Don't hector vendors

Finalizing the rules has dragged on for years, as GSA officials, certain inspectors
general and vendor groups fought behind the scenes. In that sense, it's a relief for OMB
to have finally blessed the rules.

As reported by senior staff writer Kevin Power [GCN, Aug. 25, Page 3], GSA will keep
the right to demand best-customer pricing from MAS vendors. But by retaining the right to
audit vendors' pricing practices, GSA must stress pre-award audits, which will reduce
raiding parties on vendors' books after contract award.

The key word here is stress. In negotiations, GSA still can press for post-award audit
provisions. How heavy-handed GSA will be remains to be seen.

Regular readers know we are strong supporters of agency discretion and especially of
the new latitude permitted by procurement reform. But the occasion of the new MAS rules is
a good time to express a note of caution on pricing audits. GSA should stick with
pre-award audits and steer away from hectoring vendors post-award.

Why? Just look at how the market has changed. MAS is a much looser program than before,
and it has spawned many--probably too many--secondary buying vehicles in the form of
blanket purchasing agreements.

The claims made for the potential value of some of these BPAs border on the fantastic.
There's simply no way every $100 million or $1 billion BPA is going to yield that level of

Yet the existence of these multiple channels has two effects.

One, it makes the government market much more like a commodity exchange. Price audits
are less necessary because there is so much information available.

Two, some vendors have so many contract vehicles and BPAs, they can barely support them
all. Procurement reform has made it harder than in the Brooks Act years to turn a contract
or agency experience into an annuity. Vendors must have more leather on the streets. This
all drives up the cost of sales.

The government has gained enormous leverage in buying. It should avoid burdening
vendors with too much auditing.

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