UNITED STATES GENERAL SERVICES ADMINISTRATION

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MULTIPLE AWARDS SCHEDULE ADVISORY PANEL

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TUESDAY, JUNE 17, 2008

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JURYS HOTEL

1500 NEW HAMPSHIRE AVENUE, NW

FIRST FLOOR

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9:00 A.M.

PANEL MEMBERS:

ELLIOTT BRANCH, Chairman

LARRY ALLEN

ALAN CHVOTKIN

THOMAS ESSIG

JAN FRYE

JACQUELINE JONES

JUDITH NELSON

GLENN PERRY

THOMAS A. SHARPE, JR.

DEBRA SONDERMAN

THEDLUS THOMPSON

ALSO PRESENT:

PAT BROOKS, Designated Federal Official

T-A-B-L-E O-F C-O-N-T-E-N-T-S

Page

Welcome & Administrative Announcements 3

Pat Brooks DFO

Chairman Branch

Panel Deliberations 6

Adjournment 261

P-R-O-C-E-E-D-I-N-G-S

9:07 a.m.

WELCOME AND ANNOUNCEMENTS

MS. BROOKS: Just the usual announcements. Please turn off cell phones
and pagers. If you have to access the bathrooms, they are out the door
and to the right, the men bathroom and the ladies bathroom. Please if
you have not yet will you please sign in there at the table \--

We do not have right now any presenters scheduled for this morning.
(Inaudible.) So if there are no other things on the agenda. We have no
time for (Inaudible.)

I do remind you that we did not get copy of the presentations yesterday.
They should have appeared already on my web page, but I will re-verify
(Inaudible) All the presentations for yesterday except for the one
(Inaudible) should already be on the web page and the other two will be
posted there later on.

And the discussion will be we just review with the panel if you have
questions or issues about things in general with the panel please
(Inaudible) Any questions? Comments?

(No verbal response.)

Okay. That\'s all I have.

CHAIRMAN BRANCH: Okay. Thank you, Pat.

Our objective here today is to kind of narrow the field with respect to
the issues that we want to take a look at. We had a very good meeting
yesterday, good presentations, primarily from industry, but I think a
very insightful one from Senior Contracting Office at the Department of
Justice and we gave our views from the dais, if you will, as to what we
thought some of the key issues were and I think there are a lot of
issues. There is some overlap. But I think now what we need to do to
advance the work of the panel is to try to narrow those issues down.

So what I asked everyone to do yesterday was to kind of reflect on what
they heard, reflect on what they\'ve seen and to come in today prepared
to talk about up to three priority issues. So we\'re going to do that
this morning and what I\'ll ask Pat to do is she has some little yellow
sticky pads there to kind of pass those out to the panel members and jot
down one issue per sticky note and, if we could start that way, I think
we can give the panel some time to just kind of think that through and
after that process we\'ll look at the sticky, we\'ll reflect on them and
see if we can kind of narrow the focus of the panel\'s work going
forward.

So it\'s 9:11 a.m. by my watch. I\'d like everybody to take until about
9:30 a.m., kind of think about the key issues that you have and then
I\'ll just start at one end and go down the other and ask you to talk
about your issues and I\'ll ask Pat to put those up on the chart there
and then we can perhaps discuss those issues and start to come up with
some scheme of prioritization.

(Whereupon, at 9:11 a.m., the above-entitled matter recessed and
reconvened at 9:26 a.m.)

CHAIRMAN BRANCH: Okay. If we could just take a couple of minutes to
finish up, I\'ll ask Pat to collect those.

MS. BROOKS: Okay.

(Whereupon, at 9:27 a.m., the above-entitled matter recessed and
reconvened at 9:30 a.m.)

PANEL DELIBERATIONS

CHAIRMAN BRANCH: Why don\'t we just put them up a few at a time. So the
first three up are true price competition levels, the young pack of
price reduction clause on schedule pricing and agency/customer
expectations of the scheduled program. So those are the first three
issues.

Then we have \-- Let\'s do them. Acquisition techniques for acquiring
goods and services, pricing techniques.

MR. CHVOTKIN: Those are mine. Pricing techniques for goods and services,
what, when and how is the second.

CHAIRMAN BRANCH: Okay.

MR. CHVOTKIN: And the third is what is the appropriate or best business
model for maximizing the value of the schedules to withering (phonetic)
agencies and vendors.

CHAIRMAN BRANCH: Okay. Do any of those \-- Before you get going, Pat, do
any of those kind of group with the first three? What\'s the sense?

MS. NELSON: Get them all first.

CHAIRMAN BRANCH: Okay. You want to get them all up first.

MS. BROOKS: They won\'t fit.

CHAIRMAN BRANCH: There is going to be 45 of them.

MR. CHVOTKIN: Okay.

(Off the record discussions.)

CHAIRMAN BRANCH: So if you just start up.

MS. BROOKS: Right.

CHAIRMAN BRANCH: I can make this easy if you just start up on the
left-hand corner. I have one that\'s similar which is the extent of
competition at the order level which is on the next to the last row in
the first position. So those two could probably go together.

MS. NELSON: Okay. So extent of competition at the order level to price
competition level. So it would be \-- They can go together.

CHAIRMAN BRANCH: Yes, I think those two probably could go together.

MS. NELSON: So we\'ll just do like this. The impact of price reduction
clause on scheduled prices.

MR. PERRY: I have one that\'s like that.

MS. BROOKS: Can I just ask who wrote this?

MS. NELSON: I did.

MS. BROOKS: So are you talking schedule pricing at \--

MS. NELSON: At the schedule level.

MS. BROOKS: At the contract level.

MS. NELSON: Yes.

MS. BROOKS: Can I just put it here so that when we can come back at it.

CHAIRMAN BRANCH: Okay.

MS. NELSON: Agency\'s customer expectations at the schedule level at the
scheduled program, I know that I have this.

MR. PERRY: I have it, too.

MS. NELSON: Narrow gap in expectations.

CHAIRMAN BRANCH: Yes.

MS. NELSON: So I\'m going to put mine there.

CHAIRMAN BRANCH: Yes, that seems to be pretty reasonable.

MR. PERRY: I have clarify a value, that long one there, clarify a value
of work of GSA at the end of this, second from the bottom, and \--

CHAIRMAN BRANCH: Second from the bottom, end one.

MR. PERRY: Yes.

MS. NELSON: Clarify the value of work of GSA to small versus large
agencies.

MR. PERRY: What should be done by the agency and what \--

MS. NELSON: I actually have that.

MS. JONES: The responsibilities.

MS. NELSON: Account for all stakeholders which might be more akin to
that.

MR. PERRY: That\'s not \-- I think that\'s different.

CHAIRMAN BRANCH: Okay.

MS. NELSON: Where I say large and small customers.

MS. JONES: There\'s another one that goes with that.

CHAIRMAN BRANCH: Yes.

MS. NELSON: It\'s right before akin to narrowing the gap of expectation
because \-- I don\'t know.

CHAIRMAN BRANCH: I think that one \--

MS. NELSON: Is the same as.

CHAIRMAN BRANCH: \-- and Glenn\'s are different. I think your two are
the same, but I think it\'s different than narrowing the gap.

MS. NELSON: Right.

MS. JONES: Yes.

MS. NELSON: I think because there\'s multiple stakeholders that need to
be taken \--

CHAIRMAN BRANCH: Right.

MS. NELSON: My personal opinion is that there are multiple stakeholders
that should be taken into account.

MS. JONES: There\'s another one that says don\'t forget the small
agencies.

MS. NELSON: You want to put these two together. Glen, are you in
agreement there?

MR. PERRY: Yes.

MS. NELSON: Okay, and Jackie.

MS. JONES: There\'s another one that says remember the small agencies.
Yes, right there. Yes.

MR. PERRY: Yes, and the one below that which is mine, value of the work
of GSA small versus large agencies. Those can all go together, I think.

MS. JONES: Yes.

MR. CHVOTKIN: And all of those may be subtending to the one on
appropriate business model for maximizing value of the schedules.

CHAIRMAN BRANCH: Yes.

MR. CHVOTKIN: The vendors and ordering agencies.

(Off the record comments.)

CHAIRMAN BRANCH: \-- recall whether those may be subtending to the
yellow sticky on maximizing value because they all relate to the value
of the ordering agency, recognizing small and others. It\'s Alan 3.

CHAIRMAN BRANCH: Thank you, Alan, for putting your name on those.

MR. CHVOTKIN: I\'ll tell you.

MS. NELSON: And the numbers. What is appropriate best business model for
maximizing the ordering agencies and vendors. Maybe that \-- Is that
narrowing the expectation or the maximizing value because \--

MR. CHVOTKIN: I mean if we were clear on expectation \-- You know, if
we\'re clear on expectations and we take into account the role of the
smaller agencies, we will somehow address the appropriate business model
for both of those. There may end up being five or six subheads under
that, but I think they\'re all related to the same general topic.

MS. NELSON: I think it may be more overarching.

MR. CHVOTKIN: Yes.

MS. NELSON: So my opinion would be that we hold it for a minute and see
which one \-- where it falls.

MR. CHVOTKIN: Okay. Yes.

MS. NELSON: That\'s my opinion. I don\'t know about anybody else.

MR. CHVOTKIN: And that goes on the third one at the top row.

MS. JONES: Third one, yes.

(Off the record comments.)

MR. PERRY: I think on the small agency thing I would say I\'d mix it
together. I think if we clarified what GSA is going or is doing then the
agency can decide what they have to do and whether or not that\'s a good
\-- whether that\'s reducing their effort or not and whether it\'s small
or large, you still have to make that decision. I think the small piece
is you want to be able to \-- You want to just say maybe you want to
push out what they do in order to help the small agency. But it\'s
really down to the ordering CO. So it could equally affect large or
small agencies. It may be more around the size of the requirement we may
find out is what we\'re really talking about and what\'s most
appropriate.

MS. NELSON: Okay. So let\'s try and see if we can assimilate some of
these other ones and \--

CHAIRMAN BRANCH: Yes, come back to that one.

MS. NELSON: Adequacy of vendor and agency user training. Would that \--

MR. PERRY: There are a couple others. I see a couple others. There\'s
somebody else that has that one. Some of us in the middle have the
advantage of being able to read these.

CHAIRMAN BRANCH: I think you may be able to put that actually as a
subset of narrowing the gap of expectation in the sense that if you\'re
not communicating to everybody how this all works, then that may be one
of the reasons you have an expectation gap.

MS. NELSON: Can we see whether or not there\'s other specific to
training?

MR. PERRY: Sure.

CHAIRMAN BRANCH: Yeah.

MS. NELSON: And then maybe \-- What is appropriate best business model
for maximizing value add of the schedules to ordering agencies and
vendors?  Alan, where \-- Wait. We looked at that.

CHAIRMAN BRANCH: Yes, that\'s parking lot.

MS. NELSON: One size does not sit \-- recommend \--

MR. ESSIG: Is that the one on pricing?

MS. NELSON: Yes sir.

MR. ESSIG: Yes, it fits \-- Alan, it fits some of the ones up here. We
continue to talk about all the schedules. Do they represent fair and
reasonable pricing? How do we do that for small orders? How do we do
that for large orders? I think we\'re trying to come up with one
solution that fits everything and that won\'t work.

MS. NELSON: I think that goes with the one \--

MR. ESSIG: It is. It focuses on how do we do the pricing of the orders.
You have to have competition. Are the schedule prices okay as is?

MS. JONES: And then the competition.

MR. CHVOTKIN: And I tried to stay at a higher level. My second one was
pricing techniques, the what, when, how question.

CHAIRMAN BRANCH: Yes.

MR. CHVOTKIN: I think there\'s like \--

CHAIRMAN BRANCH: So those two probably go together.

MS. NELSON: This one with Alan\'s.

CHAIRMAN BRANCH: Yes, I would think.

MS. NELSON: And, Alan, you also have this acquisition technique for
acquiring goods and services which is kind of \-- One is on the agency
side and one is on DSS.

MR. CHVOTKIN: Well, one of my mantras in dealing in this whole area of
commercial items is to keep separate the acquisition techniques from the
pricing techniques and I think all too often I\'ve seen examples of
where people tried to define the term \"commercial items\" by looking at
how you price an item and so that\'s why I kept the issue of the
acquisition technique whether that\'s a cost \-- contract, a T&M
contract or firm fixed price contract and it goes to some of the early
structure questions that Elliott raised yesterday. I just think those
acquisition techniques are very different from the pricing techniques
and that\'s why I had two separate items for them.

CHAIRMAN BRANCH: Yes, Alan, if I could just ask you to a question on
that. Did you also mean that to cover commerciality because, you know, I
guess as I\'ve listened to all of this that this is what troubles me.
You know, I worked for a small business that held a MOBIS schedule and I
can honestly say we had a whole lot more government business before we
did commercial business and it isn\'t clear to me that if you looked at
a pure definition of commerciality my company should have Alamoed the
schedule because our baseline customer was the Department of Defense. So
is that one kind of covering that idea of commerciality as well?

MR. CHVOTKIN: I had not intended it to be that definitized. However, I
can certainly see a discussion in that broad context to get at the very
heart of the question of what is commerciality of whether a product or a
service is truly a commercial item to start with. I assume that the
definition of what is a commercial item is separate from how you acquire
it and how you price it. At least, that\'s how I\'ve tried to look at
it. But I\'m happy \-- If it doesn\'t fit any place else, then I\'m
happy to have that discussion as a subtending item to my Item No. 1.

CHAIRMAN BRANCH: Okay. Yes, and we may want to do that. I was just
really trying to get some clarity at this point because I think to some
degree even if we look at the bearing points and the Booz Alan Hamiltons
of the world, you know, we see them and I think this goes back to some
of the discussion around government specific requirements. We see even
the large companies segmenting their government practices from their
commercial practices yet continuing to assert that this is a commercial
item. And I think that may be part of the dilemma that we have when we
look at both of the basis of award as well as the price reduction clause
because they\'re not really commercial. They\'re not commercial items.

CHAIRMAN BRANCH: You\'re right. Part of this is the acquisition
technique. I think part of it goes to the early discussion that we had
even today about closing the gap of what the understanding of what the
schedules are for clarity around the purpose and role of the schedules.
Both of those are appropriate. I think those are a higher order of
magnitude than I was looking at which is really the flexibility question
of the acquisition techniques, reopening the question of fixed price,
cost type, T&M and structure for acquiring them.

MR. CHVOTKIN: Okay. All right.

CHAIRMAN BRANCH: Your issue is an important one and it may be the
overarching one because if we don\'t have clarity around the purpose as
you and I were talking earlier then how you acquire and what you price
it and everything else is really a secondary order.

MR. CHVOTKIN: I guess I would prefer not to muddy the water with that
issue given you\'re right on that. That may be an issue we want to
revisit as a panel and we can certainly talk about that and build
consensus if that\'s one we want to discuss or not.

CHAIRMAN BRANCH: Happy to do it anyway you want to.

MR. PERRY: I had a separate sort of similar item on one of mine.
Yesterday I was thinking about it as Elliott suggested on the way home.
We\'re getting hung up on, my little different angle, we got hung up a
little bit on the benefit of using GSA and the schedules program as far
as things like the technologies surrounding how we acquire the \-- how
the cost of buying and selling to the government with the government
through a central schedule and I put down we need to \-- I thought maybe
we needed to separate those two issues so we could get at \-- which kind
of goes to your acquisitions, how we do it versus the actual offerings
and what we do with the offerings and the pricing of that.

MR. CHVOTKIN: Glen, I think you and I were a little bit closer than to
the issue that Elliott was trying to \-- well, the issue that Elliott
raised. So maybe we add yours to mine and leave Elliott\'s as a separate
one at this point. I would feel a lot more comfortable dealing with
Elliott\'s concerns in the GAP question or in the structure question
than I would in the acquisition techniques discussion.

MS. NELSON: I have to say that as I\'m looking through these one of the
concerns I have in trying to clarify where we\'re going is the themes or
the suggestions seem to be rocking back and forth between the theme of
procurement and the theme of acquisition and they\'re not the same
thing. And one of the things I might suggest along the way is that we
determine whether or not we\'re going after or if we\'re going after
both acquisition and procurement that we sort of define for ourselves
where we\'re going at, you know, improving, and maybe that\'s Elliott\'s
deferential between the structural and I don\'t know what you call it.

CHAIRMAN BRANCH: Execution.

MS. NELSON: And execution. But one is acquisition and one is procurement
and we\'re rocking back and forth between them but with no distinction
among ourselves and it\'s causing me, I don\'t know anybody else, a
little confusion because we\'re just jumping between them and they are,
you know, one is on GSA\'s side sort of and one is on \--

MS. JONES: I think it\'s a matter of policy that the schedules are to
acquire commercial products and services which are a Part 12 type
acquisition. I mean, that\'s policy. That\'s stature. It\'s always \--

MS. NELSON: It\'s always statute.

MS. JONES: Yes, it has always been there and \--

MS. NELSON: It\'s beyond policy. That\'s statute.

MS. JONES: Well, it is statute. All right. I agree and it has always
been there from the beginning of the programs themselves.

CHAIRMAN BRANCH: Yeah, and I don\'t want to belabor this issue. But
I\'ll give you one very small and I think powerful example. So how many
commercial entities by CON 100 which is on Schedule 69?

MS. JONES: Of a similar type, too. Commercial or of a similar type.

CHAIRMAN BRANCH: And I think that is part of the conundrum as we look at
pricing models for schedules because when we say CON 100 is of a similar
type you can certainly say yes it\'s training. But exactly what
commercial training is it similar to and then you start to get into the
fact that there really is no commercial market for that. The basis of
award becomes other government agencies and then when do you do in terms
of operating the price reduction clause with respect to, say, a
competition for a large offering of services to serve surge capacity at
DAU versus, say, one of your smaller agencies like Pension Benefit
Guarantee Corporation simply wanting to upgrade its work force. So I
think there\'s an issue there, you know, when we start to talk about
what other type is what we really mean by that and how that informs
pricing.

MS. JONES: Well, I think \--

MS. NELSON: (Off microphone) Are you running amuck of the \-- the
facilitator \--

MS. SONDERMAN: Judith, come up to the mike.

CHAIRMAN BRANCH: Okay. I\'ll get back in my box.

MS. JONES: I\'m going to say from a CO\'s perspective when the COs are
evaluating offers it\'s not a matter of looking at who they\'re selling
to. I mean that is the case for the purposes of pricing. But for the
purposes of defining commerciality in terms of a proposal they are
looking of the type and not just who the contractors are selling their
services to. I\'m talking about services, of course.

So there are comparative market rates that a particular company may have
sales only to the government. But there are comparative rates out there
that can establish a market range for determining fair and reasonable
pricing.

MS. NELSON: Go back to assynthetizing (sic) these and then discuss what
to do with them.

CHAIRMAN BRANCH: Absolutely. I think that. That one is in the parking
lot.

MS. THOMPSON: I just have some concerns about where our discussion is
going because I think we\'re getting far afield from the very basic
premise of the charter and that was \-- this is actually one of my
comments. To me sort of the key kernel in the charter if you will is
where it say the \"MES\'s panel\'s advice and recommendations will
assist GSA in assuring that such policies,\" meaning the price reduction
and most favored customer, \"result in MES prices that are lowest
overall price.\"

You know, that\'s our charter. This is what we should be focusing on and
I think we\'re bringing up a whole lot of other issues that are very
important obviously that come to bear on this issue.

But I always feel the need to bring us back to that basic core issue
that we should be striving toward, not to reinvent the schedule program,
but to sort of start where we are and move forward, this is just my
opinion, and provide some recommendations that can assist GSA in better
serving the customers and that\'s just my opinion.

MR. ESSIG: I think I take the other viewpoint on that. I think the way
that charter was worded there includes some concepts that I believe we
have indicated and maybe fundamentally flawed some of the concepts that
we have here about most favored customer and have some significant
issues with it. And if we are going to limit ourselves and constrain
ourselves in putting together schedules that we believe will be of
benefit to the users we\'re wasting our time.

MR. SHARPE: Just a comment. I kind of share the prior comments and I\'m
not \-- As I sit here, I guess this is, what, our fourth day. I\'m still
unclear whether the current pricing is working or not and, at some
point, are we going to have a discussion about building out that case to
understand if the pricing now works or doesn\'t work?

CHAIRMAN BRANCH: Let me make a couple observations. The most favored
customer provision and the price reduction clause are a component and a
system. So I think as I said yesterday we really have to look at this in
two ways and I guess what I\'m essentially trying to do is harmonize
Thedlus\' observation with Tom\'s. So if you say I have a given
structure in which I do schedule business, is there something that I can
do with respect to the way that structure operates to get at the
objective of the charter which is to look at the pricing clauses in a
way that will result as the charter is worded and the overall low is
priced to the customer?

That said, I think Tom has a good point in that in order to really
achieve that objective you have to look at the architecture of the
schedules as a whole and say, \"Given that I can do some things within
the current architecture and I can make the current architecture more
efficient, is there a more efficient architecture\" which is why I have
said yesterday when we started out that maybe what we need to do is
maybe we need to kind of group these things in two buckets, one that
says, \"

\"Given the context in which we function today are there some things we
can do with respect to the most favored customer provision and the price
reduction clause that can make us more efficient today\" and are there
some things in terms of observations that we can offer to the
administrator that says, \"This is our best advice given the
architecture you have today. But if you really want to reach these
objectives, here are some things that you need to look at in renovating,
revising, rebuilding that architecture.\" So I think there is a ground
that kind of synthesizes all of this.

Now to Tom\'s point, I think whether the pricing is working today is
clearly a valid question and I think we\'re going to have to gather data
to determine whether the pricing is working today. But before we go
gather that data and maybe this needs to go up on the board since this
appears to be emerging as an issue. I don\'t know if it\'s represented
in one of those notes or not. But I think we need to decide what we mean
when we say is the pricing working today. Does that mean it results in a
fair and reasonable price in all cases? Does it mean it results in the
lowest overall price in all cases? What do we mean when we say is the
pricing working?

So just some kind of observations to kind of try to bring, you know,
this piece of the discussion together and I would certainly welcome
comments from the panel on that.

MR. ALLEN: I think, you know, we also touched a little bit on this
yesterday as well when the end of the day we were talking about various
data calls we could do and I had in my mind that we would go through the
post-it note session this morning and then maybe go to the data call
section. I don\'t know if that\'s a good way to proceed, but that
certainly could be one way to proceed.

I think one way and you can have a lot of discussions about pricing, not
all of which are data-driven, but data was, I think, brought out
yesterday as an important part of something this panel could look at and
we also referenced an IT schedule pricing study. I think that there is
another study looking at schedule efficiency that\'s underway right now
by a third party. We\'d also talked about having GAO come in. All of
these could be useful exercises for the panel. But I thought maybe if I
could suggest with going through the post-it note session first and then
turning to that issue.

CHAIRMAN BRANCH: Other comments?

MS. JONES: I would like to say from some of the speakers and the
presenters that we had and from industry partners that came in to talk
about the price reduction clause what I heard was not that they had an
issue with the price reduction clause. It\'s complying with the clause
that was the problem. I didn\'t hear anybody say that giving GSA the
most favored customer pricing was a problem for them. It\'s a matter of
managing that price relationship and complying with the clause that was
a problem.

MR. SHARPE: Yes, I got that. I guess I\'m interesting in hearing from
GSA. Are they getting that price?

MS. JONES: That\'s what the COs are negotiating for.

MR. SHARPE: No, but I\'m \-- An analysis that supports whether we\'re
getting that price or not. I mean, what is broken here?

MR. ESSIG: Tom, I think I\'m in agreement with you and actually my first
point on the pricing methodology when I said one size does not fit all,
trying to argue that the schedule pricing is fair and reasonable is
flawed. The way you get fair and reasonable prices are most likely
through the use of BPAs and competition at the task or level.

There is a lot of work involved with that. One of the problems I have,
and, Elliott, I like the way you synthesize that and I agree completely,
one of the fundamental problems I have with the way the charter is
worded is the continuing focus on obtaining lowest price. Sixty-five
percent of all the orders on schedule today are services and a focus on
lowest price rather than on best value is a fundamental flaw in that
approach.

