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bob7947

H. R. 5472's Calculation of Cost Savings Resulting from Competition

H. R. 5472: The VA Procurement Efficiency and Transparency Act's Cost Savings Resulting from Competition  

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  1. 1. Does H. R. 5472's Cost Savings Calculation Show True Savings Caused by Competition and Is it Worth the Administrative Costs of Reporting? Is H. R. 5472 a Good or Bad Idea?

    • Good Idea.
      2
    • Bad Idea.
      22


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On June 14, 2016, Representative Mike Coffman of Colorado introduced H. R. 5472, The VA Procurement Efficiency and Transparency Act.  The Congressman is trying to capture cost savings resulting from competition and this idea is captured in a new section 8129 which I have cut and pasted below.  Subsection (c) shows how the calculation of any cost savings resulting from competition would be calculated.  It only takes a few minutes to figure this section and subsection out.  After you have read it, please fill out the poll.  You can then comment with a response if you have anything more to add.

The poll results will be anonymous.  I will close the poll on July 22, 2016.

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``Sec. 8129. Information on cost or price savings from competition
    ``(a) Recording of Information.--With respect to any contract
awarded by the Secretary that is reported in the Federal Procurement
Data System described in section 1122(a)(4)(A) of title 41, United
States Code, or any successor system, the Secretary shall record
information on the amount of any cost or price savings realized by
using competitive procedures in awarding such contract.
    ``(b) Placement of Records.--The Secretary shall place recorded
information under subsection (a) as follows:
            ``(1) With respect to contracts recorded in the Electronic
        Contract Management System, or any successor system, in such
        system.
            ``(2) With respect to contracts not covered by paragraph
        (1), in a location determined appropriate by the Secretary.
    ``(c) Calculation of Cost Savings.--(1) In carrying out subsection
(a), the Secretary shall calculate the amount of cost or price savings
realized by using competitive procedures in awarding a contract by--
            ``(A) subtracting the total value of the selected offer or
        quote from the average of the total values of all offers or
        quotes evaluated; or
            ``(B) subtracting the total value of the selected offer or
        quote from the total value of the median offer or quote
        evaluated.
    ``(2) If the difference calculated pursuant to paragraph (1) is
negative, the Secretary shall record such difference as zero.
    ``(3) The Secretary shall make calculations under paragraph (1)
with respect to a contract--
            ``(A) at the time at which the Secretary obligates amounts
        under such contract; or
            ``(B) if such contract contains options, at the time at
        which the option is exercised.''.
 

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There are 2 days left to record your vote on H. R. 5472, The VA Procurement Efficiency and Transparency Act.  Nineteen votes have been recorded.  If it does not reach 20 votes, it will be removed from the list of Polls.

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I guess they are saying that the average price for something would be X and "we saved" Y dollars below the average price by using competition.   But the measure of average price is based upon competition(?) It doesn't seem to compare non-competitive prices with the value of competition.   

Then they offer an alternate measure based upon the median price. Two alternate, measures...

 

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And you would include the price actually paid in the determination of the average amount or or median price that you base the savings on. 

 

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