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HORAN. GSA SER Software. Well, the way I would like then to figure it out is if it really produces a much better value, best value to the federal government, considering the expense to the contractors. I do not believe they can do that based upon the way in which the proposed guideline is carried out here.

Small organizations are known for the added value they can supply companies with advantages such as customer care. Big corporations or huge business can refrain from doing that. Mr. Horan, you specified in your testament that the brand-new guideline does not account for such included worth. GSA SER Software. What could this omission mean not just to little vendors however likewise to the agencies that acquire their goods and services? Mr.

I think those other terms that result in finest value could be lost. Once again, that it could be-- the procurement might be driven to low price just, and as a result of that, the specialists who offer a few of these other terms and services that supply finest value will lose sales at a minimum, perhaps be driven out of the market.

Due to the fact that they are out of the company or they are simply not bidding anymore? Due to the fact that they are out of the company. Since there is such pressure on contracting officers to look at just low price that often they will exclude consideration of finest worth but ultimately, I think they might be out of the organization.

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TAKAI. Okay, thank you (GSA SER Software). The ratio for federal government procurement study in its study, small businesses indicate that it would handle typical 232 hours to adhere to the GSA's proposed guideline. Mr. Stanford, has your business done its own price quote on the hours it will take to abide by the brand-new requirement, and do you discover the results of the survey to be more precise than GSA's own analysis? Mr.

We have not. And while we have looked at their study and the ABA work, we are also encouraged in accepting their conclusion since also SBA Workplace of Advocacy and GSA's own inspector basic figured out that those expenses appear understated. Mr. TAKAI. Their, suggesting the union, not GSA's? Mr. STANFORD.

Other than our spin on compliance, can you discuss some other costs that companies like yours will have to face since of this rule? I will not speak to our company individually, however speaking to the business we work with as they get in the federal market, the expenses beyond compliance are-- for small services are initial costs up front.

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Mentioning the expense of updating its information systems, GSA is proposing to ask suppliers to report to GSA the details of what was purchased through GSA. This resembles asking sellers offering through Amazon to report to Amazon what it sold, through Amazon. To take this example one step further, Amazon would then use that information to market pricing to other consumers, on Amazon.

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While not a perfect comparison, GSA in numerous methods operates as an Amazon-like part of the acquisition procedure. The intent behind this guideline is looking for to make a best-in-class contracting marketplace. Yet, GSA has actually decided to pass on purchasing a data collection system that could gather this information immediately.

II. The Guideline Imposes a Substantial, Underestimated, and Unnecessary Burden GSA approximates that it will take six hours for a specialist to accomplish all tasks required to comprehend the reporting requirements, prepare its systems and workers, and establish the treatments required for developing the needed reports, and a typical 31 minutes per month for ongoing reporting. 2 GSA does not offer adequate detail to analyze how these price quotes are flawed, but essentially every notified celebration who has weighed in on these quotes thinks they are incorrect.

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Reg. 11625. The Small Organization Administration's Workplace of Advocacy reports that small companies and their representatives are worried that GSA "under quotes the problem and resources." 3 The Council of Defense and Area Industry Associations views the estimates as "grossly underestimated,"as stopping working to "account for expensive adjustments to details systems that will be needed to properly and totally capture the information aspects needed by the guideline"or to "sufficiently account for the time required to perform quality control on draft submissions and examination into possible data abnormalities that regularly arise with transactional information reporting." 4 Based on its experience with pre-award audits of contractor systems, the GSA Office of Inspector General "question [s] whether GSA's price quote of 6 hours per professional to configure their systems for reporting is accurate"and "compete [s] the predicted concern of monthly reporting as 0.

Otherwise, the contractor will risk a claims of fraud under the False Claims Act, as has been the case with basically every other form of cost or cost reports sent by a specialist to the federal government. Importantly for this hearing, small companies will bear the biggest part of this problem-- GSA approximated that out of 15,738 vendors holding agreements that would be subject to this Rule, 12,590 are small companies (GSA Search Engine Ranker).

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Reg. 8 GSA also recognizes a point really essential to market-- that price paid is only of many "details points"in figuring out the best value to the government. 10 We can also add client service, item support services, warranty, and other terms to this list.

So, according to GSA's own analysis, this burden imposed on contractors will provide the government with only one of the necessary information points-- transactional rate-- with no methods to obtain the other information points essential to examine price. Without access to, and consideration of, this other crucial details, the price info is of little value at best and can be really deceptive at worst.

In my view, the failure of the Rule to catch these other non-price factors might be particularly hazardous to small companies. Small companies frequently operate as value-added resellers or otherwise identify themselves in the competitive market based upon the value they include to a deal, such as client and item service capability, that is not caught by transaction rate.