We have to look at the benefit we\'re getting, whether or not it\'s the
lowest price is sometimes irrelevant and that is one of my major
concerns.

CHAIRMAN BRANCH: Okay. Let me ask this because I think we\'re \-- we
kind of have a good method to flush these issues out. So am I hearing
that we really need to put some sticky notes up there that people
didn\'t generate individually? Is this discussion, you know, calling out
to us to write that issue down and put it on the board as something that
we want to discuss?

MR. ESSIG: I think I did.

CHAIRMAN BRANCH: Okay.

MR. ESSIG: I\'m just concerned to have a discussion around price to not
know the current GSA position on whether the prices are the most favored
customer price or not.

(Off the record discussion.)

MS. JONES: That\'s probably objectives of the schedule program.

MR. ESSIG: No, I\'m not asking the objectives. Is GSA delivering that?

CHAIRMAN BRANCH: So that\'s up there as one of the issues. There seems
to be a bunch of energy around that. So can we kind of move on to decide
whether there are other issues that kind of fall into that?

MS. SONDERMAN: What I\'d like to add is if you ask any of the KOs,
they\'re going to tell you their darnest to get most favored customer
pricing and a fair and reasonable price because they\'re signing their
name on that negotiation memorandum in every file.

MR. ESSIG: Okay.

CHAIRMAN BRANCH: So it sounds like this is an issue that\'s going to get
a lot of votes to go talk about. We have a little more affinity work to
do and I think we can probably then get to some discussions about what
our hypotheses are and what data we would like to either approve or
disapprove those hypotheses.

MS. NELSON: Okay. To the point if it\'s up there on products, Mr. Sharpe
has the question. Is mass pricing MFC or not? So I think it\'s up here.

MR. SHARPE: Okay.

MS. NELSON: So can this be affinitized? I don\'t know who wrote this.

CHAIRMAN BRANCH: That was Debra Sonderman and her real question was so
what is the role of the MAS prices at the ceiling price. What should it
represent in the context of pricing?

MR. PERRY: The same as the impact in the price. Is that the same pricing
question again? Yes, it\'s the impact of the price whatever the MAS
price.

MR. SHARPE: I think what she\'s saying that if it\'s not MFC what is it.
Is it the ceiling?

CHAIRMAN BRANCH: Exactly. That was really her question. If it\'s not the
most favored customer price, what is it in relationship to the operation
of the schedule? Is it the ceiling price and agency KOs should negotiate
down from that.

MS. JONES: Competition issue.

MS. NELSON: So is this going along with narrowing the gap and
expectations?

CHAIRMAN BRANCH: It\'s defining the expectations.

MS. NELSON: I wrote clarify \-- Yes, narrowing the gap so that we\'re
defining them and, for instances, I wrote on mine I was assuming that
we\'re defining what the regulatory requirement is in that gap so that
we can define that gap. So there is no gap or less of a gap in
expectation. The one below that says agency customer expectations of the
schedule program. So do you think \--

CHAIRMAN BRANCH: Thoughts on that? I\'m comfortable putting that under
expectation management because that\'s really an issue of clarity. How
does the group feel?

One thumb up on this side.

MR. PERRY: Yes, that\'s fine.

MS. NELSON: Alan has one that says \"acquisition techniques for
acquiring goods and services\" and, Alan, I would ask just for me and
maybe I\'m wrong is is this acquisition or is this procurement. Is this
on the agency side or is this on GSA\'s side? Is this how the agencies
are procuring them or is this \--

MR. CHVOTKIN: It is intentionally vague.

(Laughter.)

However, I use the word \"acquisition\" in lieu of \"procurement\"
because I think there is a broader process and we talked about it
yesterday. It\'s important to recognize that Part 6 comes before 8, 12,
13, 14 and 15 and so we ought to do some planning up front.  I think
that\'s part of the acquisition process. So I was looking at the
totality of the decision process.

It is a way to get at this \-- a little bit to tease out the structure
question that Elliott was looking at about enterprise wide contracts
versus the schedule. But I\'m really looking at it from both angles,
Judith. I\'m trying to get at acquisition and I\'m trying to get at the
best method for what are the techniques that we could use whether those
are schedules or others for acquiring goods and services.

Now we\'re obviously talking here about the schedules program. But
another external factor that we have to deal with is the growth of the
enterprise programs and the value proposition of the schedules. I can
address all of those under that or be more narrow. I tended to be \-- I
tried to move it up a level and that\'s why I used the words
\"acquisition techniques.\"

MS. NELSON: So do we have somebody here who had a sticky note \-- I\'m
almost guessing that Tom did or Glen on the value proposition of the
schedules.

MR. ESSIG: Yes, I have my second one up there concerning the fee
structure, just the last part of what Alan says but not the rest of it.

CHAIRMAN BRANCH: So we could subsume yours into Alan\'s discussion.

MR. ESSIG: I think Alan\'s is much broader, but, yes, okay.

MR. CHVOTKIN: It is interesting \-- I think Tom\'s is a subtending one.
Again, not to exclude it, but it\'s an area to discuss it.

CHAIRMAN BRANCH: Right.

MR. ESSIG: Yes, an area to discuss. I\'m sure he\'ll agree with me on
the conclusions a little bit later. Right now for purposes of
discussion, I think we have it in the right place.

MS. NELSON: Well, we don\'t have it in any place right now because I\'m
not sure.

MR. ESSIG: Mine\'s entitled fee structure up there. Second row. It
should be one of those two. I think that\'s probably it right there.

CHAIRMAN BRANCH: You have it. You\'re on. Yes, you got it.

MR. CHVOTKIN: How did you mean the fee structure, Tom?

MR. ESSIG: The issue I brought up yesterday, 0.75 percent of \$1 million
action charted cost the agency \$7,500. That\'s a bargain.  If the same
transaction, the same contract, is now a five year IDIQ for \$1 billion,
it costs me \$7.5 million to use a BPA. It\'s not worth it.

MR. SHARPE: I think the broader issue is the inherent conflicts within
GSA that the higher the prices the higher the fee.

MR. ESSIG: Yes, it\'s related.

MR. PERRY: I\'m straining from trying to do you a favor. When you said
\-- You made the distinction when you talked about GSA\'s role in
acquisition versus at the order agency for procurement. I think that\'s
an expectation issue on the schedules, on this multiple award schedules.
Because if I look at what GSA is doing in total, I would say some of the
other things they\'re doing outside of the schedule are more about
acquisition as far as enterprise wise solutions versus the rationale
that\'s been presented by the GSA folks in discussions which has been
about the use of the schedules for very transactional, instantaneous
type and that\'s the purpose and I think again maybe we need to resolve
the expectations around what GSA thinks they\'re providing as far as the
base of what the schedules represent in total in each of the areas
versus what the others. So I guess I would \-- Again, it\'s another
expectation issue and I think it drives how you treat this.

MS. NELSON: I don\'t disagree at all.

MR. PERRY: How we treat the pricing.

MS. NELSON: I don\'t disagree. It\'s just in the affinitizing. Sometimes
it\'s hard to determine what an individual or a panel member or what
we\'re talking about. Because in the case, for instance, of Alan\'s, are
we talking acquisition? Are we talking procurement? So I was just asking
to clarify.

I don\'t disagree that GSA plays a role in both and that is actually the
mandate of Congress for us to play a role in both. So I don\'t disagree
at all with your point. I was just trying to make a point that these
particular sticky notes, sometimes it\'s difficult to understand what
someone is talking about.

Okay. Service schedules. Focus on labor rate is flawed, F.P.

MR. ESSIG: It just gets down into the issue of value versus price and
talking specifically on services. When you have price reduction clause,
that\'s focused on the labor rate. It\'s only one component of price and
I think it\'s a fundamental flaw in that process to focus exclusively on
just one element.

MS. NELSON: Did anybody else have \-- I thought I wrote something on
that, on best value. Did anybody else do something on best value?

MR. ESSIG: It\'s more than best value. It\'s kind of the issue we
discussed with services. Services are different than supplies.

MR. PERRY: We\'re getting into separation of \-- For example, I put one
down at the bottom, separation of consumable goods from services and
then also on the pricing whether it\'s commercial versus government. And
I get into that and that gets into his issue on the value for the
services versus \--

MS. NELSON: Okay.

CHAIRMAN BRANCH: And I have one that\'s probably related to that which
is the need for the price reduction clause and services task orders.

MS. NELSON: Right, and I actually as well wrote address PRC to product
and services individually with a cautionary vote for integrated
solutions.

MR. ALLEN: There may or may not be other. I know I have a post-it note
specifically on the price reduction clause. So I don\'t know.

MS. NELSON: There\'s a second one up there that\'s close too.

MR. SHARPE: I had even a broader sticky on the topic. What is the
government\'s services acquisition strategy?

MS. NELSON: And does that relate specifically \-- That may be \-- To me,
I don\'t know. Do you think that might relate to Alan\'s on the other
GWACs and MACs that are out there and whether or not \--

MR. SHARPE: I don\'t know, but if it\'s our biggest element of spending,
does somebody somewhere have a cohesive view of how this should be
handled?

MS. NELSON: Do you \--

MR. SHARPE: That fits in with the same topic I had on service.

MS. NELSON: Is that an OMB charge or our charge?

CHAIRMAN BRANCH: Yes, and that\'s the kind of issue that I think you
kind of deal with as you talk about whether the schedules need to be
rearchitected. I think that that\'s an important issue, but it\'s
probably not one directly on point to the charter.

MS. NELSON: Are we able to parking lot that one and perhaps bring that
to \-- I mean, put it within things that we bring to the administrator
but not within the charter? Are you okay with that, Tom, that it go
within \--

MR. ESSIG: Yes. I agree with that.

CHAIRMAN BRANCH: I think let\'s decide \-- Let\'s finish this and then I
think we can decide what do we want to study with respect to giving the
administrator some additional recommendations and what do we want to
study with respect to the specific charter as Thedlus, I think,
articulately points out is to deal really with the pricing structure.

MS. NELSON: Okay. There are some \-- Tom, is yours up here or is it not
yet been put up here?

MR. SHARPE: I\'ve had several. Which one?

MS. NELSON: The one you just referenced.

MR. SHARPE: Yes, I handed them to Pat. I\'m sorry. I can\'t see from
here.

MS. NELSON: Remove all non-statutory, non \--

MR. SHARPE: They might be in your hand.

CHAIRMAN BRANCH: No. You have Tom on bright or green sticky and he
signed them.

MS. NELSON: Here it is. Services, we need a strategy.

MR. SHARPE: And I agree with Elliott\'s comment.

MS. NELSON: Okay. So could we put it in the parking lot as something
that we might want to bring to the administrator\'s attention.

MR. SHARPE: I think we can. But on the issue of price if after some
period of time of time we\'re not convinced there\'s value on these
schedules I don\'t know. We don\'t make a recommendation to stand them
down while someone knows there is.

MS. NELSON: Okay.

MR. SHARPE: Services or otherwise.

MS. NELSON: Understood. Abolish of MSD, establish fair and reasonable
pricing objective.

CHAIRMAN BRANCH: And I think that goes there. That\'s kind of an
expectation.

MS. NELSON: What is the role of \--

CHAIRMAN BRANCH: Yes. Unless anybody has an objection.

MS. NELSON: There is a theme pricing reduction clause. Should the clause
be scrapped? Should the government rely on competition at the TO level
to ensure price fair and reasonableness?

MR. SHARPE: I have one that\'s very similar to that.

MR. FRYE: That\'s one of mine. That and the other one. MS. NELSON: Yes,
sir.

MS. JONES: That\'s kind of what I meant, too, when I said the impact of
the price reduction clause on scheduled pricing.

CHAIRMAN BRANCH: Okay.

PARTICIPANT: That\'s going to be the my second.

MS. NELSON: Jan, are you good putting that with Jackie that the impact
of the pricing at the contract level and then following that through at
the impact of the task order level? So we\'re looking at both the
structure and the \--

MR. FRYE: For now.

MS. NELSON: For now. Okay. I hear a \-- Should the government be \--
Define resellers. Should the government be required to purchase through
a distributor when the manufacturer sells directly to commercial
customers?

MR. CHVOTKIN: Read that one again, Judith please.

MS. NELSON: Define reseller. Should the government be required to
purchase through a distributor when the manufacturers sell directly to
commercial customers?

PARTICIPANT: Why do we care?

MR. FRYE: Oh, we care big time. When we buy products, if we buy products
or can buy products from a manufacturer but that manufacturer doesn\'t
want to expose his pricing to us, what he claims as a front company
perhaps and this front company is named as a reseller. I don\'t look at
them as a resellers. I look at them as front companies.

What value do they add? They don\'t stock anything. They don\'t
represent the manufacturer\'s products to commercial customers. All they
are is a front to sell to the government. So it\'s a big issue, a huge
issue, in my mind and I think the Department of Defense is starting to
look at this with a jaundiced eye as well.

CHAIRMAN BRANCH: Okay. So, Jan, just to make sure I understand the
issue, you have companies that are willing to sell directly to
commercial entities. So, for example, you may have a health supply
company, let\'s just say Baxter, who is willing to sell directly to the
INOVA chain. But when you want to buy from Baxter they say, \"No, I want
you to go to Acme Hospital Supply.\"

CHAIRMAN BRANCH: Absolutely.

MR. FRYE: Okay. Thank you.

MR. ALLEN: And that\'s not unique to the VA. That happens through the
schedules program and it can happen probably for valid business reasons.

MS. NELSON: A lot of it is the lack of willingness to expose their
records to the auditors.

MR. ALLEN: Some of it and some of it is that they know that if they
would like to have their product sold in the government, but they can\'t
set their systems up to be in good contract compliance. So they know
that they\'re setting themselves up for a fall if they try to comply
with something they know they can\'t comply with. Yet the government has
expressed an interest in getting the stuff that they offer. This is one
way to get there.

MS. NELSON: Okay. So for whatever reasons they do it, good, bad or
indifferent, where are we putting it?

CHAIRMAN BRANCH: I think that\'s a standalone. I mean, I think it\'s an
important issue, but I don\'t necessarily see it falling into any of the
affinities that we have so far. Any thoughts?

MR. PERRY: I think potentially maybe on expectations of what we have to
do. Let me give you another example on desk top computers. I know that
our folks have been \-- I\'ve seen folks in situations where the
reseller, where we\'ve actually had the work behind the reseller on a
schedule with the manufacturer to get them to a different level based on
what we tell them is going to be our volume so that we can get a better
price from the manufacturer. So that\'s extra work on the part of the
\-- that the agency needs to be aware of that that\'s what they may have
to do. That happens.

MR. FRYE: I think it\'s part and parcel to the price reductions clause.

MS. JONES: Yes, I agree.

MS. NELSON: All right. I mean if that\'s \--

PARTICIPANT: Reseller. I didn\'t know that resellers are part and parcel
to the price reductions clause. I mean, the fact is GSA has made the
policy that resellers are a legitimate source of supply as long as you
can arrive at price reasonableness like you can with any other group.

MR. PERRY: And I think legitimate resellers are.

MS. NELSON: Well, the question here is whether or not the panel should
recommend that there be alternations to that. So if the panel is
recommending that that be looked at, then we should legitimately put it
in there.

CHAIRMAN BRANCH: I think what I\'m hearing is this. We have a price
reductions clause and not expressing my own views but expressing what I
believe I\'ve heard I think I\'ve heard from both contracting officers
as well as vendors that whatever its value it\'s extremely difficult to
administer and one of the consequences of that difficulty in
administration is that there are companies seeking to maximize their
government sales while minimizing their need to comply directly with the
price reduction clause because they don\'t necessarily have assistance
to do that data.

So they go through a reseller who probably has that ability because
they\'re getting a price from the manufacturer. Again, this is an
example of where we have some folks that say, \"I\'m going to move into
the government market space because I understand the rules and I
understand how to comply with them.\" And as a result because of the
reseller, we believe we may not be getting the same kind of price that
that manufacturer is selling to a large institution that\'s analogous to
the government. That\'s what I believe I\'ve heard.

So what I think about that is that is directly related to the clause.
No. Is it an example of behavior that is created perhaps by the clause?
Yes. So I guess the question is do we want to lump it with consideration
of the clause or is it simply an observation that the clause may drive
that kind of behavior?

MR. CHVOTKIN: Mr. Chairman.

CHAIRMAN BRANCH: Yes.

MR. CHVOTKIN: I think it is the result \-- It is not a result of the
clause itself. It is a technique. I\'m a little troubled by the use of
the word \"fronts.\" That implies a whole different set of issues. It is
a legitimate \-- If it is a legitimate issue, we ought to deal with it
as an issue and I think it is a result of the pricing issues generally,
not just the clause specifically. I prefer to deal with \-- I recommend
we deal with it in the pricing discussion, not just in the price
reduction clause discussion.

CHAIRMAN BRANCH: So that goes with, I think, one of your stickies, Alan.
I think we might be able to subsume that in your sticky with respect to
business model.

MR. CHVOTKIN: I\'m happy to do it there. I\'m happy to have it as a
separate discussion. I agree with Tom\'s initial reaction which is why
is this an issue. But if it is \-- but I agree with you, Jan.

MR. FRYE: I\'d like to pop in here though before the associations drown
me out. I see it as an issue whether you want to admit it\'s an issue or
now. There are many, many legitimate resellers out there. Most of the
vendors that we deal with in the VA as we set up our schedules are
resellers. But there are illegitimate fronts who are pretending to be
resellers and it is an issue. And it\'s going to become a bigger issue I
feel.

MS. SONDERMAN: I have to jump in, too, and say I\'ve actually got a
situation where I have a manufacturer who has not reached the point
where they\'re saying, \"I will only allow you to set up schedules with
X number of companies I\'m willing to have sell my products.\" Then when
those X companies sell the products to resellers, they\'re coming back
and saying to GSA, \"You can\'t put a schedule in with the reseller to
sell my product even though the reseller bought the product from the
authorized middleman.\" So it\'s more a case of \-- Part of it is just a
case of somebody trying to control the marketplace. In some instances
carried to the other extreme.

CHAIRMAN BRANCH: The amount of energy I\'m hearing around this issue
says I think we probably need to leave it as a standalone issue and just
put the note on the board.

MS. NELSON: I think there are many \-- Just from my own experience,
there are many issues outside of pricing. There are a lot of clauses and
there\'s issues of privity of contract and there are issues of fraud and
there are issues \-- I mean, there are a lot of issues outside of
pricing and disclosures that go to this that beyond just the price that
the government can get and beyond the price reduction clause that are
associated with this and some have to do also with the CO\'s ability to
negotiate the contract and look into the history of the company and the
past performance and the rest of that both as the manufacturer \-- So I
really do believe in my own personal opinion and my own history that it
is a standalone issue because it touches so many of the clauses and so
much of the CO and the vendor\'s history.

I do believe it is a massive issue and will continue to grow as an
issue. I agree with Jan. I see it across the schedules program.

MR. PERRY: Then put it on the board as a separate issue. Let it go. We
got it.

MS. SONDERMAN: Well, it also goes up a little higher into the basic
philosophy. Do we just contract with everybody or do we at GSA
selectively contract? As it stands now, if an offer comes in the door,
we are required to look at it and we are required to attempt to make an
effort to reach to an award.

MS. NELSON: But we are not required to award.

MR. FRYE: Right, but doesn\'t it go back to Tom\'s question are these
prices valid. If we\'re \-- If a company is intentionally setting up the
system so that they don\'t have to sell directly to the government and
they pass through a, I\'m going to call it a front, that\'s going to
cost us six, eight, ten percent more. Should the government pay that
just to have a front set up? I really think that goes to Tom\'s issue
and to both Toms\' issues about are these prices legitimate and I think
it\'s something that has to be looked and thank you for putting up their
\--

MR. ALLEN: There are methods to look at that today to determine whether
or not the prices being offered are fair and reasonable and if you could
make a \-- a contracting officer could make an affirmative
determination, it\'s not like there\'s a lack of a process today to get
there.

MR. FRYE: Well, there is a lack of a process. When you go to a company
that\'s in this front situation, they\'re not, you know, where are you
going to get your, I can\'t remember the term, the customer that you \--
the tracking customer. Where are you going to get a tracking customer if
you have a company that\'s a front that doesn\'t sell to commercial
customers?

PARTICIPANT: Basis of award.

PARTICIPANT: Basis of award.

PARTICIPANT: There are a number of ways to get at that.

MS. NELSON: Again, I think there are \--

MR. FRYE: Yes, you go to the manufacturers and they\'re not going to
give you their \-- they\'re not going to give you their numbers.

MS. SONDERMAN: But they\'re also saying, \"I\'m not going to do a
contract with you either.\" So when we need the products, how do we get
there? We have to be able to meet the needs of the agencies.

MS. NELSON: Jan, I think that the agencies also have other means. I
mean, there\'s no requirement while GSA must look at the offer. There\'s
no requirement that the contracting officers award that contract and the
answer is that the agencies seek other means which to procure their
requirements.

CHAIRMAN BRANCH: Right. But I think we\'ve come to the conclusion that
(a) it\'s an important issue.

MS. NELSON: Critical.

CHAIRMAN BRANCH: (B) It\'s not necessarily related to some of the other
issues there. So I would like to suggest we want to put that on the
board as a separate issue and kind of move through the process. Folks
okay with that?

MS. NELSON: I think this may be Larry\'s because I think he said it but
\-- No. Well, somebody else put it directly up here and I don\'t know
what one of the acronyms stand for shockingly. Is there a difference in
the way they should be treated, products versus services, and is there a
difference in the way they should be treated WRT?

PARTICIPANT: With respect to.

MS. NELSON: Oh, with respect to. I learned something today.

MR. ALLEN: That\'s mine.

MS. NELSON: With respect to the price reduction clause.

MR. ALLEN: That goes in one of your piles.

MS. NELSON: Address PRC, product versus services individually.

MR. ALLEN: Right.

MS. NELSON: I think we have that one.

(Off the record comments.)

MS. NELSON: Focus on the fourth sentence of the third paragraph of
charter.

MS. SONDERMAN: That\'s mine.

MS. NELSON: I know this is DeeDee. The MAS panel\'s advice and
recommendations will assist GSA in assuming that such policies, MFC and
PR, result in mass prices that are lowest overall. Price? Lowest overall
\--

PARTICIPANT: Price.

MS. THOMPSON: Well, actually the statute says lowest overall cost
alternative.

MS. NELSON: Yes.

MS. THOMPSON: It doesn\'t say price.

MS. NELSON: Right. Can I change this?

MR. CHVOTKIN: Well, the charter \--

MS. NELSON: We\'ve said lowest overall price numerous times and I just
as GSA\'s Policy Representative would like to put on the record that our
statute that addresses is lowest overall cost alternative.

MS. THOMPSON: Alternative.

MS. NELSON: Which is substantially different than lowest overall price.

MR. CHVOTKIN: The charter uses the words \"lowest overall price.\" I
think that\'s where Thedlus was coming from to follow the charter
questions and I think it\'s instructive that the statute has different
words than the administrator used in her charts to the panel. Same.
Different. I think it\'s important to separate those out.

CHAIRMAN BRANCH: And I think we can probably address that in the report.

MR. CHVOTKIN: But that would be price plus your fee.

CHAIRMAN BRANCH: Right. Overall cost.

MR. CHVOTKIN: No, no, there\'s difference. And it could be life cycle
costs. So my cost to acquire, you know, the vendor costs, so forth.
Because I think if you look at the schedules and this is one of the
issues Tom has raised as well as you, Tom, both Toms have raised. Is it
cheaper for me to use my organic procurement resources to go do
something or do the schedules really present a viable, economic
alternative to doing that work. So I think that\'s really what the
statute \--

CHAIRMAN BRANCH: Right. So if \--

MR. CHVOTKIN: And Thedlus will correct me, but I believe that\'s really
what the statute is getting at.

PARTICIPANT: I think so.

MS. THOMPSON: Yes, but if I could say something further, too, along
those lines, before using the schedule, each agency must go through
their normal acquisition planning process and it\'s within that
acquisition planning process that you determine which vehicle is going
to be appropriate for your procurement, if you will.

