‘Seeding the schedules cloud’ – what’s the forecast?

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This column was originally published on Roger Waldron’s blog at The Coalition for Government Procurement and was republished here with permission from the author.

“Seeding the schedules cloud” means addressing 1980s-era Multiple Award Schedule (MAS) pricing policies that limit access to 21st-Century commercial solutions, especially leading-edge commercial technologies, like cloud computing. By so doing, the General Services Administration can increase agency access to best value commercial products, services, and solutions.

MAS consolidation has eliminated contracting stovepipes, duplication, and process burdens at the contract level. The next step for GSA is to streamline, reform, and enhance the underlying pricing policies governing contract negotiation, award, and compliance. Reforming these underlying pricing policies will unleash the MAS program, enhancing best value mission support by focusing on increasing commercial market access and competition at the task order level.

Nowhere will this effort be more impactful than in the MAS program’s cloud computing offerings. The federal government is scratching the surface on cloud, with the federal market for cloud expected to grow to over $8.5 billion in the next few years according to Bloomberg Government. Cloud enables data analytics, machine learning, and AI — capabilities that are the focus of government modernization. Moreover, the pandemic has served to accelerate the commercial cloud transition and usage, with remote work and virtual offices driving demand. Given the growing demand for cloud, the MAS program has the opportunity to leverage the commercial market to deliver increased capabilities to support agency IT needs. So, pricing reform clearly is a game changer.

For example, MAS commercial cloud capabilities are held back by the outdated, anti-competitive pricing policies, like the Price Reduction Clause (PRC) and Commercial Sales Practices (CSP) that are the basis for MAS price negotiations. The PRC and CSP are static, formulaic, catalog-driven mechanisms that limit pricing flexibility. By so doing, they restrict flexibility and competition and emphasize oversight and compliance. In contrast, the cloud pricing environment is dynamic and flexible. Pricing is driven by customer business models and frameworks, volume, and variable pricing is driven by market demand, technology, business models, and customer frameworks. These factors require flexible pricing that can react over time depending on use and market conditions. The PRC and CSP were simply not built for this kind of dynamic approach to the market.

Negotiating cloud pricing terms consistent with the current MAS pricing policies is like trying to put a square peg in a round hole. Thus, with these current pricing policies, customers, contractors, and GSA suffer increased pricing risk and restricted access to technology solutions. It is time to waive application of the PRC and CSP for cloud computing services. Likewise, the Economic Price Adjustment clause should be waived for cloud. In their place, a flexibly priced model at the contract level should exist to enhance the ability of MAS contractors to effectively and efficiently price and deliver best value cloud solutions at the task order level.  ­­­­­­­­

Together, these changes will provide an opportunity to ensure that task order terms and conditions retain the flexibility for contractors to effectively respond to customer needs and adjust to changing market conditions in meeting those needs. The net benefit will be to streamline customer access to innovative commercial cloud solutions at the competitive task order level. For these reasons, the Coalition stands ready to work with all stakeholders on “seeding the cloud” for a best value customer forecast.

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