategy, create more transparency, and minimize burdens on vendors. GSA hopes to expand the use of TDR over Commercial Sales Practice (CSP) and Price Reduction Clause (PRC) disclosures.
What The Expansion of TDR Could Mean To Contractors
Though it is not clearly stated, it appears GSA will look to expand the program to other Categories and SINs under the MAS contracts, as well as other GSA managed contract initiatives. These changes will give all Industry the opportunity to participate in the program, get competitive, and relieve some compliance concerns.
TDR has been great for industry and agencies as it allows vendors to compete in commercial and federal markets without the fear Price Reduction Clause non-compliance which can lead to penalties.
What Contractor Should be Watchful With the TDR Expansion
It may also mean that as transactional data grows, vendors are “punished” for discounting steeply on past orders when looking to win new orders with higher prices or rates. Agencies will have access to prices purchased and attempt to compare categories and products acquired previously to current proposed items.
We know that GSA utilizes the 4P Report to make fair & reasonable price determinations on offers and modifications. The 4P Report compares your proposed prices against prices paid in the market. Contracting Officers and specialists receive the items weighted demand (agency purchasing history) and market thresholds (percent above baseline). They will negotiate those high demand items first.
However, if vendors are offering unsustainable discounts in order to win an order and hope to establish a relationship for future orders, they are driving the baseline down and potentially limiting your ability to be competitive and profitable.
The 4P report will be provided by contracting officers prior to negotiations on modifications and offers for product categories. Labor Category equivalents are not yet available to industry prior to negotiations.
Overall, TDR has been successful for all parties and GSA has shown their intention of applying to other initiatives. Reach out to Coley Government Contract Services for any questions or concerns regarding your GSA Schedule questions on pricing, sales reporting, contract compliance and much more by reaching out to [email protected] or directly by phone at 210-402-6766.
Vice President for Coley GCS, LLC, a Government Contracts Consulting, Coaching and Training company. Daniel leads the day-to-day operations of Coley’s consulting practice. He has two decades of experience with the acquisition, management, and marketing of Federal, State, and Local government contracts. Daniel specializes in all aspects of GSA Schedules management and marketing and has helped hundreds of Coley clients remain compliant with the terms of their GSA contract while helping them expand their business.