So basically, my thoughts were we\'re coming to the table having made
that determination that we\'re going to go schedules. But I\'m seeing
that there are other viewpoints in terms of going back to that
acquisition planning stage which is, okay, is this going to be the best
vehicle for this particular procurement and I think that\'s where we
come in with some of this one-size-doesn\'t-fit-all. Well, yeah, it\'s
not going to if you\'re going to be looking at your acquisition planning
that you may determine that maybe schedules is not going to be best for
this particular procurement. We don\'t particularly like that, but I
mean that may be the result. So I just wanted to also mention that as a
different point of view in terms of how we look at this whole issue.

MR. PERRY: But I would say that when you do that and make that at the
agency, you\'re looking at using the schedules for a variety of reasons
which have been touted as, for example, speed and being able to protest,
you know, those issues, limited competition, those type of things. So
when you go \--

MS. THOMPSON: What\'s protest under?

MR. PERRY: So we\'re talking about \-- Okay. So when I decide to go
there for those reasons, then I have a certain dependency on what the
preliminary pricing has been or what\'s being offered then. So then you
are back in that territory.

MS. THOMPSON: Yes, I don\'t disagree with you. I just wanted to \--

MS. THOMPSON: Okay. And that\'s why the pricing \-- that\'s why it\'s an
important issue.

CHAIRMAN BRANCH: Okay.

MS. NELSON: Thedy, where would you like this, if at all, affinitized
with the current group of \--

MS. THOMPSON: I think it\'s more of a process issue than a substance. I
mean it\'s always bringing the conversation back to the core. That\'s
how I view it in terms of keeping on track. So I\'m not sure where \--
an overall reminder to \--

CHAIRMAN BRANCH: I think that\'s kind of a standalone.

PARTICIPANT: I do, too.

MS. NELSON: Parking lot or \--

CHAIRMAN BRANCH: No, I\'d \-- To Thedlus\'s point, I think what she\'s
doing and appropriately so is reminding us why we\'re here.

MS. NELSON: How can GSA obtain needed data regarding pricing from buyers
and sellers and vendors and I don\'t know who wrote it, but I believe
Tom has one here that says we need systems to call items purchased by
common inscriptions and captured data on purchase. So I think these two
obviously go together.

MS. THOMPSON: Yes, that would be fine. So that\'s fine.

CHAIRMAN BRANCH: I have a data one also above that. Right there.

MS. NELSON: Require/provide for data collection at order level and on.
So these three. Give me a second. I\'m having technical difficulties
with tape.

Products. Is mass pricing MFC or not? This is Tom. If not, how do we
address?

CHAIRMAN BRANCH: Yes, I think that probably goes \-- Yeah. We have a
whole bunch of them.

MS. NELSON: We have a whole lot about role of MFC and \--

MR. SHARPE: I\'m not asking what the role is. I\'m asking are we getting
it.

MS. NELSON: Okay.

CHAIRMAN BRANCH: Okay.

MR. SHARPE: And I think it\'s a profound question.

MR. FRYE: What was the question? What\'s the sheet say again?

MR. FRYE: Are we actually getting the MFCs?

MS. NELSON: Are we getting MFCs? Well, is that on a data call? Can we
\--

MR. SHARPE: I\'m asking. I would think GSA could answer that question.
How do they police the program?

MS. NELSON: Okay.

MR. SHARPE: How do they do their post award audits? How do they know
with some sense of confidence that they\'re getting MFC is that\'s what
the program is supposed to provide?

MS. NELSON: Okay, and we can discuss how perhaps we can look at some
reports.

MS. JONES: Isn\'t there something up there about the basis of award
customer?

(Off the record discussion.)

CHAIRMAN BRANCH: Yeah.

MS. NELSON: I think, Tom, are you looking for specific data here?

MR. SHARPE: I\'m asking how GSA stands behind that representation.

MS. NELSON: I understand. So are you looking for data on this?

MR. SHARPE: If that helps GSA answer that question.

MR. FRYE: I think Tom\'s really asking an important question. How does
GSA \-- I know how VA does it. But how does GSA ensure that we\'re
getting most favored customer pricing. You don\'t do post award audits
as I understand it.

MS. NELSON: Yes, we do.

PARTICIPANT: Yes, we do.

MR. FRYE: You do?

PARTICIPANT: At the option period.

MS. NELSON: We do and we also have \--

MR. FRYE: I mean, if you do \--

MS. NELSON: \-- the OCAO\'s office does peer reviews on our contracts.

CHAIRMAN BRANCH: Well, can we all agree that that (a) a profound
question and (b) it stands by itself?

MS. JONES: I have a question for Jan. How do you guys track that?

MR. FRYE: We do post award audits.

MS. JONES: Yeah.

MR. FRYE: Okay.

MS. JONES: Okay.

MS. NELSON: So do we.

CHAIRMAN BRANCH: So we\'re \-- Our purpose here really isn\'t to get
kind of in a substantive discussion of these, but to figure out which
topics we\'re going to take time to get into a substantive discussion.
So I guess I\'d like to suggest that. It sounds like that\'s a separate
question to me and it ought to stay on the board.

MS. NELSON: Okay.

MS. JONES: But was there one up there about the basis of award customer?
I thought I heard that at some point.

MR. SHARPE: It\'s not an aware issue, I mean, the way I meant the
question.

MS. JONES: Well, most favored customer and basis of award customer are
synonymous.

MR. SHARPE: I\'m asking do we get the MFC.

MS. JONES: I understand.

MR. SHARPE: After the life of that contract, can GSA take a position
based on some sound analysis to say we got MFC on these contracts on
these schedules.

CHAIRMAN BRANCH: Okay. Just for my own clarification, you mean against
the schedule price. So I \--

MR. SHARPE: At the schedule level.

CHAIRMAN BRANCH: Right. Okay. So we\'re at the schedule level.

MR. SHARPE: I\'m not interested in the task order level.

MS. NELSON: Understood. The impact in price reduction clause schedule
pricing, can that sit there and we do a data to look at whether or not
you feel \--

MR. SHARPE: You\'re saying \"data.\" I think GSA needs to take a
position. Are \-- And I\'m not suggesting it\'s you. Is GSA policing and
can they take a position with confidence that they get MFC pricing on
the contracts they manage on their schedule because I think if they
can\'t it\'s not much more than a contract writing service and we should
get out of the price discussion.

I mean if \-- I don\'t know what the price problem is. But if GSA
doesn\'t know it\'s getting an MFC, I don\'t know there\'s anything else
to talk about it. It\'s \--

MR. ALLEN: I don\'t know. I think that \-- I understand where Tom is
coming from, but I think there\'s \--

MS. SONDERMAN: Please explain. I don\'t understand.

MR. ALLEN: That the objective is to get MFC and I think the better
question is how competent is GSA in meeting its objective of getting
MFC, i.e., we know that there are going to be cases when the MFC as
absolutely defined is not obtained. Under the existing schedule rules
and regulations, that\'s fine.

So we don\'t want to as this panel holds GSA up to some sort of false
standard that we know going in they\'re not going to meet because it\'s
not what the existing rule is. If the objective is to get MFC and there
are usually some couchers around that says within common terms and
conditions and things of that nature. And I think the answer to the
question of does GSA always negotiate to obtain the MFC is yes. They do
always negotiate with the intention of trying to get that MFC. But the
existing rule does not say GSA has to get the MFC in every case.

So if we\'re talking about holding the agency to an artificially high
benchmark here, I think that we are going to be setting the agency up
for an unfair fall and an improper analysis because it will be an
apples-to-oranges comparison.

MR. SHARPE: I\'m fine with that. Then help me restate it. If MFC is an
objective, I would like to see GSA\'s position on how often that
objective is reached.

MS. NELSON: Okay. Why don\'t we leave it as you\'ve asked as a separate
issue.

MS. JONES: Well, I have a question though. For what purpose?

MR. SHARPE: Because I\'m here. I think I\'m here to understand if we
have a pricing problem and I have no idea if we never get MFC, if it\'s
80 percent of the time or if this is just really an exercise in
semantics that the pricing is without any real substance and everything
is dealt with at the task order level. If that\'s the case, I don\'t
know \-- We need to know that and then we could maybe decide there\'s
really no discussion at the contract level.

MS. NELSON: Okay. So \--

MS. JONES: Are you relating that though to price reasonableness or what?

MR. SHARPE: I assume GSA is.

CHAIRMAN BRANCH: Let me see if I can sum up what I\'ve heard here. So I
think Tom\'s issue is simply this. The presumption at the user level is
that there is a price on the schedule that agency users can have some
confidence in that is a fair and reasonable price because it is either
the most favored customer price or it\'s a price that you obtain through
an adequate examination of the proper basis of award.

So Tom\'s question is when you look at the history against the price
you\'ve put in the schedule, are you indeed getting that price. Are you
indeed getting the price at the standard that you set? Because if
you\'re not, his point is then there really isn\'t any point in
discussing pricing. Take the pricing clauses out because we\'re going to
get the pricing at the task order level.

MS. JONES: Well, that\'s relative to the extent of competition at the
schedule level.

MS. NELSON: I would say either that or it\'s relative to the expectation
that Tom has before anyone would place an order against it.

MR. SHARPE: Forget my expectation. I\'m asking for GSA\'s representation
to be clarified so we really understand what that objective is around
pricing and that isn\'t met.

MS. NELSON: Correct. Understood. So is the question that in the guidance
within \-- I\'m trying to understand. So there is guidance to the GSA CO
within the GSAR and within the FAR as to what they are supposed to do
and there is guidance, internal guidance, on how that is to be
interpreted and what you\'re asking is whether or not that guidance is
being followed internally.

MR. SHARPE: I\'m really making a basic point. I\'m sorry. I have a lot
of commercial background. You\'re running a pricing program. I\'m simply
trying to understand what is the objective of the pricing program and is
it being met.

MS. NELSON: Right. So there is \--

CHAIRMAN BRANCH: Could we write that down? What is the objective of the
pricing program and is it being met?

MR. SHARPE: Is this not like one of the biggest pricing programs on the
planet.

MS. NELSON: Correct and that objective is written within the FAR and
GSAR.

MR. SHARPE: Okay, and I think related to it is some connection, albeit
maybe an objective, that\'s the most favored customer price with which I
think is maybe a bar a little bit higher than fair and reasonable.

MS. JONES: It\'s a level of competition is what it amounts to because
when the \--

MR. SHARPE: You only do that when there\'s competition?

MS. JONES: No, I\'m saying when the COs are evaluating pricing and they
are targeting most favored customer pricing as the basis of award that
ensures a certain level of price competition because what they\'re
looking at is if the contractor is out there selling at a certain price
and they\'re giving this price to their most favored customer based on
history, volume, whatever the price relationship is with their most
favored customer and we\'re getting that, that price is competitive.

That\'s the analysis in all of that in determining most favored customer
pricing. So what we\'re saying is is when we get most favored customer,
that\'s a competitive price.

MR. SHARPE: I\'m sorry. I understand from the prior discussion it\'s
different. I thought you set up a benchmark point of measurement for
most favored customer and you track that over time.

MS. JONES: That\'s secondary.

MR. SHARPE: Okay. Again, I\'m asking the objective be defined and we get
some feedback on how often that objective is met. Whatever the objective
is, is it being met?

CHAIRMAN BRANCH: Okay.

MR. SHARPE: I think GSA should bring that because this is a monster
pricing program.

CHAIRMAN BRANCH: Okay.

MS. NELSON: Okay.

CHAIRMAN BRANCH: I think we have that captured on sticky note. You know,
I used to teach and I\'m sitting here realizing I\'ve violated one of my
own rules. I\'ve kept you 15 minutes longer than your attention span can
probably bear. So why don\'t we take a break until 11:05 a.m. and we\'ll
come back to this affinitizing exercise. I think we\'re almost done.

(Whereupon, at 10:43 a.m., the above-entitled matter recessed and
reconvened at 11:03 a.m.)

CHAIRMAN BRANCH: If we could get started, my goal is to get this
exercise under Judith\'s leadership finished up before lunch. I think
we\'ve had a pretty good discussion this morning and as we go through
this some clarity with respect to the issues we need to address is being
developed.

(Off the record comments.)

MS. NELSON: Okay. Are we ready, Mr. Chairman?

CHAIRMAN BRANCH: Let\'s proceed.

MS. NELSON: Okay. Return/mirror commercial practices as possible. Is
this somebody\'s? It must be somebody\'s.

CHAIRMAN BRANCH: Who had the pink stickies?

PARTICIPANT: What does it say?

MS. NELSON: Return/mirror commercial practices as possible. So I guess
this goes to business model.

MS. SONDERMAN: Yes. Make sure that we are following FAR Part 12
Commercial Practices and not diverging off into 15 or 13.

CHAIRMAN BRANCH: Okay.

MS. NELSON: Okay. So we have \-- Alan has one which is what is the
appropriate business model for maximizing value. Can we put that \--
Alan\'s not here. So we\'re going with it.

Ensure changes are \-- Okay. My professor from Harvard would shoot
somebody here. Ensure changes are doable for industry and contracting.

(Off the record comments.)

MS. SONDERMAN: We can\'t come up with something that we can\'t act on.
We can\'t come up with suggestions that are not possible for us to do.
We need to have something that\'s feasible.

MS. NELSON: Feasible.

MS. SONDERMAN: Feasible. All right.

MS. NELSON: Ensure changes are doable for industry and contracting. So
does that go to stakeholders?

MS. SONDERMAN: It\'s supposed to be a process and procedure question.

CHAIRMAN BRANCH: I think maybe that one goes down with Thedlus\'s and
let me suggest that both of those are a couple of guiding principles to
keep us on track to (a) stay true to the charter and (b) to make
recommendations that are actionable.

MS. NELSON: Okay, Mr. Chairman. Remove all non-statutory, non-commercial
schedules/terms to enhance growth, encourage competition and maximize
schedule offerings.

MS. SONDERMAN: I think that goes to the parking lot.

CHAIRMAN BRANCH: Yes.

MS. SONDERMAN: I agree that\'s a wonderful thing, but I\'m not sure
it\'s the scope that we can deal with.

MS. NELSON: Does this come from our A&E?

MR. ALLEN: What was it?

MS. NELSON: Remove all non-statutory, non-commercial schedules/terms to
enhance growth, encourage competition and maximize schedule offerings.

MR. ALLEN: That gets to data collection and other things.

MS. NELSON: I think that this actually goes to indeed we\'re
establishing a PMO to recommendations that the PMO look at the
rationalization of offerings which is something Mr. Kempf spoke about in
his testimony yesterday.

MR. ALLEN: Okay.

MS. NELSON: Is that a fair assessment?

MS. SONDERMAN: And it is part of the PMO charter.

MR. ALLEN: That\'s fine.

MS. NELSON: I\'m reasonably sure since I worked on that charter.

Separate GSA technology service used to order, conduct process, from
core purpose of offerings on schedule.

CHAIRMAN BRANCH: Can you repeat that?

MR. PERRY: Yes. That was a strange way. That\'s the one I talked about
adding to Alan\'s techniques versus the value of the techniques of what
GSA is offering to, the value of the schedule that was audited, the
thing I was talking about earlier where we\'re confusing the \--
focusing on the pricing and the schedule offerings themselves versus the
value of whatever GSA is setting up in order to use the schedules.

And we started to talk about the fees and the costs and the costs of the
eBuy and that kind of stuff like that. We\'re confused. We\'re
commingling the means. And is that a factor \-- is that being \-- But to
that extent is there \-- somehow is the cost of that somehow being
factor in and whatever the pricing is that we\'re getting.

MS. NELSON: So does this go \-- Are you saying this goes with the one
that talks about pricing techniques and one size does not fit all or is
this more to the extent of competition at the order level and true price
competition level? Where do you feel that this best fits on the
affinity?

MR. PERRY: I\'m not sure now. I\'m not sure about me putting that \-- I
guess it\'s one of those things I was trying to get us back into where
we\'re supposed to be versus \-- And some of that stuff needs to be, I
think, as separate issues as to cost of tools and cost of the way GSA
has set up how we use the schedules.

MS. NELSON: Is this more along the lines \-- Yesterday I heard the term
in talking about structural versus \--

CHAIRMAN BRANCH: Execution.

MS. NELSON: \-- execution.

MR. PERRY: Right. Yes.

CHAIRMAN BRANCH: Which is really another way of saying acquisition
versus procurement, I think.

MS. NELSON: So could we perhaps put this in the overall theme of our
guiding of where we wanted to be going with our panel because we seem to
be collecting an affinity of things that we want to guide the panel.

CHAIRMAN BRANCH: Yes. I guess I kind of look at that one and my
observation would be that\'s one of the \-- It\'s not really a process
issue as much as it may be one of those issues that transcends our
charter a bit.

MS. NELSON: Okay. We have one and I don\'t know if transcends the
charter or may this falls more \-- There\'s one that is for our next
meeting if we decide to go in that order \--

CHAIRMAN BRANCH: Right.

MS. NELSON: \-- that says the roles and responsibilities of GSA COs
versus the agency Cos.

CHAIRMAN BRANCH: Right. Now that one\'s mine. So I\'ll talk to that a
little bit and I really meant with respect to pricing. So what do we
believe GSA COs are responsible for with respect to determining the
price and what agency COs \-- Or I guess what are agency COs responsible
for with respect to price determination. So that was \-- it was my
intent to more narrowly focus that particular issue.

MS. NELSON: And where would you like to have that affinitized?

MR. PERRY: There\'s a pricing one up there.

CHAIRMAN BRANCH: Yes, it could go with the pricing ones.

MS. NELSON: This one?

CHAIRMAN BRANCH: Yes, that\'s fine.

MS. NELSON: \-- all pricing techniques for goods and services.

CHAIRMAN BRANCH: Yes, that\'s fine. I think that really falls into
Alan\'s kind of overall broad one, what, when, where.

MS. NELSON: Substantially revamp or eliminate price reduction clause,
consider not having a clause at all under some circumstances.

MR. ESSIG: I still think that\'s in the pricing category. It\'s how do
you assure fair and reasonable prices. That\'s a current method that\'s
being used. It\'s not the only method.

MS. NELSON: Well, we had one already that says price reduction clause,
should it be scrapped. Should the government rely on competition? So I
think maybe they end up going together at the end of the day.

MR. ESSIG: I think they do.

MS. NELSON: So when we re-affinitize what we already have let\'s \--

(Off the record comments.)

MS. NELSON: Okay. So this is the last one here we have to put someplace.
Separate GSA technology service use to order/conduct process from core
purpose of offerings on schedules. So this was \-- We still haven\'t put
it someplace.

CHAIRMAN BRANCH: Can I ask who wrote that one?

MR. PERRY: I did.

CHAIRMAN BRANCH: Okay. Could you elaborate on that a little?

MR. PERRY: I got a little bit off. Maybe I was just making a point that
I would like to see us separate or distinguish the roles of the tools
that GSA \-- I didn\'t make the presentations. They put on the table,
for example, yesterday that while we don\'t really have, kind of said,
we\'re kind of adding in you have eBuy and this other stuff.

So that communicated to me that this was done because of some
expectation that something else is happening at the agency level that\'s
with pricing, whatever purpose that was. And I just would like us to
somehow separate out the \-- when we talk about the expectations of role
what do you think that\'s \-- how do we turn into what is that doing for
the pricing that we\'re getting at the agency because I don\'t need \--
I didn\'t get that part because \-- And maybe we ought to just take \--
Maybe it was more common that we need to take that maybe off the table
as a rationale.

MS. NELSON: Well, I\'m just \-- I think we may be want to put it in
expectations because I think some should be clarified. I\'ve talked to
Elliott about some of it because a lot of those things that GSA provides
come directly from Congressional mandate that GSA must provide them to
the customer agencies as part of what they do. They may not \--

MS. SONDERMAN: \-- provides visibility into all the pricing.

MS. NELSON: eBuy also is part of what we do. Some of these things
Congress has mandated that in one form or another we do them. So maybe
there does need to be further clarification to the customer agencies on
what GSA has chosen to do and how they\'ve chosen to do them in a manner
in which Congress has mandated to GSA that they do as a benefit to the
customer agencies.

CHAIRMAN BRANCH: Yes. And I think that\'s fair because then it starts a
dialogue amongst customer agencies with respect to whether those sorts
of things make sense and it then creates an opportunity for the
community as a whole whether it\'s through the, you know, CAOC or
whatever body to say to the Congress, \"These are some of the issues
we\'re grappling with. Perhaps these are some of the unintended
consequences with respect to buying commercial items that we\'re now
facing\" rather than \"I just don\'t like you people. Your rules are
stupid. I\'m going to go somewhere else.\"

MS. NELSON: So would it be fair, Glenn, to continue that along
expectations.

MR. PERRY: Clarify expectations.

MS. NELSON: Clarify expectations and why those came to be so that they
can be clarified?

MR. PERRY: Right, and how it plays into getting best price for best
value for the agency.

MS. NELSON: Correct. And then maybe those recommendations could be made
to GSA to pursue perhaps with the weight of the panel behind it.

Okay. So are we ready to further affinitize?

CHAIRMAN BRANCH: I think we\'ve grouped them. Are folks comfortable with
the groupings that we have so far?

(No verbal answer.)

So I guess the first group deals with competition. The second one
appears to deal specifically with the price reduction clause.

MR. ESSIG: I think those two are interrelated. I don\'t think you can
really address one without touching on the other.

CHAIRMAN BRANCH: Okay. So I\'m hearing perhaps a couple of different
views of that. Does anybody want to \--

MS. SONDERMAN: Should we just recapture the groups first?

CHAIRMAN BRANCH: Okay.

(Off the record comments.)

MR. ESSIG: Elliott, while she\'s doing that, something which is
frustrating me right now and I\'d like to get it out is I\'d like to
understand what we\'re trying to do as a panel right now. I mentioned
yesterday that in my view the business model that we do our acquisitions
under has changed and changed fundamentally. It\'s changed from a
transition based model to strategic. It\'s moved from individual based
decisions to enterprise wide decisions.

Now I really need to understand what the charter is of this group to
understand are we trying to fine tune schedules to make them as good as
they can be, to come up with schedules that will be great but nobody
will use or are we open to fundamentally changing the way we write our
schedules to reflect that new business model?

CHAIRMAN BRANCH: Well, I\'m going to ask the panel to answer that
question for itself and I\'m happy to start with my answer. I think the
charter is fairly clear and while I don\'t believe it is overly narrow I
think it is very focused and I go back to, I guess, a theme that I\'ve
been sounding since yesterday afternoon. I think we have a clear charter
to try to optimize the schedules with respect to most favored customer
and price reduction clause as they are.

Now having said that, I believe we owe it to the administrator being
some fairly thoughtful and experienced acquisition professionals to say
if we indeed believe the way the schedules are architected today are not
the model for the 21^st^ century here are some things you want to
consider in rearchitecting that model.

MR. SHARPE: Elliott, on the pricing, would it be unfair to call back to
do among other things where to look at this pricing and is the pricing
at least not at two levels, the contract level and then obviously the
task order level? But staying at the contract level, I\'m back to the
issue. We need to know if the current pricing is working because one
range of a recommendation would be it\'s working, leave it alone.
Another range of the recommendation might be at the other extreme. GSA
can support their pricing. Take them out of the pricing business and we
may recommend anywhere along that continuum.

But I don\'t know how we get too far. I don\'t even know how you get to
the task order level until you resolve the problem at the contract level
and know if that pricing is working. I think that is central to what
we\'re trying to do here and I\'m yet to be convinced it is. And maybe
GSA shouldn\'t be in the pricing business.

MS. JONES: But it is.

MR. SHARPE: I\'m sorry.

MS. JONES: The sales alone under the schedules program will tell you
that the pricing isn\'t broke.

MR. SHARPE: I think the sales might be an indicator of a huge problem if
those prices are no good. Big sales at bad prices big problem.

MS. JONES: Well, if there\'s competition at the task order level based
on \--

MR. SHARPE: I want to see the empirical data. I think GSA needs to come
in here and support their pricing program.

MS. NELSON: And does Department of Treasury or any of the other agencies
in their acquisition plans and when they award have they done
evaluations? Because I know Treasury has some major deals that they\'ve
done with FAS under the schedules program. So have your COs done the
same because we don\'t have visibility into the ultimate BPA?

MR. SHARPE: I think you\'re punting. I\'m at the contract level.

MS. NELSON: At the contract level.

