GSA issues RFI to reevaluate schedule 70

It may be “Soft”ware but GSA is coming hard

In late October, GSA issued a Request for Information (RFI) about a proposal to change the way agencies buy software under IT Schedule 70. The proposal would support compliance with the MEGABYTE Act of 2015, and improve federal management of $6 billion worth of software.

The proposed changes mostly impact term licenses, perpetual licenses, and software maintenance. Term software licenses would be “Redefined so that they are only applicable to software that is provisioned and executed from the ‘user’s servers, computing end-points, or other designated computing devices where the user has the right to load or deploy software,’” GSA stated. “Additionally, the requirement to convert term licenses into perpetual licenses has been modified so that it is only required when an offeror offers the same conversions to their commercial customers.”

There will be two pathways towards perpetual licenses: “Option 1 contemplates software vendors that will embed software identification tags in their software products that are consistent with the ISO/IEC 19970-2 standard,” the RFI states. “Option 2 contemplates software vendors that will allow incumbent software licensees a right to transfer or move perpetual licenses to a new licensee for a previously negotiated fee. It is intended that these new asset management rights and features are voluntary, meaning that software vendors who wish to offer them may optionally include them on their schedule contract.”

And there might be a new SIN for software maintenance! “Software maintenance-as-a-product, henceforth, will be the maintenance that software vendors charge for on an annual basis…Under the current software maintenance SIN structures, it is impossible to differentiate a software purchase from an annual software maintenance purchase. Providing software maintenance-as-a-product with its own SIN identifier allows the federal government to better manage software as an asset and appropriately track categories of spend by differentiating between software licenses and software maintenance.”

Exciting! If you have any questions or worries about your Schedule 70 products, feel free to call your EZGSA proposal specialist or anyone at our office at 301-913-5000.

Welcome to the Jun(GSA)le

GSA opening up to businesses and industry partners

Jack St. John, Chief of Staff at GSA, has released a statement promising GSA will be more business friendly by improving industry partnerships, streamlining acquisitions, and easing the onus  of regulations. He announced that GSA will make Transactional Data Reporting optional and asked for public comment in reexamining the policy.

Also of interest to many of our clients, Schedule 75 for Office Supplies and Services will reopen, making a significant statement about increased access to dynamic pricing and innovation from the competitive marketplace. St. John further outlined GSA’s goals for uniting and simplifying the Professional Services Schedule (PSS) to increase the efficiency of the contract for agencies and industry partners. The suggested PSS solicitation is available to read and open for comment until May 26.

You can read more about it here or contact EZGSA at 301-913-5000 or mbotello@ezgsa.com

GSA’s TDR rule changes EVERYTHING

Just over a month ago, GSA published the final Transactional Data Reporting (TDR) rule designed to expunge the Pride Reduction Clause (PRC), Most Favored Customer (MFC), and the Commercial Sales Practices. Starting 22 August, new Schedule awardees whose contract is part of the pilot roll-out will be evaluated against the TDR. Existing contract holders will be allowed to opt in, but it is a voluntary, bi-lateral move.

According to GSA, “This rule asks contractors to electronically report key procurement data; including prices paid, quantity, standard part number and product description for all purchases through GSA contract vehicles. The information collected through the TDR will help contracting officers make smarter purchasing decisions and provide data to assist in negotiating future contracts.”

The upside for vendors taking on this additional burden is that they will be spared from having to worry about violating the PRC, which states that if your commercial MFC price drops below the basis of award rates, an automatic price reduction is triggered. Failing to implement this price reduction may subject the vendor to the False Claims Act, under which they can be sued for fraud. This had been one of the leading complaints from contractors. And while there are new concerns accompanying this rule, it does seek to address a the difficulty of maintaining pricing compliance.

The TDR will require an entirely new way of dealing with GSA pricing and has some significant future effects. EZGSA is developing a white paper concerning the TDR and will post it’s link here in the next week.

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.