What the consumption-based cloud model means to you

As GSA moves to apply more commercial best practices to buying cloud services, you must understand the model and the funding available to your customers.

Recent proposed changes from the General Services Administration would apply commercial sector best practices to the process of procuring cloud services -- to improve efficiency and reduce costs. From industry’s perspective, it’s important to strike a balance between this so-called “consumption-basis” model and the various types of funding available to government agencies.

Everyone who procures cloud computing services has the same goals at heart. Whether you are in the private or public sector, you want the most cost-effective solution to meet your technical and security needs. And you want to take advantage of the latest technology available and those that offer the greatest flexibility.

The commercial sector has developed a robust portfolio of software as a service, platform as a service, and infrastructure as a service offerings. GSA is working to develop policy changes that allow for a streamlined approach to procuring these additional cloud computing models. 

Last month, GSA Senior Procurement Executive Jeffrey Koses (Office of Acquisition Policy) requested industry comments on a draft acquisition letter (AL). The letter addressed special ordering procedures for the purchase of cloud computing on a “consumption basis” under GSA’s Federal Supply Schedule program.

The AL’s definition of consumption basis has three components: The offering is measured and billed on a “predetermined periodic basis,” is billed based on what was actually used during an elapsed period of time and is charged based on predetermined pricing and rates.

This consumption-based approach is already widely accepted in the private sector. GSA hopes to leverage a similar model to recognize the same efficiencies, increase cybersecurity, foster competition and provide cost savings and transparency – all benefits that are being realized today in the private sector. 

How will GSA accomplish this goal?

While using a consumption-basis model is already allowed under GSA’s FSS program, Koses’ AL highlights some key requirements to further support this effort. The new procedures would waive the price reduction clause, and consumption-basis offerings will be fixed-price at the schedule and order level. The economic price adjustment clauses will not apply for these items that are offered on a consumption-basis.

According to the draft procedures, the contracting officer will negotiate a “fixed discount against a market price list or an index” that will remain constant as the price list or index changes. The CO will also determine a ceiling price for all estimated cloud computing offerings.

In addition, ordering activities are advised to create a “consumption-based monitor” that will track units and available funding status and notify the ordering CO accordingly. Total increases will be limited to “no more than 50 percent of the initial quantity ordered of the same line item,” and consumption-basis cloud orders will be limited “to only when using ‘no-year funds’ or ‘multi-year funds’ with more than one year remaining.”

While industry has provided feedback on all these requirements, there are very specific concerns with placing this type of restriction on funding type. Some are concerned it may have the undesired consequence of withholding critical cloud offerings to those agencies that do not have multi-year and no-year funds available. 

GSA has also asked for feedback on a “requirements task order” concept for consumption-based procurements. In this case, “the Government will award a contract with the obligation to purchase its future requirements under that contract but does not obligate funds for estimated usage upfront; instead the actual requirements are then satisfied through orders against the contract.”

This approach may reduce costs and lower pricing. There is some concern, however, that contract disputes could easily arise without accurate usage estimates. 

How has industry responded?

The Coalition for Government Procurement has put together comments, concerns and suggestions from industry in a response to GSA’s draft letter. 

These industry comments range from approving the waiving of the Price Reduction Clause to concerns over potentially burdensome tracking and reporting requirements – as well as apprehension around GSA’s ability to handle the number of price modifications that this new model would require. 

The main theme from the feedback, however, is the request for flexibility when it comes to procurement of consumption-based cloud. 

Cloud computing is offered in various models (consumption-based with not to exceed ceiling, subscription based, on-demand, per-use-based, tier-based) as well as pay-as-you-go and fixed- price combinations in the private sector. Each has its own advantages based on the customer’s specific needs, such as environment, consumption usage, usage term and so on.

The ideal procurement path for consumption-based cloud computing would provide agencies with flexibility across both funding and consumption models. This would allow for a customized solution to promote both cost efficiency and private sector best practices.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.