CHAIRMAN BRANCH: Yes, Tom. I think I understand your question. But could
you kind of walk us through, say, a hypothetical scenario that would
illustrate because I think \-- And again, I hesitate to put words in
anyone\'s mouth. But the dialogue kind of gives me a sense that the GSA
folks who work with the schedule are perhaps not quite understanding
your question.

MR. SHARPE: Well, to the extent I understand from what I\'ve heard these
four days and what we\'re about is one of the things we\'re supposed to
make recommendations on is the effectiveness of the pricing program and
I think there are two levels to it. It\'s at the mass contract level and
then there are certainly prices at the order level. In my mind they\'re
too separate and distinct pricing events and strategies.

So I\'m asking for me at least to understand how I might make
recommendations for the mass pricing. I think we\'ve spent some time to
understand how the program works. But I haven\'t seen any data that says
it is working. We are getting most favored customer pricing. We do
benchmark ourselves external. We would have some visibility that these
are good prices because I think we\'ve learned that those prices carry a
certain type of aura around them and contracting officers have a
reliance on them.

And if that\'s not right, a range of options might be if it\'s working
well leave it alone. If it\'s not working well, possibly stop pricing.

MS. NELSON: And as an ancillary to that then, there are multiple other
interagency contract vehicles that would be impacted by that.

CHAIRMAN BRANCH: Okay.

MS. SONDERMAN: I want to jump in.

CHAIRMAN BRANCH: Go ahead.

MS. SONDERMAN: I think that I take a little exception to the way you\'ve
toned it only in that GSA pricing is available publicly every day, all
day, on GSA Advantage. So the empirical data is there every day, all the
time. Now is every single individual price always perfect? No. And the
first people to call me and tell me that somebody\'s on a schedule with
some very bizarre price is industry. They\'re watching those prices on
GSA Advantage all the time and bless their hearts. They keep us posted
when we\'ve done something that\'s out to lunch. So we have that data
exposed every day, all day.

MR. SHARPE: So part of your \--

MS. SONDERMAN: That\'s part of the empirical data is it\'s there all the
time.

MR. SHARPE: Okay.

CHAIRMAN BRANCH: So if I could kind of rephrase your question, Tom, to
make sure I understand it, I think the premise that most contracting
officers operate on is that I ought to be able to given what I\'ll call
a one sigma pricing event or ordering event, I ought to be able to go to
the schedule and I ought to be able to have confidence that for, say,
two-thirds of the transactions, I could do it the GSA price and not feel
that I have to negotiate a discount or try to further lever the vendor.
I only want to do that in unique circumstances when I have a large
requirement or there is something unique about my requirement while not
perhaps buying ancillary items or doing things that the courts and GSA
have told us we cannot do under the schedules but some unique instance
that does not push me outside of the pricing. I should have the
confidence as a contracting officer when I use that schedule price with,
say, competition but no negotiation that GSA has done sufficient due
diligence that I have a high degree of confidence that that is the most
favorable price and thus a fair and reasonable price. Is that kind of a
fair paraphrase of the issue you\'re trying to get at?

MR. SHARPE: Yes, I would just comment when you said two-thirds. I think
absent large volume, unique event I would think you would have that
reliance all the time.

MS. SONDERMAN: I would tell you that all my contracting officers would
be willing to stand up and say they firmly believe they had done the
best they can to get the best price for the circumstances dealing with
that vendor.

MR. ESSIG: Let me if I could here. We mentioned this at a meeting, I
think, two meetings ago. We talked about for our current identifies that
the scheduled prices are \"fair and reasonable\" and we talked about
that. The MFC and price reduction clauses that we\'re focused on I think
are the primary vehicles under the current schedule process that are
intended to give us the assurance that we are, in fact, getting fair and
reasonable prices.

The primary concern I have is I believe that it\'s a fundamentally
flawed structure. We don\'t know whether or not we\'re getting MFC. We
don\'t know how to implement a price reduction clause. It makes
absolutely no sense to try to implement in services contract. So if the
tools we have to enforce fair and reasonable price are fundamentally
flawed, the entire structure is defective.

MR. PERRY: I take exception with the fact that anybody would call the
existing structure fundamentally flawed. I\'m more towards Lisa\'s
comments that can you say that there are thousands of items on schedule.
Can you say that every single one of them are right where they need to
be? Probably not. But I doubt that anybody, commercial, government or
otherwise, could say that about any similar pricing program. I doubt
that WalMart would stand behind each and every one of the thousands of
items it has and tell you right now that, you know, it gets the best
deal everywhere all the time.

MR. ESSIG: Let me clarify.

MR. PERRY: So, you know, I think that \--

MR. ESSIG: Sorry. Let me clarify. I was talking about the process of
believing that those two provisions will result in fair and reasonable
pricing is a flawed assumption.

MS. SONDERMAN: Why?

MR. ESSIG: They\'re not. We\'re not getting fair and reasonable prices
in schedules unless we go and compete at the individual order level.

MR. SHARPE: To Tom\'s point, if the underpinnings is most favored
customer and price reduction, how many post award audits have we done?
Where have the prices been done?

MR. ESSIG: The fact that we always get reductions when we compete,
always, not most of the time, not some of the time. We always get
reductions when we compete at the task order level tells me that the
prices that were in those schedules were not fair and reasonable.

MR. SHARPE: Even absent the competition.

MS. NELSON: Tom.

MR. SHARPE: How many post award audits have you done?

MS. NELSON: Tom, can I make a point? The reason why you get price
reductions is because the schedules contract by definition is a non
requirement \-- contract.

(Off the record comment.)

By definition, and I don\'t mean to be in your face. I\'m just talking
into a mike. The schedules as discussed yesterday and several times
before, the way a schedules contract is designed and the solicitation is
designed is in non requirement. There is no specifics.

MR. ESSIG: My question is what benefit at all do we get from the MFC and
price reduction clauses.

MR. SHARPE: How often have the prices come down as a result?

CHAIRMAN BRANCH: Well, I think we need to be careful here and \-- I
think we need to be careful here. A couple of things. One is I think
we\'re getting into a discussion that needs to be had. So don\'t let me
say that. But I think back to Tom Sharpe\'s point this needs to be one
informed by data and not necessarily just data from GSA.

And I\'ll throw out, I think, a point that Lisa raised which was a very,
very good point yesterday and that is of the smaller agencies. So if I
am the Forest Service and I\'m in Yellowstone National Park where there
is not a national urban market for certain supplies and services, is
that GSA price indeed in the way that it has been determined going to
give me a high degree of confidence as a contracting officer that
that\'s a fair and reasonable price and I think that\'s a very, very
different issue for myself certainly where frankly I think I probably
buy at least one man year of support services for everybody in NAVSEA
Headquarters. Okay. So we\'re talking 2,000 man years round numbers,
where for Tom, who in many of his operations is looking at enterprise
wide solution and frankly has larger buying power because he comes to
the vendor with a definitive requirement and says, \"If you give me this
price, I will guarantee you X volume of business.\"

You know, I think it\'s important for us to remember that a GSA schedule
price is somewhat of a hypothetical price in that no vendor is going to
bet his enterprise on that price. No vendor is going to give you the
absolute lowest, rock bottom price because neither can you guarantee the
volume under the schedule nor can you guarantee its timing. So I think
it\'s an important discussion to have, but I think it\'s a much more
nuance discussion than the one we\'re perhaps having.

So I might recommend that we defer this until we really start to get a
pathway through how we determine issues.

MR. SHARPE: I\'m a little confused though. I think we keep intermixing
the schedule price with what can happen at the order when there\'s a
volume. I thought there was a guarantee to the schedule price and that
was the price reduction and the tracking customer.

MR. ALLEN: Well, as I\'ve tried to explain a couple of times how the
price reduction clause works, it doesn\'t always kick in at any Federal
price. The price reduction clause only kicks in under certain
circumstances having to do with commercial customers.

MS. SONDERMAN: It\'s at the schedule \--

MR. ALLEN: So it\'s independent of what happens in the Federal market
and, you know, I think as some of the GSA folks have tried to say that
they do negotiate very diligently foreign IDIQ type contracts fully
expecting that customers will seek subsequent discounts when
circumstances so warrant.

But I think that the price you end up with on schedule inside of it
being an IDIQ type price is probably a very competitive price and it\'s
been deemed to be so by a warranted contracting officer. Now does that
mean that you have a specific opportunity at a specific time? Frankly,
I\'d be shocked if you didn\'t get a better price because that\'s a real
live offer. It gets into a little bit about what Elliott was saying.

But again, let\'s not make the price reductions clause out to be any
more than it is. It is a tool that almost never is triggered by any
event that takes place in the Federal market. It is an event that takes
place only under certain commercial market transactions and then when
that clause is triggered there are significant substantial penalties to
companies that do not meet their contractual obligations to lower their
price on schedule accordingly and there are a number of attorneys in the
town and elsewhere that make their living off of companies that fail to
do that. Some of them are represented in our room today.

MS. SONDERMAN: I have to agree with Tom Essig a little bit on the idea
of the fundamental flaw in that we are conscious of the fact that when
we were making that most favored customer determination that there could
be and there might be the perception of a limited scope or a limited
competition ro some people\'s point of view that it could be less than
totally above board or, that\'s probably not the correct word,
completely open to view.

As a consequence that\'s one of the reasons that we were directed to do
GSA Advantage and get all the pricing out there. We go out there and
make the effort to get the best price that we can given the
circumstances and then we expose it to public view so that at the
schedule level everybody can see what those prices are and you can take
company A\'s price on the schedule, compare it against company B\'s and
you take a hard look at what their product definition is or what their
service category is and then at the task order level you can make a
judgment call whether you want to include that company in your
competition because what they\'ve shown you at the schedule level does
look to do what you need at your task order level.

So, yes, it\'s a two step in that regard. As a contracting person
speaking to both levels having done both levels, it\'s very different
for those of us who set schedules up than it is for those of us that
actually award task orders. But at the schedule level, the biggest
advantage we have is that everything is out there for public view.

MR. SHARPE: Let me ask you this. I mean, it just seems like it\'s
circular in my mind, the price at the contract level and the price at
the task order level and if there is so little utility to things like
price reduction clause and things like that to the contract level price,
why are we bothering with it? Why price it and how many people at GSA do
we have tilting at this if we put so little credence to the price at the
contract level?

MS. JONES: One of the customers, well, the customer yesterday that spoke
to us did mention that he sometimes awards on initial offer.

MS. SONDERMAN: Right again we\'re \--

MS. JONES: There\'s not always a competition process in place. But
agencies can rely on those prices to be competitive.

MR. SHARPE: I\'m not convinced we should from what I\'m hearing.

MR. PERRY: I\'m not hearing that. I hear on both sides of me talk about
the scenario that they believe on scenarios that I believe that I don\'t
know how we can be a most favored customer based on the basis of what
people are expecting. No companies \-- We\'re not the most favored
customer if the way we\'re looking at it is we\'re only doing pricing
for ones and twos and if we\'re not doing anything to drive price
reduction clauses based on what I think collectively we\'re buying, then
we\'re not most favored customer right there.

So I\'m not even understanding what most favored customer is right at
the moment because I don\'t think that\`s \-- But I can tell you from my
perch that if I\'m looking to GSA to the schedule I believe I do have a
reasonable expectation that GSA has quantified and collectively put
together what the potential is of the government doing business with
that particular entity and that they are, in fact, getting something
based on volume between us all or else it doesn\'t make any sense. I\'m
just as well off doing them myself and I can\'t rely on it as the most
favored customer because I\'m not singularly going to even get close to
quantifying for that.

MR. ALLEN: Well, this gets back to some of the discussion we had in our
very first meeting which underscores whether or not you have MFC and
that\'s one of the reasons why I made the recommendation you do away
with it. I talked about that yesterday.

And I still think you ought to not call something that it isn\'t and
other panel members besides myself have said that and I think it\'s
perfectly valid to say fair and reasonable pricing. As I mentioned
yesterday, the GSA itself came very, very close to saying that about 14
years ago and arguably may have done that or might wanted to have done
that and it would have avoided some of the competition or the discussion
here.

But I think this is nothing new. We\'ve been through it and then we\'ve
tried to have some people from GSA and other places come in and talk
about the fundamentals of the program. I\'m not sure what it is we\'re
not hearing about the underpinnings of the program that\'s needed to be
heard about it except for Tom\'s comment which I think are clearly
resonated.

CHAIRMAN BRANCH: Well, let me try to make some of the assumptions we\'ve
been laboring under perhaps implicitly explicit. I\'m going to tell you
what I\'ve heard now for the last three meetings.

When we started to talk about this the GSA folks came in and talked to
us about the idea of most favored customer and they gave us a rather
nuance view of that and said, \"You know, it\'s not really the most
favored customer for any particular enterprise. It\'s the customer who
establishes the basis of award.\" Now that may mean that that isn\'t the
customer to who you sell to at the lowest price. But it means a customer
that is most comparable to the sales opportunity to the government.

So I may have several distribution channels. I may sell in several
different ways. Let\'s say I have a huge, huge \-- Let\'s say I\'m Dell
and I have a contract to outfit all of GM. Well, that doesn\'t mean that
when they negotiate a schedule price with GSA that they\'re going to
necessarily give them the same price. They may indeed look at the market
opportunity in the government and say, \"You know, my contract with
Oracle is more comparable. We\'re going to use that as the basis of
award and I guarantee you that I will give you no worse a price than I
give to Oracle and if that price with Oracle changes, I will adjust my
price in accordance with the price reduction clause to the GSA.\"

MS. JONES: That\'s correct.

CHAIRMAN BRANCH: So that\'s where I kind of start. So here is where I
guess I think we need to be headed with respect to the price reduction
clause. So the real issue is in my mind if that price that constitutes
the basis of award we don\'t believe in the agencies is a good price, a
price that contracting officers have confidence in, they can make an
award in a typical circumstance outside of unusual volume, unusual
requirements and so forth, then maybe we need to do something else with
GSA pricing structure and as a consequence of doing something else with
that pricing structure retire the price reduction clause.

So I think the issue is very important because I think the issue is do
we have confidence that the GSA price really represents some kind of
benchmark that is useful to the ordering agency. Because if you answer
that no and you want to do away with GSA pricing or somehow modify it,
then there is no need for the price reduction clause. However, if you
believe the answer to that is yes, there is some validity to the pricing
that GSA does, that gives us an entirely different path to look at the
price reduction clause. Then we have to consider its efficacy in terms
of the burden that it imposes both on our industry partners as well as
our contracting officers and we have to address the question \"Is there
another way to make sure that the pricing we have convince in from GSA
stays consistent with that vendor\'s behavior in the commercial
marketplace.\"

I apologize for that kind of long summary, but I really think that\'s
our charter here and I think that\'s why we\'re having the discussion
over GSA pricing because depending on what you believe GSA pricing is in
terms of its usefulness then determines whether you would keep or not
keep the price reduction clause.

MR. ALLEN: I think that\'s well said. How do we make that determination?

CHAIRMAN BRANCH: Good question. So now I guess I would ask for some
thoughts from the GSA folks as to how they make that determination today
and then I would ask the panel to consider thoughtfully whether what GSA
tells us in terms of their process we believe we have some confidence
in.

You know, this is one of those conundrums that philosophers and lawyers
run into all the time. How do you prove the negative?

MR. SHARPE: Or do it the other way. If it\'s supposed to be a good
price, how often are we seeing price reductions through the clause and
how often are we seeing very small quantities against those schedules at
lower prices?

MS. SONDERMAN: I had actually planned on having \-- trying to get a
couple of my contracting officers to come and walk through step by step
how they do it as part of the roles and responsibilities.

MS. JONES: I can tell you how it\'s done.

CHAIRMAN BRANCH: I don\'t see you having a comfort level with that, Tom.

MR. SHARPE: I\'m open to hearing everything, but this is a very, very
large pricing program and if we\'re sitting in the IBM Company or
General Electric this would have been over days ago. I think GSA needs
to support this pricing and it can\'t be done anecdotally. Otherwise,
I\'m with Elliott. I think if discussion gets short, we stop pricing it
and the fees come down. If the prices are no good and they\'re serving
no value, we should quit tilting at it.

MS. JONES: Tom, I can tell you how it\'s done.

MR. SHARPE: Not how it\'s done. How are they good prices?

MS. JONES: Well, let me explain the process to you.

MR. SHARPE: Okay.

MR. FRYE: Before you get into that, could we talk about \-- You know, we
haven\'t talked about the other value that the GSA schedules offer.
It\'s more than just pricing.

MR. SHARPE: And I acknowledge that.

MR. FRYE: I look at GSA schedules (1) socioeconomic considerations,
don\'t necessarily have to comply with socioeconomic considerations.
That\'s very important if you\'re looking at speed. (2) We can truncate
the number of vendors. We don\'t have to go to open market and have 50
or 60 vendors give us proposals and respond to those or evaluate those
50 or 60 vendors.

So there\'s a lot of speed involved, for instance, we don\'t have to
synapses.

MS. SONDERMAN: Past performance has already done. Financial
responsibility has already been done.

MR. FRYE: The risk when it comes to protest is diminished as well. So
there are a lot of reasons to use GSA schedules. I do think it\'s
important to talk about this cost thing, but there are many, many
advantages to the use of schedules and I don\'t think we should forget
that as well.

MR. SHARPE: I fully acknowledge that. They are a very, very important
point. But just price as a piece, I\'m just trying to get the answers to
the price piece.

CHAIRMAN BRANCH: Okay. So let me think \-- Let me say what I\'m hearing
from at least part of the panel. Well, let me try this a different way.
Would we all agree that a threshold question that has to be answered is
the degree of confidence we have in the schedule price and the model by
which that schedule price is adjusted?

PARTICIPANT: Yes.

MS. NELSON: I think we agreed on it at the very beginning of the
affinitizing and we\'ve kind of come full loop in 45 minutes. Tom put it
up there and does \-- get MFC and whether or not there is a way of
getting that and the question it came to was whether or not there was
data around that and he initially said he did not want data. He just
wanted GSA to provide how they do that and whether or not they do that.

And I believe I\'m hearing now that he does want data around that.

MR. SHARPE: No. What I said is I think GSA needs to represent whether
they\'re getting good prices. Put the descriptor on it, MFC or whatever
you want to call it, and I would think you would make that
representation based on empirical data.

MS. NELSON: Okay. And I think if one of the things that we are charged
with or have taken the charge is whether or not it\'s best for us to be
looking at a basis of award or an MFC. And so that\'s part of our charge
as a panel as what GSA should be looking at and how the basis should be
determined. But I do agree and have from the, I personally, time that
you brought it up and put it on the board that we should be looking at
whether or not GSA, well, I\'ll say FAS, the Federal Acquisitions
Service, because GSA encompasses far more than the schedules program, is
getting \-- or how GSA is going about following the regulatory mandate
that it has.

MR. SHARPE: I\'m kind of locked in this. I acknowledge everything Jan
said. Are these prices any good? How many people does GSA have?

MS. JONES: Tom, can I just explain this?

MR. SHARPE: Yes.

MS. JONES: And tell you the way that it\'s evaluated and then you can
make that determination. Okay. When a company submits an offer to GSA,
they are required to submit what is called a commercial sales practices
disclosure and, in that disclosure, they provide an estimate of the
sales that they anticipate to the government. They are required to
disclose and the key here is disclosure. They are required to disclose
the customer or the category of customer that they provide the same or
similar service to at like pricing. The CO looks at that information to
determine where our sales volume will be in relationship to that
customer or category of customer that the contractor has identified.

MR. SHARPE: This is a sales volume based price.

MS. JONES: It\'s anticipated and it\'s based on the estimated volume of
sales.

MR. SHARPE: To the Federal Government.

MS. JONES: To the Federal Government and to the category of customer
that they\'ve disclosed. So, in other words, if a company comes in and
says that WalMart is my biggest customer and I\'m using Parks now as an
example. But if they come in say that WalMart is my biggest customer and
I sell \$2 million a year to WalMart, GSA, I\'m coming in with the
proposal and I anticipate \$2 million in sales to you as an agency.

MS. NELSON: On an annual basis.

MS. JONES: On an annual basis and we\'re going to look at that as a
comparable category of customer and our goal is to achieve the same
pricing or better than that pricing and that\'s the way it\'s done. So
the reliance on whether or not GSA is getting most favored customer
pricing is really based on the contractor\'s disclosure. If they tell
us, we don\'t know.

MR. SHARPE: Great. So what\'s the rest of the program and are we
actually getting the price? In your analogy, are we getting the WalMart
price?

MS. JONES: That\'s the negotiation objective and if there are no
substantial variances such as to the government we\'re going to give you
warranty as well at no additional charge. There are concessions that are
considered on both ends. There may be some concessions that they offer
the commercial marketplace that are not relevant to what we need and so
maybe we won\'t get most favored customer because it doesn\'t quite fit
the needs that we have in terms of the scope of our schedules.

MR. SHARPE: And that makes sense and I might push in your analogy the
price above or below because of those differences, the WalMart example.

MS. JONES: So in that \--

MR. SHARPE: What I learned on this, this is a volume based price. How do
we police we\'re getting it and then why do we see such dramatic
decreases when we introduce volume?

MS. JONES: Well, because the contractor has a responsibility to disclose
and that, like Larry mentioned, is why attorneys in the DC area make a
full-time living on this. If they don\'t disclose to us what their sales
information represents and we don\'t get full disclosure, then, no, we
can\'t know that and we don\'t know that and we don\'t get equal to. But
when we do find out from whatever means we do and we can, then we
negotiate for that.

CHAIRMAN BRANCH: Let me suggest that we are perhaps asking a slightly
different question and this is what I\'m hearing from the discussion.
The question I think I really hear Tom asking, and, Tom, I\'m sure you
will spit the words out of your mouth if I\'m putting them in there, but
if you look at an economist\'s view of price, in the market an economist
will tell you that price is really a signal about a set of aspects with
respect to not only that product or service but the business
environment.

So is the question you\'re really asking is the \"GSA catalog price\"
and I\'ll just put that in quotes a useful price to the contracting
officer? In other words, when one of your contracting officers, say,
doing a big ITDO (phonetic) or a big SETA deal looks at that price, does
that price have any utility in telling him anything about the market,
i.e., \"Hey, I can accept that price and move on\" or \"I should seek
further concessions in that price\" and so forth and so on.

So I\'m not sure if we\'re talking about whether the price is good as in
terms of fair and reasonable. I think the real question may be is the
price a useful signal to ordering agencies with respect to executing a
procurement strategy.

MR. ALLEN: There\'s been a very full discussion on this issue and I
think that it is useful. But I\'m not sure that we can come to any
finality on it right now in absence of having some tutorial or some more
empirical evidence or information from GSA. But it is interesting.

I might suggest that we also talk a little bit about \-- We\'ve been
talking all around getting information that will help us further the
discussion. Perhaps it\'s time to focus in a little bit more on what
that information may look like.

PARTICIPANT: I agree.

CHAIRMAN BRANCH: I absolutely agree.

MS. NELSON: I would agree. I\'d like to see if we could further
affinitize these down so we could bring a little bit more structure to
how we\'re going to proceed in both the where are we going with roles
and responsibilities. I don\'t know if we can further affinitize them
down. I have a little bit of thought around that.

CHAIRMAN BRANCH: Yes, I guess I\'ll take a slightly different view and I
want to build consensus around this. So I\'m not going to shape the
direction as the Chair.

But it seems to me if you decide that these prices are not useful to the
ordering agency, then that sends you in a very different direction with
many of these because if the prices are not an useful economic signal,
get the rid of the prices, get rid of the pricing clause, conduct all of
the competition at the task order level and don\'t worry about training
anybody. You know, don\'t worry about any of this stuff. On the other
hand, if you decide that the pricing, the GSA catalog pricing, provides
some kind of a useful economic signal, then you have to grapple with
these.

MS. JONES: I think the best people to answer that question are the
agencies that are using the schedules. I mean, it was my understanding
from the last meeting that we were going to invite customer agencies
here to give some feedback and our office invited Eldred here. We can
invite more people.

MR. ESSIG: I\'m here. I\'m from \-- The Department of Homeland Security
is here. I\'m sitting right here. I can answer those questions.

