Pricing Your Pricing in Your Proposal

Pricing can be the biggest stumbling block for businesses applying for GSA schedule contracts. The notion that the government expects the absolute lowest price in the world, plus the fear of triggering the Price Reduction Clause, lead some to conclude that it’s just not worth the hassle and risk for such low margins.

It is tempting to automatically set your price as low as possible, especially when selling products. Here are three pieces of information that may cause you to reconsider how to structure your GSA Schedule pricing proposal.

Similar Terms, Quantities, and Conditions

The misunderstanding out there is that you need to give GSA the lowest price you’ve given anyone. The truth is that you need to give GSA the lowest price you’ve given to anyone with similar terms, quantities, and conditions.

This is a big difference. Let’s imagine that you give your distributer a 40 percent discount, but only on purchases over $250,000; this distributer takes the risk holding high volumes of your product, promotes and sells your product, represents your brand, and has their cousin Jeff drive down to the warehouse monthly to save on shipping. The government may want that 40 percent discount, but because the terms, conditions, and quantities are not similar, should they actually get it?

If you can establish that the federal government is more similar to a customer that gets a lower discount, you may be able to establish a higher GSA ceiling price.

GSA is going to negotiate during your proposal process

Before your Final Proposal Revisions are signed, your GSA Contracting Officer is going to negotiate. A CO may take the stance that your items are too expensive, no matter how slim the margins. Your company can do better.

COs are required to push that discount rate as high as possible so they can get the best deal for the government, and ergo the taxpayer. S/he will most likely push back on your proffered discount rates. If these rates are already at your limit, you may not be able to successfully negotiate during the proposal process.

Purchasing agencies are required to ask for additional discounts

Your GSA price is a ceiling price, meaning you can’t charge the government a higher rate. But you can always go lower.

“The GSA Schedule CO determines the prices of supplies and fixed-price services, and rates for services offered at hourly rates, to be fair and reasonable prior to contract award. However, ordering activities are always encouraged – and, in some cases, required – to seek additional discounts (i.e., price reductions) prior to award of Schedule orders and Blanket Purchase Agreements (BPAs).”

In order to be competitive, it may behoove you to keep prices high. You may then have room to discount individual orders from agencies.

Supreme Court takes on “Rule of Two”: what the decision means for set-asides on Federal Supply Schedules

reposted from https://gsablogs.gsa.gov/gsablog/2016/07/14/supreme-court-takes-on-rule-of-two-what-the-decision-means-for-set-asides-on-federal-supply-schedules/

You may have heard people talking about a recent U.S. Supreme Court decision (Kingdomware Technologies Inc. v United States of America), saying it’s given a “boost” to veteran-owned businesses. And that the “Rule of Two” is now mandatory at the U.S. Department of Veterans Affairs (VA). But does the Court action affect Federal Supply Schedule (FSS) task and delivery orders? And does it affect every agency?

The very short answer is “no, not at this time.” That’s because “Rule of Two” is a term used for both the VA and U.S. Small Business Administration (SBA) statutes and regulations – but they’re different rules with the same name. At this time, the Supreme Court decision applies only to VA contracting rules and is specific to Veterans Affairs and to VA awarded contracts. Unless there is a regulatory change, agencies other than the VA should recognize that there has been no policy change in regard to the discretionary nature of FSS set-asides.

So, you can jump into the fourth quarter buying season with confidence, knowing there has been no change in procedures for using the Federal Supply Schedules.

As you might expect, we’ve received many questions since this decision was announced. Here are a few of the most frequently asked ones, along with brief answers:

Are set-asides allowed against FSS contracts?

Yes. FAR 8.405-5 allows for set-aside acquisitions on FSS contracts. In accordance with FAR 8.405-5(a), ordering activity contracting officers may, at their discretion, set aside orders or blanket purchase agreements for any of the small business concerns identified in FAR 19.000(a)(3).

Are ordering activity contracting officers required to set aside task or delivery orders against FSS contracts if the “Rule of Two” is met?

No, it is not required unless agency specific statutes or regulations require set-asides. FAR 8.405-5(1) states “preference programs of part 19 are not mandatory in this subpart,” and ordering activity contracting officers are provided the discretionary authority to set aside FSS orders.

Could there be future policy changes in light of the Kingdomware decision?

Yes. The Office of Federal Procurement Policy (OFPP) will coordinate meetings between GSA and SBA to discuss this decision. However, unless there is a regulatory change, agencies other than VA should continue to follow policies recognizing the discretionary nature of set-asides under the FSS.

Who can I talk to if I have questions regarding acquisitions against FSS contracts?

Any questions regarding acquisitions against FSS contracts may be directed to Steve Hutchinson, MAS Policy Division, Federal Acquisition Service Office of Acquisition Management, by phone at (202) 573-6211 or by email atsteven.hutchinson@gsa.gov.

1. FAR 8.405 was updated through FAR Case 2011-024 published in the Federal Register at 76 FR 68032 which was based on updates to the statute, specifically 15 U.S.C. 644(r), Multiple Award Contracts.