MR. SHARPE: One way to test these prices would be find representative
parts to the schedules and set up some market baskets and take those
prices and those skews and find out where else to shop them for the same
quantities you anticipated and let\'s look at that data.

MR. PERRY: I would agree with Elliott as far as once we determine how
good this \-- what does this price represent at the contract level, then
that tells you what\'s been left on the table and that will drive all
the rest of these.

MS. JONES: I think it\'s to the users.

MS. NELSON: I have a question. Tom, you\'ve made the point that you can
answer the question and you\'ve said that in regard to the fee that for
five year IDIQ procurements done within DHS as a large agency that it
does not make sense to pay the fee and do BPA or ordering activity, you
know, even multiple BPA, off schedule.

But as an agency for lower than these billion dollar procurement that
you\'re setting up, what is your sense for smaller procurement? I mean,
because we\'re talking DHS and we do recognize that this is an enormous
agency with enormous requirements and probably a better 1102 structure
than a lot of our agencies right now.

MR. ESSIG: Actually I have some information on the sticky I put up on
the board. But I think we have \-- Again it\'s under the context of one
size doesn\'t fit all. In there, I grouped it into three different
categories, relatively small value orders, mid-size value orders and the
very, very large orders.

MS. NELSON: Could you just define because DHS is \--

MR. ESSIG: I need to work that. Okay. What I\'m looking at \-- Somebody
from GSA several years ago said something to me which I still remember
today. He said, \"If you\'re buying one stapler, use GSA Advantage. If
you\'re buying 500, use eBuy.\" That\'s the construct I think we need to
have here is that schedules with firm prices on the schedules should
reflect small dollar orders, okay, where you know what it is. It\'s not
for everything, but if you\'re just going to order ones or twos or ten,
the prices there are fair and reasonable and it really is not the
administrative expense of trying to do better than that.

If you want to go beyond that, now I\'m saying if you go to a mid-size
level, let\'s say the million, two million dollar range, then maybe you
need to do more than that and maybe some informal discussions with the
offerors.

MR. ALLEN: I think so, too. That\'s why most schedules have a maximum
order.

MR. ESSIG: I\'d like to finish please.

MR. ALLEN: Sure.

MR. ESSIG: And if I then go to the large ones, the billion dollar
programs, and I have some at DHS which are multiple award contracts for
several years which are in the billion dollar plus range the schedules
would still potentially provide an opportunity, but right now, it\'s
really prohibiting our consideration of that is the current fee
structure. So if we could change that and something reflect something
which more adequately or accurately represents the value we\'re gaining
that would still be an option. But I think we really need to address
those groups separately.

MR. SHARPE: Tom, that makes sense to me but I\'m still stuck on, and
Jackie helped me learn a little bit, the price on the schedule is sales
volume based.

MS. JONES: Yes.

MR. SHARPE: So we\'re saying different things. Because if that\'s sales
volume based, Tom wouldn\'t need to go do what he just said.

PARTICIPANT: Right.

MS. NELSON: So would it be helpful for you, Tom, to look at a basic
solicitation, say a MOBIS solicitation, in order to \-- and go through
that \--

MR. SHARPE: I don\'t know, but I\'m \-- I don\'t know how we maintain a
position that the GSA price is sales volume based and yet anytime
anybody introduces a volume on an order there\'s a dramatic decrease.

CHAIRMAN BRANCH: Well, let me offer an observation about that. I started
my career in a field contracting organization. I bought a lot of onesies
and twosies and when GSA, and again spit these words out if I\'m not
being accurate, says that this is sales order based it\'s across the
entire universe of potential sales opportunities in government. So when
you look at the 14 executive departments, the smaller, you know,
including the smaller agencies, I as a vendor may say, \"You know, I\'m
looking at my sales data and I believe that across the universe of all
Federal agencies I may be able to sell,\" I\'ll pick a number, \"100,000
units a year.\" So I\'m going to use that benchmark of 100,000 units and
I\'m now going to say that\'s equivalent to what I sell Cincinnati
Machine Tool a year and therefore this is a basis of award customer.

So when Tom or I or anyone on this panel from a large agency walks in
and says, \"Gee, I\'d like to buy 200,000 units\" that vendor is (a)
doing the happy dance because he figures he can probably still sell the
100,000 on which that price was based and, of course, he\'s going to
give you a price break because you have a firm quantity that he\'s not
looking to fulfill the base on which his GSA catalog price is based.
He\'s looking to augment that base.

MR. SHARPE: Those economics make perfect sense, but either the price on
schedule is volume based or it\'s not and we can compare against onesies
and twosies if we don\'t believe it\'s sales volume based. We can take
that GSA schedule price and go shop DOD eMall and see what happens when
you do the same one for a quantity of one, a quantity of two.

MS. JONES: That\'s the nature of an IDIQ contract though and that\'s
what \--

CHAIRMAN BRANCH: But when we say it\'s sale volume based I think it\'s
important. I don\'t disagree with you, Tom. But I think it\'s important
to remember that that sales volume is an annual sales volume and it\'s
aggregated across the Federal Government. So when you buy onesies and
twosies, what you are doing is you are essentially fulfilling the base
against which that contractor gave the GSA that price.

MR. SHARPE: Again, Elliott, I get the economics. So then you would test
against the quantity of one. That would be the worst comparison.

CHAIRMAN BRANCH: No, I wouldn\'t test. I wouldn\'t test against the
quantity of one, but I wouldn\'t test against the aggregated quantity of
either you or Tom or myself. What I would probably do is I would
probably try to get a historical view of, okay, how many of these units
did I really buy from this vendor and did that anticipated sales volume
or did that actual sales volume match the anticipated sales volume for
the basis of award customer. I mean, that\'s how I take it.

MS. NELSON: I would like to take it into a services arena which is where
largely the concern is because we\'re looking at services for so much of
the industry and if I am \-- Let\'s start on the schedules and then
let\'s take it to a broader look. If I\'m negotiating services and going
back, let\'s say that I\'m negotiating and I say that the value \-- I
anticipate that the value, the estimated value, of my schedule contract
is going to be, you know, \$500 million a year. I\'m a large business
and so when either Lisa or Jackie is negotiating with me she\'s going to
look at a class of customer or an individual customer that I\'m
currently doing that level of business with.

Now that\'s going to be a huge business or I could be a small business
or let\'s call it a medium sized business because that\'s also a large
contingency. And they\'re going to base it on that and that is what\'s
going to trigger the price reduction. Remember that we\'re looking at a
triangle here. What my class of customer is that is the basis of award
is going to ultimately instruct what is the GSA price and that basis of
award class of customer is ultimately going to instruct what is going to
trigger a price reduction clause.

Now again, as Elliott said, but there may be multiple reasons. Now when
I negotiate an IDIQ with, let\'s say, an enterprise wide IDIQ or BPA
with Tom Essig at DHS, I don\'t assume the same risk that I do with the
schedule. I\'m negotiating on schedule. I\'m assuming a great deal of
risk. I may be giving those incredible prices.

Let\'s say, you know, when I negotiate, I have no idea whether or not
I\'m going to have people on the beach. I have no idea are my people
going to be employed. When I negotiate with Tom, he\'s going to give me
a requirement and say you\'re going to be employed this amount of time
and I may give Tom 40 percent less than I\'m negotiating on schedule.

Now I may negotiate an IDIQ with Tom Sharpe on a different area and my
pricing may look very different than it does with Tom Essig.

MR. SHARPE: I recognize all those economics. How many price reductions
did GSA did last year?

MS. NELSON: How would we possibly know? We\'re talking 17,000 contracts.

MR. SHARPE: Well, I tell you. I have no confidence in the price at any
of the contract level. I can\'t get straight answers.

CHAIRMAN BRANCH: Okay. We\'re probably at lunch time. But I\'d like to
kind of get some closure on this issue. Do we all agree that we need to
address Tom Sharpe\'s issue which is whether this is a useful price
before we worry about the rest of this stuff?

MR. ALLEN: I think that we can talk about it, but I think we have to be
very careful. Otherwise, we\'ll be here until midnight and I think \--

CHAIRMAN BRANCH: Well, I don\'t mean tonight.

MR. ALLEN: We\'ll end up talking past each other. I think we spent the
better part of the last 45 minutes talking past each other already on
this issue. So I\'m not disinclined to having additional discussion on
it. But if we are, I think we ought to have a very clear end purpose to
it and put some definers on it. Otherwise, I think we run the risk of
going further and further down a rathole.

CHAIRMAN BRANCH: I agree with you, Larry. I guess the question I\'m
really asking is this some \-- is this a threshold issue we need to
resolve before we move to some of these other issues.

MS. JONES: I think it would be helpful maybe to have some of the
auditors come in or have GSA auditors come in and discuss some of those
because it really is going to tie into the price reductions issue.

MR. ALLEN: I tend to agree with that. I think if you\'re going to have
this type of discussion it probably ought not be one that the panel, and
I don\'t think it is because we just spent 45 minutes on it, I don\'t
know that it is one that the panel can reach some closure on on its own
even though there is considerable expertise on the panel on this issue
without having somebody come in and do a step-by-step through it,
talking about what the program is and what the program is not.

I mean, there are points all around. Everybody on this panel, I think,
has made a good point today. I don\'t think anybody\'s been off base.
There\'s just a question of how do you define what happens under given
circumstances and perhaps we need somebody who is outside of the panel
to come give us that from a perspective of somebody coming in. I think
that could be helpful and if we still get back to chasing our tails on
this issue, then that\'s indicative of something that maybe needs to
have a different type of an address to it.

CHAIRMAN BRANCH: Okay.

MS. SONDERMAN: I would just \-- I need to have a chat with Tom to have
him even explain to me. I believe what we do with sales volume is what
you\'re saying. My reservation is that that is a term I would consider
commercial term of art and I\'m not exactly sure that I know the
definition of it to then apply it across the board to GSA schedule. So
I\'m thinking that we may have just a semantic issue.

CHAIRMAN BRANCH: Other thoughts on this? I guess what I\'m trying to get
at is I got back to my earlier analysis. If you don\'t believe that
that\'s a useful price, then our recommendations are probably pretty
short and sweet which is get rid of the pricing, get rid of the price
reduction clause and let the agencies determine the pricing through
competition at the task order level. But if you do conclude that this is
somehow an economically useful price, the catalog price, then I think we
have a whole host of other issues to address.

So I guess I\'m trying to \-- You know, I\'d hate to try to go tackle
the other affinity categories with the elephant still sitting in the
room. So I\'m trying to figure out how we make the door wide enough for
the elephant to exit gracefully.

MR. FRYE: I think you\'re right, Elliott. If we don\'t solve this issue
right now, the whole question of schedules is up in the air.

CHAIRMAN BRANCH: Yes, and I don\'t propose that we sit here and attempt
to solve it today. But if that\'s the issue we believe we need to take
on as a threshold issue, I believe the discussions in the afternoon need
to center around, okay, what are our hypotheses, what data do we need to
gather to address those hypotheses and who we need to hear from. If
it\'s not a threshold question, I think we get back to the other eight
or nine categories of issues we have and we start talking about a plan
of attack.

And again, I\'m not going to drive this panel. I think we work best with
consensus. But I will say very strongly that what I\'m hearing everybody
say is this is a threshold issue. If you do not believe these prices are
useful, then the mechanism that maintains these prices current with
their benchmark is not particularly useful either. So I think we have to
address it.

MS. NELSON: Elliott, I don\'t disagree that there should be some further
discussion as to whether or not the pricing and how effective the
pricing is and I do believe that that was one of our charges as to how
effective the pricing is As to whether or not the pricing model is
defunct and not of value, I think, is a premise that I\'m not sure that
all of us hold and I think that before we make a determination as to
whether or not we go forward, that might be something that we choose to
\--

CHAIRMAN BRANCH: No, I concur. I have an open mind as to whether that\'s
an economically useful price.

MS. NELSON: Right, and I just say that before we make a determination at
the end of the day as to whether or not we\'re going to move forward
without that kind of data that we look to all of the panel and determine
whether or not we\'re going to move forward with the things that we\'ve
affinitized or not.

CHAIRMAN BRANCH: Okay. It is now about 12:15 p.m. So why don\'t we break
for lunch until 1:30 p.m. and that would give everybody an opportunity
to consider what they wish to do as we move forward.

(Whereupon, at 12:12 p.m., the above-entitled matter recessed to
reconvene at 1:36 p.m. the same day.)

MR. PERRY: Audience, we\'ve had a couple members who cannot be here this
afternoon including our esteemed Chair.  So by default through a couple
of other folks that can\'t be here, I\'m going to be the chair for the
afternoon.

I thought about it a little bit this afternoon, but I\'d like to hear
from the others as to how they would like to progress for the rest of
the day. I have \-- From my perspective, I would like us to somehow take
these affinities that I think we\'ve come up with and prioritize them.

I think before the end of the day it sounds like we need to brainstorm
what the data needs are that folks would like to have Pat go after, who
we would like to still hear from and how do we get them here. And I
wrote down one other thing that I can\'t read. We\'ll cover that when we
talk about who we want to be here.

MS. NELSON: Okay.

MR. PERRY: Anybody else is free to weigh in as to what they would like
to get out of the rest of the day today and then we\'re going to try to
accomplish that.

MR. ALLEN: I think that\'s a good thing and I\'ll try to prioritize what
we did and then figuring out the data requests and potential speakers
around that. I think that\'s a good summary.

MS. NELSON: I agree. So \--

MR. PERRY: The next thing in order to prioritize \-- But go ahead. Did
you have anything? In order to prioritize, the only thing I\'ve noticed
myself as I was looking at these now is do we have to do anything to
further expand upon what these are.

MS. NELSON: Right. So I was just going to \-- I talked to Glenn and I
was going to try and facilitate the prioritization. So before we do
that, I just want to recap what the affinity looks like and see if
without going into lengthy discussion so that we can get through the
effort whether or not we need to group some of these together. The
least, probably to prioritize is to have a concise or clear
understanding of what each of the \-- what each category is. Otherwise
it\'s very hard to prioritize them because each of us will be looking
and understanding each of the groups differently.

So as they stand right now, we have one that\'s called pricing
techniques. Okay, and looking at them, we have things like whether or
not there should be MFC pricing, roles and responsibilities of COs at
\--

MR. SHARPE: Could I make just a comment? Not to further lobbying on the
price issue, but I thought \-- At least, I think what I read in
Elliott\'s mind was we\'d have to somehow or other grapple with whether
we consider that a threshold issue or not. And I\'m not lobbying upon
the issue because some of these \-- In other words, if we were to say it
makes no sense to price it at the contract level, you know, talking
about PRC would go away and some of the training things would change,
obviously, roles. So I think some of these decisions are kind of
stacked.

MS. NELSON: So I think that one of the things that we should do is
prioritize them and if a large majority of the panel finds that this
rises to the top of the priority list then that would become the case.

MR. SHARPE: I don\'t think I agree. I don\'t think we\'re there yet. I
don\'t think we\'re at the point where we can yet say whether or not the
pricing is something that needs to go away. I think that rather this
would come out during some follow-on discussions that we would have and,
i.e., the more we talk about pricing techniques, the more we talk about
whether or not it makes sense to price at the contract level.

So I agree with Judith. I think setting some prioritization among these
of post-its would be good and that will lead us, I think, probably not
today but in the future to a more thorough discussion about at what
level you set an MAS price.

MS. NELSON: And we haven\'t applied the who do we need to hear from to
that nor the data.

MR. SHARPE: Right.

MS. NELSON: So let\'s see where it comes to so that we can make that
determination, Tom. Okay.

So we have one that\'s called Pricing Techniques and that really goes to
where and when the pricing is becoming clear.

We have one \-- Well, this kind of got moved. So I\'m going to have to
look at it a second. We have one that\'s coming around the expectations
and essentially narrowing the gap of the expectations and the role of
that MAS price. I\'m not saying these are the final. The panel may
decide to move these around and close them up.

We have one around a data call for further data.

We have one that talks specifically at looking at the multiple
stakeholders, small versus large agencies, Congress, large companies,
socioeconomic, contractors.

One regarding training.

One specifically regarding the value of competition at the ordering
level.

One specifically \--

PARTICIPANT: Slow down.

MS. NELSON: Another specifically regarding the price reduction clause,
dividing it potentially products and services or having none at all.

We have another one which I think remains. It was a standalone which
were the overarching guidance which the two were to ensure that the
changes are doable for both industry and the contracting officers and I
assume that that regarded both our customers and the GSA and the other
had to do with the statutes under which GSA is guided.

Another one is the business model whether or not, you know, what type of
commercial business model and whether or not we should be instructed by
the commercial business model or how we should be instructed by the
commercial business model.

And, finally, this one which Tom just brought up which is whether or not
FAS and the MAS program is getting MFC pricing and how do we have
confidence in whether or not MAS is getting the MFC pricing.

MR. ALLEN: If you\'re looking for some suggestions, I might say I think
it was very good to take a step back during lunch and get some
perspective on some of this. I think looking at the price reduction
clause and how it plays into pricing techniques may have some value to
it. Similarly, expectations and overarching guidance may or may not work
together and whether or not there\'s an element of training that goes
into expectations as well. Just one man\'s thought.

MS. NELSON: I\'m sorry. There\'s one \-- I\'m sorry, Larry. There\'s one
more and that has to do \-- There were two, one Tom Essig put up here
that had to do with the mass fee, the Industrial Funding Fee, and Alan
put up \--

Oh, Alan is back.

MR. CHVOTKIN: The Maytag repair man at this end of the table.

MS. NELSON: No, you just weren\'t here when we initially conveyed.
 Acquisition techniques for acquiring goods and services and I suppose
that the mass value at its pricing, so to speak, not whether or not the
pricing is valid but rather at its current pricing structure is the best
way, I think, I can paraphrase it or vis à vis other vehicles or
something like that.

So I\'m sorry, Larry.

MR. ALLEN: No, I think that if you want to talk about putting price
reduction clause into pricing techniques issue, price reduction clause,
I think, whether or not you have one or how you have it would be part
and parcel of a pricing technique discussion and that also whether or
not you have a pricing technique discussion which was the issue from
this morning would be part of that discussion as well. And then, too,
working on expectations, training and guidance would also seem to be
things that are perhaps first cousins.

MS. JONES: I\'m looking at that and thinking that competition and the
price reduction clause could be subsets of pricing techniques.

MS. NELSON: I\'m sorry. Competition you\'re saying could go to pricing?

MS. JONES: Pricing techniques.

MS. NELSON: Yes, techniques. Any other input about moving things around?
Glenn?

(No verbal response.)

Jan?

(No verbal response.)

MR. PERRY: That would give us how many categories then?

MS. NELSON: I\'m in favor \--

MR. PERRY: Can you tape those over there and just see what we have, I
guess?

MS. NELSON: Okay. Well, then we\'ll take this off the prioritization.

MR. PERRY: No. You can leave that. Just list them up there and then we
can, if you get them down \--

MS. NELSON: I have a way for prioritization.

MR. PERRY: All right, Ms. Facilitator.

(Laughter.)

MS. NELSON: If we take pricing techniques, everybody complains about my
spelling, and we\'re talking about taking competition and PRC.

MR. PERRY: Right.

MS. NELSON: I worked so hard to tape them up here and put them in there
and then we take training and expectations.

MR. ALLEN: Do we want to add guidance to that as well? You have the
benefit of being able to read what the guidance post-its say.

MS. NELSON: The guidance, I think that our Chairman and we could
overrule him we chose to wanted to keep them separate.

MR. ALLEN: Okay.

MS. NELSON: As an overarching \--

MR. ALLEN: Let\'s do that then.

MS. NELSON: To inform \--

(Off the record comments.)

MR. SHARPE: I think they were kind of like instructions to us. Right?

MS. NELSON: Right, to inform how we do our work was one that the program
does have a statute that \--

MR. PERRY: Okay.

MS. NELSON: And the second is that at the end of the day the results \--
the recommendations that we come forward with have to be something that
are feasible.

MS. JONES: Or actionable.

MS. NELSON: Actionable, doable, however we want to do it both from a
statutory, regulatory \--

MS. THOMPSON: Pragmatic.

MS. NELSON: \-- pragmatic sense. They have to work on a program level
and I think those were sort of like our guidance from our chairman.

MR. SHARPE: I think stakeholders shape expectation.

MS. THOMPSON: I was thinking the same thing.

MS. NELSON: I actually disagree.

MR. SHARPE: Well, I think this \-- I\'m not really sure exactly where
we\'re going. But one of the things we\'re trying to do is figure out
who else we want to hear from and I don\'t know if we\'ve heard from all
the stakeholders. I think folks \-- separate.

MR. ALLEN: Like a lot of users.

MS. NELSON: Yes.

MR. SHARPE: So I think this is going to form a number of things. But if
you\'re looking at who else we need to hear from, I think there are
stakeholders or at least our people on the panel say let\'s get more
customers. Right?

MS. NELSON: Right. I\'d like to hear from several different stakeholders
and I would leave them separately.

MR. SHARPE: Okay.

MS. NELSON: Or separate.

MR. ALLEN: I don\'t know. Does FAS get MFC? I mean, that might be an
outcome of how we feel about price techniques maybe. Right?

MR. SHARPE: Right. Exactly.

MS. JONES: I have a question on it. If you put stakeholders up there in
a category by itself, what about the \--

(Off the record comment.)

MS. JONES: I\'m sorry. If you put stakeholders in a category by itself,
what about stakeholders? I mean, what do we want from them? What are we
expecting? I mean, we have to further define that, I think, rather than
just leaving it broad to say stakeholders.

MS. NELSON: Well, I\'ll give one opinion or \-- Tom?

MR. SHARPE: It just struck me. Didn\'t Elliott have kind of \-- Didn\'t
we kind of agree as a group to sequence? The first thing we\'ll try to
figure out is stakeholder expectations. Okay. I don\'t know if we got
all that done. Then what was the next thing? Roles and responsibilities
and the next thing was \--

MR. ALLEN: Very good. Right.

MR. SHARPE: We have built a little bit of a thought structure for
ourselves.

MS. NELSON: Right.

MR. SHARPE: If that still remains helpful, right. But that\'s how we let
last meeting.

MS. NELSON: Right.

MS. THOMPSON: Expectation of stakeholders.

MS. NELSON: My thought personally on stakeholders is I think that there
are multiple stakeholders that have expectations. I think our customer
agencies have expectations. I think that our industry partners have
expectations from the multiple awards schedule program. I think that
OIG, the oversight community, not just the IG but Congress has
expectations and has set certain expectations on the program and I think
it would be instructive to the panel to know what those expectations are
that they\'ve set. I think that \--

MS. SONDERMAN: The 360 perspective is what you\'re asking for.

MS. NELSON: Yes.

MR. SHARPE: I think if I recall right that was the idea of the model.
Right? We were going to try to understand what the various constituent
groups wanted out of the MAS schedules. Right? And then given that,
which expectations do we recommend be met, I guess. Right? And there
might be some we as a group say yea or nay and then how we align the
roles and responsibilities. So at the bottom of all that, we got the
pricing we were looking for. I think that\'s the path we were on.

MR. PERRY: Yes, we were on the path \--

MS. NELSON: And what informs the pricing that we\'re looking for.

MR. PERRY: \-- and that was supposed to have been what was to happen
yesterday and today.

MR. SHARPE: Yes.

MR. PERRY: I sense \-- Well, I\'m not sensing. We have not completed
that.

MR. SHARPE: That\'s what I\'m saying. Yes, I agree.

MR. PERRY: Tom, we\'re referring to what we set forth actually in the
announcement for the meeting from last time that this session yesterday
and today was to capture stakeholders, actually stakeholder
expectations.

MS. NELSON: And requirements.

MR. PERRY: And we\'re obviously not done with that work based on the
information we have as of today.

MS. NELSON: I\'m wondering \--

MR. PERRY: You are now actually saying we\'re separating those two.
It\'s probably resulting from what happens. So now we\'re trying to
focus in and more narrowly get at those.

MS. NELSON: Right.

MR. PERRY: The next session was on roles and responsibilities.

MS. NELSON: And I\'m not sure we\'re there until we get a better
perspective on stakeholders.

MS. JONES: Right.

MR. SHARPE: That\'s what I\'m trying to suggest because I think once we
think we\'ve heard enough of a cross section. Maybe we should list the
cross sections we want to hear from to be sure we populate each of the
buckets.

MS. NELSON: Right.

MR. SHARPE: And then I think we\'d have to group and say which
expectations do we think are the ones to be met and which not and then
who does what and then how do you price.

MS. NELSON: Right, and I think that\'s where we\'re going is we\'re
going to prioritize these and then find out under each one of them what
we need from each one and who we want to hear from.

MR. SHARPE: Okay.

MS. NELSON: Yes. So for me personally, I\'m wondering whether or not
what\'s an appropriate business model might just go back into the
pricing techniques and I don\'t know because I didn\'t write either one
of them. But maybe the people who did \-- One says return/mirror
commercial practices as possible.

MR. SHARPE: To load all these in pricing techniques doesn\'t help us.

MR. ALLEN: Yes, we\'re going to lose something.

MS. NELSON: Okay.

MR. SHARPE: We\'re back where we were. It\'s just all under one title.

MS. NELSON: Okay.

MS. JONES: I think that that\'s fine separate and it would flush itself
out in the priorities, in the order of priorities.

MR. SHARPE: I mean the first priority is probably to complete the list
of stakeholders we want to hear from.

MS. NELSON: We\'re going to prioritize them. I promise. And you probably
are right, but \--

Okay. We have data, a requirement for additional data.

MR. SHARPE: Well, you say additional. It\'s a requirement for data.

MS. NELSON: Right.

MR. SHARPE: It\'s kind of like a whole separate initiative. Right?

MR. ALLEN: Or do you think that\'s part and parcel of stakeholders?

MS. NELSON: And it may be beyond stakeholders.

MR. ALLEN: Okay.

MS. NELSON: So I\'m just wondering if we put this aside because we know
that\'s where we\'re going once we prioritize these.

MR. SHARPE: You know, to Larry\'s point, now that we\'re getting better
organized, that would be a good question to ask the stakeholders when
they come see what would be your \-- what would you like to see in a
nice data world.

MS. NELSON: Okay. I\'m just \-- In the effort to do this, do we put this
on the prioritization or do we know that in the prioritization the next
step that we\'re going to have is what data \-- who do we want to see
for each of these and what data would we like to be able to get from
them where appropriate?

MS. JONES: I think we should put it on the list of priorities. But it
may be a requirement more than once.

MS. NELSON: Yes.

MS. JONES: In other words, it may need to list the result of each of the
subsections if you will.

MS. NELSON: Others? Jan?

MR. SHARPE: I think the main thrust of where it came from is that we
need data. Right?

MS. NELSON: Do we put it on the prioritization list?

MR. SHARPE: I don\'t know. I don\'t know if it matters where you put it
really. I think it\'s a good question to ask of the coming \--

MR. PERRY: We need data and we\'re also going to need data, a different
data model, for whatever the business model is going to be.

MS. NELSON: Right. I guess my opinion is that since we know that we\'re
going to need it as a result of each of these that to put it on here to
me it would rise to the very top no matter what. But then it kind of
skews the \--

MR. SHARPE: I think it\'s almost an aside. I wouldn\'t say it\'s any
more important than anything else. It\'s like a parallel need.

MS. NELSON: Right.

MR. PERRY: Right. It\'s \--

MR. SHARPE: So if we were going to wave a wand and make the schedules
perfect by our vantage point separate and parallel to that there needs
to be a data infrastructure.

MS. NELSON: Right.

MR. PERRY: Ubiquitous.

MS. NELSON: Right. It\'s going to go across all of them.

MS. JONES: Right.

MS. NELSON: And the question is once we prioritize them then there\'s
almost like this chart that says who and what kind of information.
Right?

MR. SHARPE: I think it\'s more standalone and profound. Like we say to
the vendors, why can\'t you tell us your billings? The question on our
side is why don\'t we know the prices we pay, I think, is the profound
point.

MS. NELSON: Okay, and then we have another one here that we kind of
named mass value at its pricing level. Tom Essig put down tiered fee and
Alan has acquisition techniques for acquiring goods and services. I
think he was talking about mass in terms of other acquisition vehicles.

MR. CHVOTKIN: Both on the schedules directly as well as other vehicles.
But it\'s in that same context of the value proposition.

MR. SHARPE: It strikes me that fees go with business model.

MS. NELSON: Okay. So are we good to put that in the business model?

MR. PERRY: Are you okay, Alan, because you\'re 50 percent of whatever is
going over there?

MR. CHVOTKIN: Yes, sir.

MS. NELSON: Okay. We just have one more and does FAS get MFC and whether
or not we can get a level of competence and if that is being negotiated
and do we want to have that stand alone?

MR. PERRY: Yes.

MS. NELSON: I think we do.

MS. JONES: But would that not be an expectation since it is a part of
the program \--

MS. NELSON: I think we\'ve determined that that\'s going to be
standalone whether or not that is a \--

MR. ALLEN: It impacts all of them really.

(Off the record comments.)

MS. NELSON: Mr. Sharpe, does the way I\'ve put this, \"Does FAS get
MFC/competence,\" capture that for purposes of prioritization? Okay. I
just want to make sure I\'m capturing that correctly. Okay.

So, in playing facilitator \--

MR. PERRY: Keep going. You\'re doing all right.

MS. NELSON: Okay. So this is what I\'m going to ask you to do.

MS. JONES: Wait a minute. You left overarching \-- Is that a standalone?

MS. NELSON: Yes, these two we\'re going to \-- Those are standalones.
They\'re not going in the prioritization.

So we\'ve come down to five which is a very good number for
prioritization and here they are. We\'re going to call one pricing,
simply pricing, and that is basically pricing both at the contract level
and at that task order level and how that\'s done. It encompasses the
price reduction clause. It encompasses whether or not there should be a
price reduction clause, whether or not there should be MFC, whether or
not it should be basis of award, whether or not it should be divided
between products and services, all of these issues.

We have another one which is stakeholders and I thought Lisa expressed
it extraordinary well looking at a 360 degree perspective for all of the
stakeholders of the multiple awards schedule program.

We have another one that encompasses expectations of the customers and
that there is a perhaps training issue involved in that.

We have another one on the business model.

And finally the basic question of does FAS negotiate an MFC price and
what level of confidence is there by the agencies that that is
happening.

Okay. So there are five and in order to prioritize them I\'m going to
ask each of the panel members that are here to take five stickies, put
them on without names and just for each one put price, stakeholder,
expectations, business model and number it one \--

MR. PERRY: Toward what end?

MS. NELSON: Because we\'re going to try and prioritize them as a \--

MS. SONDERMAN: So somebody could put five stickies on one.

MR. PERRY: But toward what end?

MS. NELSON: Because we\'re prioritizing them as a group.

MR. SHARPE: I get that. But if our next step is to finish among other
things the stakeholders we want to hear from \--

MS. NELSON: But we don\'t know that that\'s the next step. Right? We\'re
assuming that\'s the next step.

MR. SHARPE: We agreed with that last meeting.

MS. NELSON: Okay.

MR. SHARPE: We had a stakeholder path. We had a \--

MS. NELSON: Right.

MR. PERRY: You\'re back to exactly what we laid out now that you\'ve
done this. You\'re pretty much back to what \--

MS. NELSON: So let\'s assume that we\'re stakeholders. But the agreement
that we had at the beginning after lunch was that we would move to
prioritizing them. So let\'s assume the stakeholder rises to the top.
Then we have to go down the next level. So just appease me and go
through what Mr. Perry asked me to do was to prioritize them. Right. We
had an affinity chart.

MR. PERRY: After we do this, I\'m going to open up that we have \-- we
could change that that\'s the way folks \--

MS. THOMPSON: Judith, don\'t forget the parking lot issues. Do we need
to look at that now?

MS. NELSON: Those were things I think we determined were going to get
recommended to the administrator and to Mr. Williams as things that
should be addressed but are maybe outside of the immediate scope of the
panel.

MS. JONES: So we each get five votes and we go up and put our stickies.

MS. NELSON: Only if the panel determines that we\'ll prioritize them.

MS. JONES: Well, I agree that we did decide we were going to do that
when the last meeting adjourned in May and those are the notes that I
have that the purpose of the meeting for these two days was to hear the
stakeholders\' expectations and that we were going to hear from
contractors, government, IG, customer agencies and that we were going to
invite people from those stakeholder groups.

MR. SHARPE: Yes, that\'s kind of where I am. I think unless we want to
revisit the path forward we built and we can do that, but we might as
well knock them down unless we want to revisit it, knock them down in
the order we laid it out. So I think we should finish the stakeholder
round and I think come up with the list of people we want to hear from.

MR. PERRY: And then that can get us back to working on the other issues.

MR. SHARPE: And I think what we have there could help us beg what type
of stakeholders we want to hear from.

MR. PERRY: Right.

MR. SHARPE: So I don\'t know where prioritizing this takes us other than
to list topically the people we want to hear from and then try to figure
out names. Right?

MR. PERRY: I think it would be helpful to have those five broad areas
stamped out somewhere, written down for us, as guidelines for the things
that we know we want to go towards. I would even go so far as to say
that maybe somebody would want to undertake the post-it note
transcribing. But that would not be me. For one thing, you couldn\'t
read my handwriting.

MR. SHARPE: It would be a good artifact to send out.

MR. PERRY: I actually talked to Pat about taking these and make sure we
capture everything \--

MR. ALLEN: Good, good.

MR. PERRY: \-- on those notes under each of these categories. Are we
okay with this grouping here they way we have them now? This is it?
We\'re not going to refine these anymore?

MR. SHARPE: I agree with Larry. I mean, capture those. They\'ll probably
serve us later. This is certainly \--

MR. PERRY: There are some nuggets in there that I want to make sure we
don\'t lose.

MR. SHARPE: Yes. But I think it\'s useful to figure out who we need to
hear from.

MR. PERRY: Okay. And I think what we\'ve done \-- I know you started it
there, but I think we\'ve just \-- To some extent, we\'ve revalidated
the order in which we\'re doing this as far as information with maybe a
little more variation on this thing than we had from the last time and
so I think unless anybody is in disagreement it appears we still want to
do it basically in the same order with the stakeholder expectations,
roles and responsibilities.

MR. ALLEN: That goes under expectations I think.

MR. PERRY: Okay. It\'s sort of a further refinement, more of that. So we
can easily make the next session into continuation of this plus role and
responsibilities. We\'re not out of scope of what you announced.

MR. SHARPE: Okay.

MR. PERRY: And then we have the last one that we had scheduled in August
was fair and reasonable price determination.

MR. ALLEN: Ding, ding, ding. I tell you what. That takes care of the top
three up there.

MR. SHARPE: So why would we not use the time here to figure out the
groups we want to hear from and maybe some data requests.

MR. ALLEN: And I think also that any conclusion \-- I agree with that,
but any conclusions we come to ought to be cumulated with the issuance
of formal invitations from this panel to whomever it is that we decide
we want to hear from.

MR. PERRY: As a way to get them here.

MS. JONES: Right. I agree.

MR. ALLEN: I have here \-- I think some of the people we want to hear
from are customer agencies. I have a list of about five different
customers that are potential ones for the group to look at. I apologize
that I only have this copy and one other.

(Off the record comment.)

MR. ALLEN: Sure. Elaine Rasmussen who is with the Army Contracting
Agency. Maybe I won\'t read the individual people. Maybe I\'ll read
this, the VA \--

MS. NELSON: Can I make a point? Elaine Rasmussen is not with \--

MR. ALLEN: Okay.

MS. NELSON: Elaine Rasmussen is with FAS.

MR. ALLEN: All right. Well, the Army Contract \-- That\'s right. I see
that now. The winner was the Army Contracting Agency.

MS. JONES: Is that AMCOM?

MR. SHARPE: Which is now the Army Contracting Command.

MS. JONES: Is that AMCOM?

MS. NELSON: AMCOM.

MR. CHVOTKIN: No.

MS. NELSON: No?

MR. CHVOTKIN: No, it\'s not AMCOM. Army Contracting Command now part of
the Army \--

PARTICIPANT: Material Command.

MR. CHVOTKIN: \-- Material Command. Thank you.

MR. ALLEN: The VA National Energy Business Center. The DOD Enterprise
Software Initiative and I apologize for not having a better
classification here for this one but it\'s at least one part of the U.S.
Department of Education. And what I\'m reading off of here, that
doesn\'t say, I\'m afraid to say it, the part that makes good use of
small business. That\'s the one, these are people who we know are
interested customers in the schedules program and are actual users of
the program. These are people who have won awards for being good users
of the schedules program from a variety of walks of life.

This list is not meant to be exhaustive and I don\'t have any personal
stake in it. I\'m just offering these opportunities up as ones that I
know we\'re interested if that helps the group forward the discussion.

MS. JONES: I\'d like to add AMCOM to that.

(Off the record comments.)

MS. THOMPSON: I have question in regards to the list you just mentioned,
Larry. In light of the fact that we want to hear from a multiple number
of stakeholders and realizing that there\'s different constituencies.
Can you pinpoint areas in which they would be representative of MAS
customers, for instance, in the use of particular schedules or in their
use of teaming?

MR. ALLEN: Yes.

MS. THOMPSON: Or BPAs or some area that we use them as representatives.

MR. ALLEN: Sure. I can say what they won awards for last November. The
Army Contracting Command was cited as most effective use of FAS in
support of a critical agency mission. The \--

MR. SHARPE: Who are the awards from?

MR. ALLEN: This is an awards program that sponsored by the Coalition
Federal Computer Week with the government portion supported by GSA\'s
Federal Acquisition Service. That\'s probably language that Thedy
actually approved.

(Laughter.)

MR. ALLEN: Let\'s see. The VA National Energy Business Center won for
most critical use of GSA support of civilian agency mission. The
Education Department won for best use of small business. Richard
Galloway was listed as the person for the Department of Education.

PARTICIPANT: Federal Student Aid.

MR. ALLEN: Federal Student Aid. So small business. And then the \--

MR. PERRY: They use the \-- That was for use of the schedule for debt
collection.

MR. ALLEN: Right. And then the Enterprise Software Initiative won the
award for having been loyal, long-time users and innovative users of the
schedules program.

MR. FRYE: Do we have a representative cross section there? Do we have a
user that buys stuff versus services?

MR. ALLEN: That\'s a good question. I don\'t know the answer to that.

MS. BROOKS: This one is just software and I think some services here,
but I know it\'s software.

MR. ALLEN: Yes, I\'m not talking about software here. I\'m talking about
in our business, for instance, medical/surgical supplies or pills and
portions, pharmaceuticals, somebody that actually buys stuff.

MS. NELSON: Jan, perhaps you could suggest \--

MR. ALLEN: Absolutely, this is list is not meant to be exhaustive, just
as a help to get us started on a discussion.

(Off the record comment.)

MS. NELSON: I know Elliott pulled a list of the top ten DOD Procurement
Office programs for use of schedules and he was going to see what he
could do about contacting some of those program offices and that NAVSEA
is one of those top ten.

MR. FRYE: I might suggest the Pharmacy Benefits Program from the VA.
Have the folks from Pharmacy come in and talk about their use of the
Schedules.

MS. SONDERMAN: I\'d like to pointedly ensure we get at least one or two
of the small agencies.

MS. NELSON: I\'m wondering if whether or not small agencies or whether
or not to cover the Office of Small Business Utilization, OSDBU,
Mendoza\'s office.

MR. ALLEN: I think bringing the OSDBU is a good idea. I think you may
also want some small agencies. I think you want \-- who are the
constituents? Maybe OSDBU, the small agencies. You certainly want to
have some DOD, some civilian. You want to get some product and services
coverage. Right?

MS. SONDERMAN: There\'s a small agency council. I\'m trying to think of
the name of it right now that might be a good place to go for the small
agencies.

MS. NELSON: Actually, OSDBU might be a good source. I was actually
recommending and I would agree that OSDBU is a good one. I was actually
recommending, hard to hear the difference, was OSBU, Office of Small
Business Utilization, which is Mendoza\'s office, separate.

PARTICIPANT: Mendoza is with who?

MR. ALLEN: GSA.

MS. NELSON: GSA.

MR. SHARPE: And they\'re a user?

MS. NELSON: No.

MR. SHARPE: Because we\'re listed under customers.

PARTICIPANT: They\'re a stakeholder but they\'re not a customer.

MS. NELSON: Yes.

MR. SHARPE: Fine. Right. We\'re going to get other categories of
stakeholders.

MR. PERRY: I think right now we\'re talking about those people, I
believe, who are actually ordering the ordering unit.

MS. NELSON: Sorry about that.

MS. JONES: I would like to add to that MARSYSCOM. They\'re a presenter
at MARSYSCOM.

(Off the record comment.)

MS. JONES: M-A-R-S-Y-S-C-O-M. They present at our Expos a model for
teaming arrangements and they do that very well.

MR. SHARPE: Who are they?

MS. JONES: MARSYSCOM.

MR. SHARPE: No, I mean it\'s a vendor. It\'s a part of government.

MS. JONES: It\'s an agency. It\'s a customer agency.

MR. SHARPE: Okay.

MS. JONES: Yes.

MR. ALLEN: We had also \-- Well, we\'re talking about people who order.
So I was originally going to say GAO but \-- They order I guess but they
would come in a different capacity.

MR. PERRY: Different stakeholder.

MR. SHARPE: Right.

MR. PERRY: Different type of stakeholder.

PARTICIPANT: Do we have waterfront covered?

MR. SHARPE: I think we want to \-- I think the object is to test the
list. Do we have products covered, services covered? Do we have DOD,
civilian, small agency? I don\'t know which is products and services.

MR. FRYE: I\'m from the VA and I have no idea what the National Energy
Business Center does. But Mr. Allen has their name there as a winner.

MR. SHARPE: They do good work.

MR. PERRY: They must do good work.

PARTICIPANT: It\'s the leadership.

MR. PERRY: There\'s no problems. That\'s why you don\'t hear about them.

MS. NELSON: Jan, get with the program.

MR. SHARPE: Can someone help with like P&S? Which of these do you think
are products coverage and service coverage or both?

MS. NELSON: Can I \--

MR. ALLEN: Let me see what I have here.

MR. SHARPE: Because I think we all agree that they\'re different beasts,
right, product and then services.

MS. NELSON: In some cases, you know you\'re not going to be able to
definitely get them. A lot of them are integrated solutions.

MS. JONES: As far as the products go though, we could contact New York,
Region 2 and Region 6, and ask them about some customer agencies here or
Region 7 and come up with some to represent the products.

MR. ALLEN: I think the Army Contracting Command is a product group. It
says here they bought without any apparent irony a steady stream of
bleach.

MS. JONES: That was somebody\'s nomination.

MR. ALLEN: Right.

MS. JONES: Yes, they\'re a model for teaming arrangements, too, and
BPAs.

MR. FRYE: The VA\'s Pharmacy Benefits buys about \$5 billion worth of
pills and portions a year, hefty stuff.

MR. ALLEN: And then the Department of Education, they use the services,
FABs particularly.

MR. SHARPE: Do we want to leave OSDBU under the customer list or are
they \--

MS. NELSON: No.

MR. SHARPE: They\'re going to be coming in from a different stakeholder
vantage point. Right?

MS. JONES: Right.

MS. NELSON: Correct.

MR. PERRY: Here\'s what I \-- let me throw something out. Here\'s what
my expectation would be fulfilled if at the next meeting and maybe, Pat,
you can help try to make that happen as far as I\'d like to hear from a
variety of users from the small and large agencies for a good sort of
representative sample of each of the schedules.

Obviously, we\'re not going to hear from all of them, but you could of
the types \-- Make sure you have a good sampling of different, some
major, sort of your big product ones and then your big service
categories where you seem to be \-- where the business seems to be
coming, where the flow of business is coming through.

MR. ALLEN: I think you\'re right. I think you have the DOD people, the
Enterprise Software Initiative. They\'re very familiar with Schedule 70.
I think Jan\'s idea of having somebody in from the VAPBM is very, very
good indeed. I think that will give everybody a very good perspective on
the schedule we don\'t often hear from in the broader community.

MS. NELSON: I think we should try and maybe perhaps have a FABS or a
MOBIS.

MS. JONES: Well, that\'s what the AMCOM and MARSYSCOM people do. They
contract for a broad spectrum of the professional services.

MS. NELSON: Right. I would be a large supporter of having AMCOM in and
I\'m reasonably certain they would come up from Huntsville. Goodness
knows they call us down to Huntsville on a regular basis.

MS. JONES: You do that. \-- IT to that list.

MS. BROOKS: So the \-- that\'s going to be products.

MR. PERRY: Right.

MS. BROOKS: Seventy, you\'re going to get a mixture of services and
products. Eighty-four, you\'re going to get that mixture and 84, you
know, is the security. So you get a different flavor from the products
that you would get on 70 because 84 is buying the boats, the \--

MR. SHARPE: Guard dogs.

MS. BROOKS: Yes, those kinds of things and, of course, MOBIS and so then
what I \-- What you\'re recommending, I do \-- to see if we can get
customers, if I can get customers, from these, at a minimum right now,
three or four schedules to talk about their experiences, products or
services, whichever.

MR. SHARPE: Okay. Then \--

MR. ALLEN: Go ahead.

MR. SHARPE: I\'m sorry. Go ahead.

MR. ALLEN: No.

MR. SHARPE: Just if you could I think DOD might have a different view
than civilian and small agency.

MS. BROOKS: Right. Okay.

MR. SHARPE: If you could get DOD, those three across that small \-- that
column.

MS. JONES: And that\'s what AMCOM and MARSYSCOM are. They\'re DOD
activities, DOD agencies.

MR. ALLEN: And I would really also recommend adding pharmaceutical to
that. I think that\'s important.

MS. JONES: And then one category to make sure we include is the customer
that orders services, but not necessarily \$1 or \$2 million type
orders. There are customers who order services that, you know, fall
within the simplified threshold where \--

And where I\'m going with this is that if the order is under \$2500 they
can select a contractor and go with that. So we\'re talking basically
about awarding on initial offer and that kind of addresses part of your
question.

MR. PERRY: \$25,000 or \$2500.

MS. JONES: \$2500. \$3,000.

MR. PERRY: You meant \$3,000.

MS. JONES: \$3,000. I\'m sorry. It went up. Yes.

MR. PERRY: But that\'s a good point.

MS. JONES: The \$3,000, the smaller agencies that would order services
under \$3,000.

MS. BROOKS: The micro purchase schedule.

MS. JONES: Right. The micro purchase. I know, but I\'m saying they\'re
likely to award on an issue without seeking further competition.

MR. PERRY: And there were two other thresholds, aren\'t there? There\'s
the \$2500.

MR. ALLEN: There\'s \$100,000 and then above \$100,000.

MR. PERRY: And above the maximum order.

MS. JONES: Above the maximum order, your very large orders.

MR. ALLEN: Good point.

MS. JONES: Of anything between \$2500 and the maximum threshold requires
\-- I\'m sorry. \$3,000. I keep saying \$2500. \$3,000 still requires
competition. So it really doesn\'t matter.

MR. PERRY: Between the \$3,000 and the \$100K?

MS. JONES: There is no \$100K under the ordering procedures.

MS. BROOKS: I think he\'s thinking about the simplified acquisition
threshold.

MR. PERRY: Right. There are some differences in what you do if it\'s
less than \--

MS. JONES: Not under FAR Part 8. Not under the ordering procedures.

MR. PERRY: Okay. So it\'s \$3K to the maximum order.

MS. JONES: Right. Yes. That\'s the range.

MR. SHARPE: So I think Jacqueline makes an excellent point. Get
something you can. Some people with under \$3K orders and people above.

MS. THOMPSON: I think that addresses kind of the onesies/twosies, too,
because those would be \--

MR. SHARPE: Yes.

MS. BROOKS: Okay.

MS. NELSON: Can we move onto other stakeholders?

MR. PERRY: Here\'s another thing I\'d like to possibly do if we can. Are
the particular questions, Tom I think or somebody else brought it, who
are these folks?

MR. SHARPE: Yes.

MR. PERRY: Are there particular questions we want to ask them to come
and make sure they address?

MR. SHARPE: I think so. The first one is, you know what, what is their
expectation of the schedule.

MS. NELSON: Well, I think that\'s a very broad question. So perhaps we
can \--

MR. SHARPE: Let\'s make it better. Yes.

MS. NELSON: Okay.

MR. SHARPE: How do you use the schedule? Why do you use it?

MR. PERRY: How do you price? What do you perceive the value of the
contract stated price?

MS. JONES: Rather than how do you price, wouldn\'t we want to know how
they see competition?

MS. NELSON: Yes. I think we\'re kind of leading the discussion here.

MR. SHARPE: I\'m okay with that.

MS. THOMPSON: Yes, what is their perception of price?

PARTICIPANT: Leading the witness.

MR. PERRY: Again, I want to hear how they\'re using.

MS. NELSON: Right.

MR. PERRY: For example, I want to hear their perception or what they\'re
doing with the contract stated price for the schedule contract.

MS. NELSON: Okay.

MR. PERRY: And what they\'re doing after that and what that\'s looking
like,

MS. NELSON: Okay.

MR. SHARPE: It\'s just a dumb question, though. You could have \-- I
acknowledge the larger point, but you could have a noncompetitive award.
Right?

MS. NELSON: Absolutely. I mean, not if they\'re DOD essentially.

MS. THOMPSON: Under the micro process.

MS. NELSON: Under the micro process, but, you know, we have \-- We
absolutely give guidance at Section 803, It prevails even under Schedule
5. Right? So I would suggest a question such as how did they seek
competition when appropriate when using schedules. Did they seek and how
do they seek? I would also since we\'re going to expectations and
training is have they received internally or from GSA appropriate
training on the use of schedules.

I mean, as coming from GSA, these are key questions that I myself would
have. I\'d also like to know outside of the actual price are there \--
do they \-- what \-- I\'m trying to figure out how to phrase this and
perhaps somebody could wordsmith it. But I\'d like to go to best value
in some fashion. What components of \--

MS. SONDERMAN: Do they do best value or do they do low price?

MS. NELSON: Well, no, beyond that. Are there \-- What components of GSA
\--

MR. SHARPE: The broader value proposition.

MS. NELSON: The broader value proposition. So what components of the \--
inform their best value procurement, something to that effect and
perhaps somebody could better wordsmith it than myself.

MR. SHARPE: Why did you use GSA?

MS. NELSON: I know but that\'s too broad of a question. In other words,
we want to be able \-- because otherwise we\'ll get nine different
answers that don\'t address the same thing and I think we\'re trying to
drive a question that \--

MS. JONES: Can I make a suggestion? Can we make this performance based
and focus on the outcomes that we want from the stakeholders rather than
specifically guiding them to specific questions. Just let them know the
outcome that we want.

MR. SHARPE: Give an example.

MS. JONES: Give an example.

MR. SHARPE: What do you think?

MS. JONES: An example would be tell us how you issue your RFQs for the
services that you buy and let them describe that to us and if we have
specific questions in that process, then we can focus in on those.

MS. NELSON: I think the data call would be just too broad. I think again
we would have nine different customer agencies or customers come in with
very different responses.

MS. THOMPSON: I\'m thinking we really need to tie this to our FAR
regulations. We\'ve issued regulations telling ordering activities how
to issue their orders. So if there is some concern there, we need to
know. Are they clear enough? Do they provide adequate instruction for
you? Is there an area that you would like to see addressed that hasn\'t
adequately been addressed? That\'s where the rubber meets the road in
terms of ordering activities, our regulations in Part 8.4.

Contractors\' price lists should indicate whether or not this is a
schedule that requires that issuance of a statement of work. Are you
finding the price list adequate for you if you\'re not going to GSA
Advantage? Those are the type of issues that I think we would want to
know about so that we can modify or consider making some changes.

MS. NELSON: I think we should ask them Tom Sharpe\'s question outright.
I think we should say \"Do you have confidence?\" I think we should put
to them Tom\'s question, even to our super users that we ask to come in.
Do you have confidence? And these are people who are going schedule and
they clearly are looking for better pricing when they have large buys.
Do you have confidence that as a base starting negotiating position that
GSA has negotiated most favored customer?

MS. THOMPSON: We tell them in 8.404.

MS. NELSON: I understand, but \--

MS. THOMPSON: No, I\'m following up. I\'m just saying that we actually
do say it here that \"GSA has already determined the prices of supplies
and fixed price services and rates for services offered at hourly rates
under schedule contracts to be fair and reasonable.\" So basically what
you\'re saying is do you agree with that.

MS. NELSON: I know. So Mr. Sharpe is asking whether or not (a) is it
being done and (b) is there a level of confidence in that.

MS. THOMPSON: Right.

MS. NELSON: And I\'m thinking that since we\'re bringing in the customer
agencies that are using it and one of the things that I think that we
should get at is whether or not the agencies that are using it have a
level of confidence that that\'s being done because they are using it
and the assumption is that when they are using it they also as warranted
contracting officers are doing a determination of fair and reasonable
before they\'re signing their 1449 that we should ask them flat out. I
mean, I think if we\'re going to ask them to come in that is one of the
important questions that we should be asking them.

MS. SONDERMAN: Yes, it\'s going at the confidence not necessarily the
regulation, but the confidence they have about that issue or whether
they even thought about it, whether it\'s just a presumption.

MS. NELSON: I think it\'s important. Tom has raised it and \--

MS. THOMPSON: I\'m not disagreeing with you. I\'m just stating it from a
regulatory standpoint.

MR. PERRY: From what extent do they rely upon that to what you had
stated in regulation?

MR. SHARPE: I\'m not \-- I think it\'s a good question to ask them. But
I think from their standpoint I think it\'s more the reliance than do
they think GSA complies with FAR. Because I think \-- My broader
question was posed to GSA how they support that. So from a customer, I
think it\'s a reliance on that.

MR. PERRY: To what extent do they rely on it, yes.

MS. JONES: But aren\'t we trying to gather information for these other
groups like what are your expectations of the GSA schedules?

MR. SHARPE: Yes.

MS. JONES: What pricing techniques do you use when you place orders
against the schedule? For example, do you rely on GSA Advantage? Do you
use eBuy?

MR. ALLEN: Yes. I think we need to be very careful about asking these
people 50 questions. Otherwise, we\'re never going to get anybody to
come to the panel.

MR. SHARPE: They won\'t come.

MR. ALLEN: In fact, I think we\'ve kind of maxed out generally where we
are on the top end of what we think is good to ask. If people get a five
page letter from us saying we want you to ask these 50 things, the first
thing they\'re going to do is turn it over to their agency general
counsel. So we don\'t want to do that.

MS. NELSON: Well, I\'m not suggesting that all of the questions \--

MR. ALLEN: I think we can ask questions when they get here about that
type of thing.

MR. PERRY: I want them to come and say \-- I was thinking that they
would come and talk about the initial things we talked about. I\'m a
little leery about starting to get into where you\'re kind of saying,
\"Well, you have to give us some\" \-- Oh, I\'m sorry. Okay. Putting
people in the position where they have to make a choice about how
they\'re being perceived as far as either positive or negative made
potentially critical of the structure that they\'re having to work with
and I\'m of concern that \-- I want them to just come and talk about how
they\'re using the schedules and not get into a judgment as to whether
it\'s right, wrong or whatever.

MS. SONDERMAN: We could just make this a list of topics we would like
them consider.

MR. PERRY: Right.

MS. THOMPSON: We may get something totally different in their response,
but we could make this this is the type of things we\'re looking to know
about.

MR. SHARPE: Yes. Flip it. These are the questions we\'re contemplating.

MS. THOMPSON: I like that.

MR. SHARPE: Any help, any insight, they can bring vis à vis the
questions we\'re faced.

MS. JONES: But do we want to know if the schedules are meeting their
expectations and how do we get that information?

MR. ALLEN: I think that that will be implicit and if we can get them to
answer even half of these that will be implicit in that, particularly if
they volunteer to show up.

MR. FRYE: One of the questions I would ask if we\'re making a list of
questions here is are you familiar with any voluntary or involuntary
reductions in contract price.

MR. ALLEN: Do you see \--

MS. NELSON: At what level? At the contract level?

MR. FRYE: Do you seek price reductions? I mean, for instance, our
Pharmacy Benefits folks are going to know something about that, if there
have been \--

MS. NELSON: At the contract level?

MR. FRYE: Right down at the program management level.

MS. NELSON: Right, but \--

MS. SONDERMAN: That\'s the task order level. It\'s not the contract
level.

MS. NELSON: Right, that\'s what I\'m asking, at the task order \--

MR. FRYE: Absolutely.

MS. NELSON: Right. I\'m trying to clarify.

MR. FRYE: Because sometimes we receive millions of dollars worth of
rebates from the contractor voluntarily.

MS. NELSON: Right.

MR. FRYE: And sometimes we get them involuntarily.

(Laughter.)

\$18 million last year for involuntarily.

MR. PERRY: Is that pretty good for customer? That\'s quite a list for
customer.

MR. ALLEN: That\'s good and then maybe we could have somebody work with
Pat on making sure we identify people from those agencies who we would
like to have come so that you don\'t have sort of Pat doesn\'t have to
go fishing for it.

MS. SONDERMAN: I can do that \--

MR. ALLEN: There we go.

MR. PERRY: List the other groups of stakeholders.

Yes, one of the things, I don\'t now, I can leave it to the end. I
think, Tom, we could probably also leave here agreeing to once we have
this we can do some reaching out to the community and see if we can\'t
make any appeals to folks to get the input back once we know what it is
we want them to come talk about.

MS. NELSON: I would rephrase from \"do you seek price reductions\"
because price reductions specifically reference the price reduction
clause. I would say \"Do you see additional discounts?\"

MR. PERRY: Okay.

MS. NELSON: Because the price reduction is referencing our price
reduction clause which is a commercial trigger. So do you seek
additional discounts?

MS. THOMPSON: And I would like to know how \--

MS. NELSON: And at what level. And I do know because we have \-- we do a
customer satisfaction survey and one of the things that we find in there
is that customers seek sometimes above the MO, above the maximum order,
and sometimes don\'t seek below the MO even though they are certainly
entitled to seek below the MO and that\'s a training issue.

MS. THOMPSON: I would like to know how they use the schedules program.
Do they use eBuy? Do they use GSA Advantage? Are they \--

MR. ALLEN: All good questions.

MS. THOMPSON: \-- issuing RFQ? What was that? I didn\'t hear you, Larry.

MR. ALLEN: I think those are valid, but I\'m very concerned that if they
get a five page letter from us rather than \--

MS. THOMPSON: You\'re talking about data.

MR. ALLEN: Yes, but rather than getting meaningful answers back. I
understand and I want to know those things, too. I just want to be
conscious that we\'re asking them to come spend their time on a \--

MR. PERRY: This is getting \-- I think you\'re getting back to what I
was talking about. I think I want to \-- I was looking to separate the
means of how you get there with these other issues I think above that
because everybody has different ways of doing all that stuff and you may
or may not use these additional tools that GSA has provided in order to
get there. But you could ask, I suppose, how they use that for
information gathering.

MS. THOMPSON: Yes, I think it\'s important.

MS. JONES: It is important and I \--

MR. PERRY: Where did they get the information?

MS. JONES: Because that\'s relative to the pricing techniques and the
competition issue that\'s up there and I agree that asking them how they
use the schedules and why they use the schedules can tell us a lot about
their expectations.

MR. ALLEN: Right. I think we have it covered. Those are ten good
questions.

MR. PERRY: Okay. Next stakeholder group.

(Off the record comment.)

MR. ALLEN: I think it depends on how many people we get to come. We can
kind of be a little fluid in that I suppose.

MR. PERRY: I think we\'ve asked on more than one occasion \-- We really
wanted to hear from the audit or IG community on their perspective on
this and I know you haven\'t had any success so far.

MS. NELSON: Actually \--

MS. BROOKS: (Off the microphone) Yes, I did. The GAO has asked to come
to the July session and for the July session, they\'re going to cover
all three of the areas on negotiating \-- they need more than an hour to
cover all three areas. That\'s the term and I\'m going to work with. So
I have some contact \--

MS. NELSON: What about Andy Patchen\'s office.

MR. ALLEN: I was going to recommend inviting Andy Patchen. I was also,
believe it or not, going to recommend inviting Maureen Regan.

MS. BROOKS: Isn\'t Andy in the same office as Bill Woods \--

MS. NELSON: No, Andy Patchen is Brian\'s \-- is GSA\'s OIG and to my
knowledge they have not been issued a formal invitation.

MS. BROOKS: Well, we have not issued a formal invitation to anyone.
People have called.

MR. ALLEN: That\'s what I think we\'d like to see, a formal invitation
issued to Andy Patchen who is the Director of Audits and the GSA IG
office as well as to Maureen Regan. Andy is Director of Audits and
Maureen is the Counselor to the VA IG.

MR. SHARPE: Could they talk to the pre-award work?

MS. NELSON: Yes.

MR. SHARPE: And any price reductions they\'ve done?

MR. ALLEN: Yes.

MS. NELSON: Yes.

MR. PERRY: Maureen Regan counseled the VA IG.

MR. ALLEN: Counsel to the VA IG and you could tell her that I
recommended her.

MR. PERRY: I\'m going to do that.

MS. NELSON: Trying to earn some points on that.

(Laughter.)

MR. ALLEN: Just take some pins out of the Kewpie doll.

MS. NELSON: I have a few others. I think that we should invite either
Shay Assad or a representative from his office. I would issue the
invitation to Shay Assad to DPAP.

MR. SHARPE: As a customer? How do you mean that?

MR. ALLEN: He\'s a stakeholder.

MS. NELSON: He\'s a stakeholder.

MR. SHARPE: Okay. So as a mega customer?

MR. ALLEN: It\'s S-H-A-Y A-S-S-A-D.

MS. NELSON: Not only are they a stakeholder but GSA, NASA and DOD make
up the FAR Council.

MR. SHARPE: Right.

MS. NELSON: So it\'s both a stakeholder, but RCAO and Shay Assad and
NASA service the FAR Council. So it\'s more than just \-- I would say
more than just a customer. But it speaks to the FAR regulations. GSA
works very hard to work in conjunction with the DFARs as well.

MS. SONDERMAN: Division stakeholders.

MS. NELSON: Correct, and there are several other. We have a DOD/GSA
working group and try and serve the needs of the customers in
conjunction with multiple requirements there.

MR. ALLEN: There had also been some discussion as to whether we did or
didn\'t want to invite some oversight staff from the Hill. I don\'t know
how the panel thinks about that.

MR. PERRY: Well, I think our GSA colleagues have said that that drives
some of their reasons why they do some of the things they\'ve done. I
thought that was a way to address that. So I guess if you could, I
don\'t have any issue with that.

MS. NELSON: I did talk to Elliott prior to his departure and he and I
were going to speak with probably Mr. Bibb and Mr. Williams for some \--
because it\'s sort of a small pea political requirement in some of those
invitations and both invite some of the minority and majority
stakeholders there from the Hill.

MR. SHARPE: Do we want someone from GSA that could talk to the pricing?
How they ensure MFC? I\'m suggesting a senior person who is responsible
for it.

MS. BROOKS: I\'m sorry. I missed you.

MR. SHARPE: Someone who could speak to how GSA ensures we get the MFC.

MS. BROOKS: That would be a contracting officer.

MR. SHARPE: No. An executive responsible for it.

MS. NELSON: I would say that that would come back to the office in which
I sit which is the Office of Acquisition Management which issues the
internal guidance.

MR. ALLEN: Steve Kempf is the \--

MS. JONES: Steve Kempf.

MR. ALLEN: \-- who we heard from yesterday would be the person.

MS. NELSON: He\'s the Assistant Commissioner that\'s over the Office of
Acquisition Management.

MR. PERRY: I was thinking on roles as we slip in from stakeholders into
roles and responsibilities if somehow we can work in \--

MR. ALLEN: That\'s a good idea.

MR. PERRY: \-- a definitive presentation from sort of what I call sort
of \"the top of the hill\" at GSA as to how this is supposed to work
because I think what we get is we got presentations from different
components and I think it\'s left \-- My perception is that it\'s left
some of us on the panel a little kind of all over the place as to
what\'s going on. So I think it would be good if we could get someone to
do that that speaks for everybody as to what\'s happening and how
that\'s supposed to work \--

MS. NELSON: In August?

MR. PERRY: \-- and elaborate on that.

MS. NELSON: In August?

MS. JONES: How it\'s supposed to work? I\'m not clear. How what is
supposed to work? MFC pricing policy or what are we asking?

MR. SHARPE: I don\'t want to come full circle but to me it\'s probably
the biggest pricing program in the country. I\'d like someone to speak
that has some authority and ensure that pricing is whatever.

MS. JONES: I don\'t \-- I told you that earlier, Tom. Do you need that
from Steve Kempf or Jeff Cosis or somebody at a higher level?

MR. SHARPE: Yes. Is this is a core GSA business function?

MS. JONES: Did Steve not cover that yesterday?

MS. BROOKS: (Off the microphone) I\'m going to take this up with \-- and
Jim Williams.

MR. SHARPE: I don\'t believe he covered that yesterday.

MS. NELSON: Okay.

MS. BROOKS: I will take it up with Steve and Jim.

MS. NELSON: Okay.

MR. SHARPE: And, Glenn, if it makes better sense under the roles and
responsibilities section, I\'m fine with that.

MR. PERRY: I\'m just saying that\'s what I was thinking that roles, at
some point, how we segue. That\'s sort of a segue into that.

MS. NELSON: Maybe Steve Kempf or maybe Patricia Pearson or the Services
Steve\'s deputy.

MS. THOMPSON: I\'m still unclear as to what the topics would be
specifically that these particular representatives would be asked to
address.

MR. SHARPE: Which representatives?

MS. THOMPSON: Mr. Kempf or Mr. Williams or \-- I\'m not \--

MR. PERRY: Everything. Can I just speak personally? Every time there has
been \-- My goal, one of my things, I had said at the beginning is I
want to have some clarity from out of this process about what the agency
can rely on, what\'s happening at GSA as far as the schedules and the
pricing. So I\'m clear as to what else has to be done at the agency and
in response that some folks from, the various folks that have spoken
from, GSA in some areas that I feel we\'re kind of poking at as to try
to get some consistency there I personally have heard some differing
views of what folks are doing and it leaves me with this not quite
knowing what to expect.

So I think that\'s what I\'m looking for, someone to say this is what\'s
supposed to be happening and where we have expectations, GSA has an
expectation, that these are the areas where we expect the agency to pick
it up from in this ordering process and I just \-- based on whoever
speaks, whether you speak from your, I\'m sorry, from some of your
respective individual roles has left me kind of still looking for what
is everybody sort of trying to achieve collectively.

MS. JONES: Are you basically talking about a program overview of the
schedules?

MR. PERRY: I\'m still \-- I think I\'m still, yes, looking not for
program overview. I\'m still trying to get a picture of what
collectively GSA sort of puts towards this getting towards the pricing
that is then ultimately put onto the schedule.

MR. SHARPE: And how is it policed?

MS. NELSON: Okay.

MR. SHARPE: And is it policed?

MS. NELSON: Gotcha.

MR. SHARPE: What\'s been the experience?

MS. NELSON: Okay. I think we have it. I would also recommend that we
ask, I put this forward before, GSA Office of Small Business Utilization
and/or SBA which we consider both to be strong stakeholders, either one
of them to represent the small business or not just small business but
socioeconomic concerns.

MR. PERRY: Yes, I would almost opt that \-- I guess I\'d like to hear
from SBA on this because I would have to recognize that if was the GSA
that person probably is going to give us as it relates to GSA, but I
don\'t know if they\'re going to give us how it relates to \--

MS. NELSON: So why don\'t we go to SBA directly? I think we could
probably go directly to SBA.

MR. PERRY: Sure.

MR. ALLEN: I would suggest that I think it\'s important to hear from all
of those stakeholders and I would not suggest lopping off any one of
them. However, I would also point out that that is a rather ambitious
amount of people to hear from. I don\'t know that we have \-- when we
have so many panel members absent it\'s appropriate to talk about
scheduling extra meetings.

But I would insert at this point of the discussion that it is quite
likely that given the ambitious agenda set forth here that that will be
a requirement and that it is something that we perhaps do want to
discuss between meetings or certainly at the next meeting.

MR. PERRY: I think you\'re right. I think the only thing I\'m doing
right now and some of us are just personally \-- we didn\'t do it the
last time and we got under what we expected.

MR. ALLEN: Right.

MR. PERRY: So I guess we\'re going over it right now and hope it comes
out that it\'s \--

MR. ALLEN: And I think that\'s the exact right way to go.

MR. PERRY: But, yes, I would say we may have to \-- We\'re going to have
to leave ourselves open to the possibility we\'ll have to make more time
available.

MS. NELSON: Right. I think we were all \-- I mean, I would agree. I was
underwhelmed. I was pleased with the amount of industry representation,
but disappointed in the amount of customer based and stakeholder based
representation that we got.

MR. PERRY: Who else do we need to hear from? Who do we want to hear from
that\'s not on the list so far?

MS. JONES: I have one question. If we\'re going to invite our Office of
Small Business Utilization, why are we going to invite SBA, too?

MR. SHARPE: I think it\'s the opposite. I think the idea \-- I think we
got the SBA because I assume your OSDBU is GSA focused or your spending.

MR. ALLEN: Yes.

MR. SHARPE: So SBA would give the whole government look.

MS. NELSON: What is the feeling about OFPP?

MS. THOMPSON: Can we go back to SBA before? What specifically are we
looking for from SBA in terms of feedback?

MR. SHARPE: The importance of small business to the schedule.

MS. NELSON: How about the importance of the schedule to small business?

MR. SHARPE: Better said.

MS. NELSON: Or does the schedule have \-- does SBA \-- What value does
the schedule have to small business? What value does small business
bring to the customers through schedules and do they have, you know \--
Are they able to provide evidence of that through their experience that
they can provide?

MR. SHARPE: So to the comment in OFPP, I had suggested to Leslie Fields,
a staffer there, that she might want to contact Pat. Because I think I
mentioned at a prior meeting, OMB has led an initiative to look at the
case for change around standard skill descriptions for IT skills. That
would be only one OFPP member. Is Leslie still there?

MR. ALLEN: As far as I know.

MR. PERRY: I guess she\'s back.

MS. BROOKS: The skills for the acquisition?

MR. SHARPE: IT skills. Yes, do you have standard skill descriptions for
IT skills? There\'s been a study done of the \--

MR. ALLEN: And I think you can also broaden that out a little bit and
ask OFPP how it views schedules vis à vis GYX vis à vis MAS.

MR. SHARPE: Maybe MAS alone?

MR. ALLEN: Absolutely.

MS. THOMPSON: Are we going to provide each of the proposed speakers with
a list of questions in advance so they will know the scope of their
presentation so that it will be useful, what we receive will be useful?

MR. ALLEN: I think that\'s why we\'re going through this exercise.

MS. THOMPSON: Yes.

MR. ALLEN: I would hope that the letter or whatever communication we
would send would include these things in it.

MS. NELSON: I like Tom\'s comment that we rephrase it to our areas that
we\'re looking into and anything that they could provide to us vis à vis
our areas of explanation.

MR. ALLEN: Right.

MS. NELSON: Rather than saying, \"Here are the things we want to hear
from you.\"

MS. THOMPSON: Though it might be helpful to them.

MS. NELSON: Right.

MS. THOMPSON: You know, it\'s a broad universe.

MS. NELSON: Mr. Perry.

MR. PERRY: Yes.

MS. NELSON: May we take a 15 minute break?

MR. PERRY: Sure. I just wonder. Is this a natural end to what I think we
have here? So we\'ll take a break. We still have \-- We\'re going to
come back to data needs and then maybe think about anything about this
that you may want to add. We\'ll just do quick at the beginning when we
come back. Okay.

And why don\'t we do 15 minutes? Is that good?

MS. NELSON: What time is it?

MR. PERRY: It\'s 3:00 p.m.

(Whereupon, at 2:58 p.m., the above-entitled matter recessed and
reconvened at 3:21 p.m.)

MR. PERRY: We try to sort of work towards wrapping up here for today.
But I know we have to get through a major item.

Before I go there, while we were breaking and collecting our thoughts,
is there anything about what we just did that anybody wants to clarify
or add to or take away from?

(No verbal response.)

I know that Pat and I talked just so you know on the invitations of the
requests and the questions. I think we\'re sensing we\'re going to have
to somehow work that and circulate to folks. Before we do that, there is
some concern about what kind of response that will get or not get based
on how those are put out to people. So I think you\'re probably going to
be getting something that you want. The only thing I\'m struggling with
here because we said we would do everything in any public meeting how we
would do that. Any suggestions or how folks think we ought to handle
that?

MS. NELSON: I think \-- I don\'t know if it would need the \-- I\'m not
an expert on FACO regulations but I\'m wondering if the end result, if
the questions at the end result, were posted on the public website, if
that would meet the requirements of our FACO.

MR. PERRY: I think the invitations themselves will probably be made
public.

MS. NELSON: And again, I don\'t know if we\'re actually asking them
questions or whether or not giving them \--

MR. PERRY: Suggested topics.

MS. NELSON: \-- suggested topics of interest to us. But I think at this
point really what we\'re doing is reducing them down to some coherent
areas of interest to us and if we were to wordsmith those down to some
more appropriate language and then those were posted on our \-- We have
a public access site and perhaps that would serve to meet the public
requirements.

MR. PERRY: Okay. And Pat\'s not here. So I\'m assuming \-- Would you
rely and make \-- I\'m just assuming she will handle this appropriately.

All right. Next, we can move on then to data, I guess, data needs. You
will continue to facilitate?

MS. NELSON: I\'ll take down the \-- I\'ll write.

MR. PERRY: And we\'ve all been asked if we say something that you lean
over a little bit more to the microphone when you do speak.

MS. NELSON: I\'m guessing \-- Can you hear me in here?

(No verbal response.)

Are we looking for data needs at this point around our stakeholder
expectations and requirements?

MR. SHARPE: I would think in general. Whatever data this panel thinks.

MS. NELSON: I was just wondering if that wouldn\'t be jumping ahead
since we don\'t know what our stakeholder \-- where our stakeholders are
at at this point.

MR. SHARPE: I would suggest if we have a data thought now make the
request. If you have data thoughts later, I \--

MR. PERRY: I would include everyone here at the table as a stakeholder
also. So they certainly can make their expectations and also make their
data requests just based on our own roles here.

MR. SHARPE: I think I would be interested in how many times we operated
the price reduction clause. How often do we recover pricing, reduced
pricing?

MS. NELSON: I\'m going to tell you that over the 17,000 contracts and
perhaps Jan has something different that\'s happening at the VA but
contractors come in and they will let us know when their basis of award
has triggered a price reduction and they will put in a price reduction
to GSA.

Now I can, as part of the MAS Mod Transformation Project, collect seven
months worth of data and I could provide that because we did a poll on
the internal system to say how many times it was done, you know, how
many times a contracting officer went in and said, \"I\'m doing a price
reduction.\"

Now I can also tell you that that data is to some degree skewed because
until very recently that system did not allow a contracting officer to
denote, to write in, when they were doing multiple modifications. So if
you were Tom Sharpe and Co. and you came in and requested a price
reduction and in addition and a deletion the contracting officer chose
one of those actions to put into the electronic system and then worked
all three of those modification actions. So the system did not always
capture every price reduction that was being worked because they didn\'t
separate those out necessarily. They may have marked them as one
modification action, though they awarded them as three modification
actions perhaps.

So there is some data that can be pulled. For instance, I pulled it
January through July 2007. Okay. But I can tell you that it is somewhat
skewed because until very recently and I mean very recently that data
was accurately captured and as part, I\'m just going to answer this, of
the transformation project one of the things, and you\'ve heard some of
this from Steve, that we\'re doing is altering that electronic system to
have better data so that we know that. Okay.

MR. PERRY: Ms. Facilitator.

MS. NELSON: Yes.

MR. PERRY: Might I suggest that the members put on the board what data
they would like to see. Those will go back to Pat and then how and what
data we get and those certainly or whoever the data source is is
certainly free to provide any caveats or limitations on the data?

Yes, sir.

MR. CHVOTKIN: It might be helpful to have a matrix with these data
fields we\'d like to know by schedule over maybe a two year period of
time or something, the number of awards, the dollar of awards, the
number of transactions in that schedule, to the extent to which we can
identify within each schedule, awards by product or service.

MS. NELSON: Wait a minute. I\'m not keeping up. Number of awards, dollar
of awards.

MR. CHVOTKIN: Right. Product and/or service.

MS. NELSON: So SINs.

MS. THOMPSON: It would be SINs, yes.

MR. CHVOTKIN: The IFF fee per schedule. I think we\'ll find a high,
obviously, the larger the transaction activity, the dollar value, Tom
Essig\'s point, the higher the transaction activity in a schedule, the
higher the IFF. We might find a very interesting distribution of
transactions, dollars and fee collected.

MS. THOMPSON: What exactly do you mean by transaction? Could you \--

MR. CHVOTKIN: Just numbers. One transaction could be \$100 million.
Fifty transactions could be at \$3,000 each or \$5,000. So we may see a
lot of activity by agencies for very little dollar and that\'s okay,
too. It just shows that that particular schedule is being used a lot.

MS. THOMPSON: Okay. Just orders.

MR. CHVOTKIN: Yes, just orders.

MS. THOMPSON: So by transactions, you\'re talking about orders.

MR. CHVOTKIN: I\'m sorry. Yes.

MS. THOMPSON: Okay.

MS. JONES: Do we have that data, the DOSG.

MR. PERRY: Yes, it exists.

MS. JONES: By the NEX (phonetic) code.

MR. CHVOTKIN: And by the schedule module.

MR. PERRY: By the schedule contract.

MS. NELSON: By the schedule number \-- for anything over \$25K to the
extent that they\'ve put it in.

MR. PERRY: Speak into \-- They were asking whether or not the data is
available. It is available in FBDS and again it\'s another \-- Whoever
pulls the data if they want to put caveats, qualifications or whatever,
but supposedly everybody was supposed to be entering what schedule
contract was being used and ought to make those orders. So you should be
able to extrapolate what schedule they were against.

MS. THOMPSON: And so this would be within a certain time frame.

MS. NELSON: I\'m assuming fiscal year \`06 and \`07 because that would
be the last two years that they could be \--

MR. PERRY: Complete years. That the FBDS was validated.

MS. NELSON: Or IFF or awards.

MR. SHARPE: Beyond, as I understand the process, looking at the vendors
we put on schedule, beyond looking at their commercial practice, does
GSA issue any other type of internal pricing guidance around the various
commodities and year on year escalation and is there any of that type of
external look?

MS. THOMPSON: Are you talking about policy guidance in addition to the
FAR and GSAM?

MR. SHARPE: I think so. Yes, it would be in addition.

MS. THOMPSON: Is that \-- We do have \-- FAS does issue internal
guidance to their contracting officers in regards to a variety of issues
implementing FAR guidance or just special information regarding the
negotiation process.

MR. SHARPE: Don\'t you think it gets to like pricing intelligence? You
know, different types of labor is escalating year on year.

MS. THOMPSON: There are documents and generally they are subject to
FOIA.

MR. SHARPE: Is there a way, for example, on a segment of the schedule
where there\'s guidance to track on how that tracks to external
intelligence and monitor the performance?

MS. NELSON: There is. I think that what Thedy is getting to here there
certainly is guidance. I\'m not sure if I\'m putting words in Thedy\'s
mouth. They are internal guidance policies. So they are \-- While
subject to FOIA, we\'re serving two masters here. I\'m not \-- I think
that they could be distributed to the panel under the panel. Our issue
is that everything that we distribute is open for the public.

MR. SHARPE: That\'s okay. I think we can discuss whether stuff can be
supplied or not. But I\'m just trying to understand what\'s available
and if it can\'t be released, so be it. But, for example, if you had a
simple thing. You had pricing guidance that whatever type of labor is
going to go up three percent year on year, do you track your
performance? And I realize there are two levels of pricing. You\'d have
that MFC and then you may not even have visibility of what happens at
the orders. But, at least, at the contract level, is there an ability to
get a look at performance against internal pricing intelligence and if
you can\'t release it, to me, that\'s a secondary type scrub.

MS. JONES: Are you referring to economic price adjustments going up or
going down?

MR. SHARPE: Well, I think pricing \-- The idea would be to beat the
pricing intelligence. Whether the market was going up or down, the goal
would be to outperform.

MS. JONES: We look at the Department of Labor statistics for that.

MR. SHARPE: Okay. That\'s a typical indicator of decline or obviously
typically increase in different types of labor.

MS. JONES: Right.

MR. SHARPE: Do we compare our performance on schedules to that metric.

MS. NELSON: Yes.

MR. SHARPE: Would we be able to see some of that?

MS. NELSON: Do you want some data on economic price adjustments?

MS. JONES: Well, you\'re saying you can go on the DOL tables and take a
look at that.

MS. NELSON: Okay.

MR. SHARPE: I was going to suggest \-- Can\'t we say all those things
that are being brought into the decision making process?

MS. NELSON: Okay.

MS. SONDERMAN: First, you want to brainstorm the data that they want and
then we\'ll worry about whether we have it.

MS. NELSON: Right. So if I\'m hearing Tom correctly, you want to know
what informs we call, I don\'t know what you do, the pricing up economic
price adjustments. Right?

MR. SHARPE: Or price down. You do \--

MS. NELSON: I\'m just trying to get to one. So what informs the
decision?

MR. SHARPE: What I\'m getting at is under the general heading in my mind
of how we set our pricing and we spent a lot of time talking about
commercial practice and getting MFC. Now I\'m asking separate from that
or, you know, in conjunction with that do you track other external
indicators? Jackie had mentioned one, DOL. And then do we compare our
performance to those indicators?

So, for example, if DOL said whatever, computer programmers are going to
go up three percent, pick the number, it\'s not important, year on year,
are we at two or at four and I realize the difference between the
contract price and the order price.

MR. ALLEN: That\'s an interesting question. I doubt that that data
exists, but I\'ll leave that to GSA to see if they can find something
along that line.

MS. JONES: Usually it is \--

MR. ALLEN: In other words, what he\'s saying is if the labor category,
if the labor goes up three percent but the prices on schedules only rose
during that period two percent, that would be an indication that GSA
\"beat the market\" in terms of keeping prices under the commercial rate
of increase.

MR. SHARPE: Yes, for the portion of the bill rate, that was labor
escalation sensitive.

MS. NELSON: Okay. So do multiple award schedules use any external
sources and do we track in any manner the performance against those
external sources?

MR. SHARPE: Yes, external sources or your own internal guidance. Do you
track your performance against it?

MS. NELSON: Okay.

MR. SHARPE: For example, do you \-- another example, I don\'t know if
you do it, with the \-- You know, do you take some of your office supply
BPA skews on a market basket basis and shop DOD Mall?

MS. NELSON: Okay.

MR. SHARPE: This is a test to yourself recognizing that the value would
be beyond a basket, not necessarily you found a skew priced better.

MS. SONDERMAN: Right. Understood. It\'s an aggregate, not just every
part number.

MR. SHARPE: Or volume based or \-- Do you do any of that?

MS. SONDERMAN: Price testing.

MS. NELSON: Okay.

MR. ALLEN: A couple things. I\'m not sure if there are any for prime
time, but I\'m know that one exercise is the IT pricing that\'s being
looked at right now. I don\'t know if that will be ready for \-- if
there\'s a snapshot of that that would be appropriate to share with the
panel.

The other is I believe GSA has undertaken an update of an old study
showing the relative time frames when you use the schedule versus using
other methods of acquisition and if that is available, again I\'m not
sure if that will be finished in a timely manner for this group, but if
it is and/or if some data from that can be shared, that I think would be
very useful.

MR. SHARPE: And a question, not being the deepest schedules expert, I
keep hearing the fee is 0.75. Is that just the fee across the board for
everything we\'re talking about or is it more complicated?

MS. NELSON: It\'s 0.75 percent.

MR. SHARPE: That\'s what I meant to say. But is it across the board or
is there \--

MR. ALLEN: Yes.

MS. NELSON: It is for multiple award schedule.

MR. SHARPE: Okay.

MS. NELSON: Not the fee for those that are at GSA.

MR. SHARPE: Okay.

MS. NELSON: It is not the fee for the VA. VA has 0.5 for products and
one percent for services. Correct?

MR. SHARPE: Okay.

MR. FRYE: Yes. We recently had a quarter of one percent. We just raised
it to half of one percent.

MS. NELSON: Okay. But, yes, it is a standard. It was lowered actually
from one percent a period of time ago. But it\'s 0.75 percent and that
has to be negotiated. But, of course, like all other things, agencies
can ask their contractors to subsume that.

MR. ALLEN: What I would say also, Judith, is that what I was also
referencing was an update on the Johnson & Johnson study that\'s now
about a decade old.

MS. NELSON: Sorry.

MR. SHARPE: Yes, I think I know where Larry was going. The other parts
of the value proposition, you know, the speed, the socioeconomic
performance vis à vis maybe total government. How many contracting
officers and contract specialists are employed on MAS, if that\'s the
right way to say that?

MS. SONDERMAN: Approximately 300. That was Steve Kempf\'s presentation.

MR. SHARPE: Was it? Okay.

MS. SONDERMAN: Yes.

MR. SHARPE: So that would be interesting to know along side the data
Alan is suggesting, you know, the raw transactions in dollars and it
would be interesting to see how many people are moving that much work.

MR. PERRY: Yes. Could we \-- Is it possible to get a breakout of where
those 300 are sitting in this sort of this \--

MS. NELSON: Can I put them in here within that matrix?

MR. PERRY: Yes.

MS. NELSON: 1102.

MR. SHARPE: Now to put Larry\'s hat on, I don\'t want to make this so
hard to do.

MR. ALLEN: Right.

MR. PERRY: You would have to add VA\'s number to that as well which is
fairly small.

MS. NELSON: I\'ll translate it over to \--

MR. ALLEN: That\'s not a bad start and I think once we get some more
discussion perhaps we could probably go further.

MS. BROOKS: Anything else?

MR. CHVOTKIN: I think the answer \-- I think this question was asked at
our earliest session. Any data on the number of schedule contracts that
are based on most favored customer versus something else? I think you
answered the question a little earlier.

MS. NELSON: Again, I know you don\'t want me to give you answers. Again
as part of the MAS Mod Project, I have a little insight into some of
that. But again, it will be a statistical analysis and not a \-- it will
be across the program but based on a statistical sampling.

MR. PERRY: Then I\'ll ask the question from you.

(Off the record comments.)

MS. NELSON: Wait. I can\'t do it. Those are for Mods not for pre-award.
I\'m sorry.

MR. PERRY: Whatever data, I wanted it left up \-- come back. Go to Pat
and say whatever data you have on that just give it back to us.

MS. NELSON: Is there anything we want from our customers?

MR. ALLEN: I think there may be something we want from the customers.
But since we\'re going to hit them with a ten question letter, maybe we
want to be smart about how we ask for that and maybe let them come first
and then we can follow up.

MS. NELSON: I was thinking we have a couple customers sitting here.

MR. PERRY: Ah.

MS. NELSON: There are more than just GSA panel members on who to call
for data calling since everyone of these companies in my office. I
thought maybe there were some other panel members here who could go home
and do some work.

MR. SHARPE: Sure. Treasury\'s a big user. I think we\'re about 30
percent of our spending.

MR. PERRY: Yes, I think it\'s going \-- Somehow I think whatever we come
up with it has to be somewhat informed on what\'s going on between what
actually ends up getting awarded against whatever the base price was
established under the contract.

MS. NELSON: So I mean, I guess, I have essentially the question what
happens at the task order level.

MR. PERRY: Right.

MS. NELSON: And what percent of the time the ordering COs are seeking
additional discounts and at what price threshold.

MR. SHARPE: You\'re on an interesting point and like you\'re limited in
your data and we\'re going to be, too. But certainly anything that can
be dug out of NG.

MS. NELSON: But they\'re not going to have it at the task order level.

MR. SHARPE: I know.

MS. NELSON: To tell us the difference.

MR. SHARPE: Beyond that, it\'s manual.

MS. NELSON: But is there \-- I mean, maybe you can go just to one
program office or one thing and just seek some insight.

MR. SHARPE: Which project office? What do you mean, Judith?

MS. NELSON: Well, one of the things we\'re trying to understand here is
the difference between what\'s happening at the contract level versus
what\'s happening at the task order level and we\'re trying to get
beyond anecdotal. So one of the things we\'re trying to understand \--

MR. SHARPE: Well, in terms of the data, of course, if you\'re putting
for example to me we could probably readily run down the big stuff,
whereas the big BPA we would struggle to go find all the orders because
it would be manually impossible. But if you wanted some anecdotal on the
big stuff, that\'s something we could probably get our hands around.

MR. PERRY: Yes, for example, one of the items you mentioned, I\'m
willing to go back and get some data on loan servicing debt collection.
We\'re the biggest user. I can get some data on that and tell you what
the prices were that we ordered/issued the orders against whatever is
stated in the schedule.

MR. SHARPE: I kind of had a broader thought and it\'s too bad David\'s
not here. I know he gets to these global forums and some GSA folks may
feel like probably they\'re being poked at. I\'m guessing it\'s probably
a best practice, but is there anyone who can tell us how this stacks up
against however big governments do it? You do?

(Off the record comments.)

MR. SHARPE: Are there any gems there that we should know about? Because
I assume this is a best practice or, at least, ahead of the curve.

MS. NELSON: So to the extent possible I still would like to see those
who are on the panel just not able to \-- the customers we\'re inviting
in, but to those panel members who are on to look to their internal
buyers. You guys aren\'t buying. You\'re overseeing that. So to your
contracting groups, how often and when? You know, like is it at the
maximum \-- Guidance says that at maximum order threshold you must be.
Are they seeking below and what kind of discount \-- How effect they are
at getting \-- And whether or not they may feel that they know that
they\'re supposed to be doing that?

MR. SHARPE: They can only get to you anecdotally.

MS. NELSON: Right. But I mean I think that we should at least seek it
from the customer.

MR. SHARPE: Or actually if they\'re willing to share some questions like
I have a Treasury wide forum on the last Thursday of the month which
would be forward we meet again that I could ask all the Bureau chief
personnel officers at least a series of questions in a structured way to
get at least anecdotal answers.

MS. NELSON: That would be great. That would be really good.

MR. SHARPE: So it\'s really just some of those basic questions when you
negotiate a discount and \-- Okay. I can do that.

MS. NELSON: I appreciate it. I think it would really help.

MS. JONES: One of the things in addition to that of when do you
negotiate a discount, I think it would also be important to find out how
they go \-- how your ordering offices go about selecting the contractors
to compete. What are the important factors to them?

MR. PERRY: That\'s back on your questions for the customers?

MS. JONES: No. We\'re talking about data here for customer agencies. So
if you were a customer agency, yes.

MR. SHARPE: I can ask that kind of stuff anecdotally.

MS. JONES: Yes.

MS. NELSON: What are \--

MR. SHARPE: To be honest with you, if someone is going to capture the
questions, I think that would be a good question set for me to take to
that forum.

MS. NELSON: Yes. I\'ll try and get these to Pat.

MR. SHARPE: I\'ll do that.

MS. NELSON: What are criteria for schedule competes?

MS. JONES: And how many contractors do they normally solicit for a
requirement especially a large dollar requirement? Something that\'s
routine because that can vary. But how many contractors do they
routinely compete?

(Off the record comments.)

MR. CHVOTKIN: It\'s really in a three part question, how many they
solicit and how many respond.

MS. JONES: Well, that\'s true.

MR. CHVOTKIN: And so we ought to ask it both ways and a related question
we talked earlier about the Section 803 requirement posed only on the
Defense Department and I\'d be interested to know from the Defense
Department how many J&As they\'ve issued where the contracting officer
was unable to find three offerors and it should have waived a J&A, I
forget exactly what the term is, to go forward. I think it is very few,
but I don\'t know the answer and I don\'t know if they keep that. But
the number of solicited and the number of proposals received are two
different questions.

MS. NELSON: Anybody, anything else or are we good?

MR. PERRY: I think that\'s a very good first cut.

MS. NELSON: Okay.

(Off the record comments.)

Glenn, I know Pat\'s not here, but I\'d like to ask if we could, I
don\'t know if anybody else would want this, sort of rather than waiting
for the transcripts to get from Pat this.

MR. PERRY: Yes. I asked her about it earlier.

I was told you are the person to go to Pat with anything that we have
\--

MR. SHARPE: My understanding based on my conversation with her is she
was going to do this separately and get it out.

MS. NELSON: Okay.

MR. SHARPE: And I think we also \-- Someone made the suggestion that we
go ahead and do that that way instead of just in the transcript and
actually post it and somehow say, \"These are the things we\'re asking
questions about.\" These are the things that the panel was interested
in, for example, on the website also just so people can go there and see
publicly in sort of a clear way where we\'re going.

MS. NELSON: Okay.

MR. PERRY: Are we done with that? Everyone feels good about that.
Anybody have any other than the direct \-- Does anybody have any ideas
of how to get \-- We\'ve mentioned some things to get the word out to
get the desires as to what information we\'re trying to get and who we
would like to hear from. Anybody have any suggestions they want to make
as to any other avenues for communication?

MR. SHARPE: We could drop an announcement in the questions sent to the
SPU list server if it was helpful.

MR. PERRY: Okay. I think that would be good.

MR. SHARPE: So I would be glad to do it. Maybe let you look at it,
Glenn. I mean I think it would be our charter and then this question set
when I receive it.

MR. PERRY: Okay.

(Off the record comment.)

I don\'t think there would be any problem with that. Any other
suggestions or \--

MS. NELSON: And who was going to do that?

MR. SHARPE: I\'d be glad to do that. I have access to the List Serve.

MR. PERRY: There\'s List Serve for the chief acquisition officers and
the senior procuring executives.

MR. SHARPE: Yes, I might suggest we write to the SPEs and CAOs.

MR. PERRY: SPEs.

MR. SHARPE: You get a lot of multi-hatting, political, appointed.

MR. PERRY: Okay. SPEs. Tom is going to take that.

MR. SHARPE: I need the questions. As soon as I get the question set,
I\'ll drop that under the charter and I guess and write \"input\" and if
anyone wants to present. Right?

MR. PERRY: Yes.

MR. SHARPE: So in terms of how we\'re attacking this, to Larry\'s point,
is the idea then this would consume the next meeting, getting through
the stakeholder stuff? And we\'re kind of like one set of meetings
behind then?

MR. PERRY: It\'s sounding like it now.

MR. SHARPE: Okay. It makes sense. So we would set ourselves a goal of
coming out of the next meeting kind of having fulfilled that first to do
of understanding stakeholders.

MR. PERRY: And I think based on the questions to the customer agencies I
think roles and responsibilities we\'ll start to get into if they
respond to some of those things. But we\'re probably going to end up
having to go back to the next meeting and finish that up it\'s sounding
like.

MR. SHARPE: Okay. It sounds like we\'re there. Are we there?

MR. PERRY: Anything else we need to accomplish this afternoon? I thought
it was a good session. Why don\'t we do \-- Elliott usually goes down
the table. Anybody? Just a couple of minutes, feedback from everybody
about today and \--

MR. SHARPE: Nothing from me.

MS. SONDERMAN: I think I\'m okay.

MS. NELSON: Thank you, everybody.

MS. JONES: Are we get this information to the other panel members?

MR. PERRY: Yes.

MS. JONES: Okay.

MR. ALLEN: A very useful session today.

MR. SHARPE: Good session. Thanks to Glenn and Judith for taking up the
leadership.

MR. FRYE: Very good and thank you for being our professional
facilitator.

MR. PERRY: Thank you very much for everybody pitching in today. I really
think the conversation was good. I think we really got into some key
issues. So from my perspective, I thought it was \-- Everybody, we
certainly got everybody\'s pretty passionate about this today and I
really think collectively we\'re going to end up really coming out with
something good as we go through this.

Did I miss anybody? Did you have anything? You\'re okay?

MS. THOMPSON: I\'m good. Thank you.

MR. PERRY: Alt right. Then we\'re adjourned until the next time. Thank
you to everybody who was here also for staying with us and
participating.

(Whereupon, at 3:58 p.m., the above-entitled matter was concluded.)