Breaking Down Price Analysis in GSA Schedule Contracts
Every government contractor’s main objective is simple – win. But how? How does a compliant, well-qualified company successfully win a contract in such a competitive marketplace? Unfortunately, the answer isn’t as straightforward as some would like it to be. However, one of the biggest pieces of the puzzle is clear, and that's pricing.
Pricing isn’t the only factor that comes into play within a GSA Multiple Award Schedule (MAS) proposal but is certainly one of the most important. We’ve been working with GSA for 17 years, so we’ve learned that contractors who take the time to understand and carefully assess the pricing portion of their proposal can position themselves to win important contracts as we move into Fiscal Year (FY) 2021.
In this article, we’ll take a look at how you can properly and strategically propose pricing, and how the government analyzes GSA contractors’ pricing proposals during the review and award processes.
How to Properly Propose GSA Schedule Pricing
Contractors who have already established a GSA Schedule as a contracting vehicle can follow a fairly straightforward path when proposing pricing.
1. Make Sure to Get the Right Line Items on Your GSA Schedule When Proposing Pricing
As we’ve covered in previous blogs, any GSA contractor who wishes to secure a contract under the GSA MAS will need to ensure that the products/services they are planning to provide in performance of the contract have been added to their awarded Schedule pricelist either by way of the initial award or a formal modification. A modification is making any changes to your GSA Schedule contract including adding/deleting products, changing pricing, updating product/service descriptions, and updating administrative information.
When adding products/services via a modification to your GSA Schedule, GSA is required to perform a pricing analysis to determine if the proposed products/services will be considered “Fair and Reasonable” in terms of value to the government. Within this analysis, there are a few different options for GSA Contracting Specialists/Officers. Contracting Specialists/Officers will look at the pricing for “like and similar goods” on other contracts, historical pricing, and current pricing available in other GSA Schedule contracts.
2. Ensure Compliance with the Awarded Commercial Sales Practices (CSP)
If your GSA Schedule is subject to Commercial Sales Practices (CSP), you must make sure the terms offered to GSA in any addition modification either remain consistent with the current CSP, or you need to work with your assigned Contract Specialist/Officer to accomplish a revision to update that disclosure. This is imperative for compliance with the terms and conditions of the GSA Schedule.
Once you have affirmed that your CSP is current, accurate, and complete, you can begin strategizing the exact pricing for the products or services you are proposing to add. For GSA’s purposes, they will look to affirm your proposed pricing with supporting documentation generated prior to the addition. Examples include previously paid invoices, quotes, and purchase orders.
The reason for this is multi-faceted. On one hand, this will affirm the pricing proposed and the CSP disclosure is accurate, and on the other, it will allow GSA to understand that the pricing is considered reasonable within the commercial (non-GSA) market.
3. What to Do if Your GSA Schedule Contract is Subject to Transactional Data Reporting (TDR)
For GSA contractors who are subject to Transactional Data Reporting (TDR), you are not required to submit invoices with an addition modification. Your GSA Contracting Officer/Specialist may request additional information, but generally these are not a required piece of your submission. This is according to the newest set of modification instructions for contractors up to date with the MAS Consolidation.
Without these pricing support examples, GSA will take a more market-based approach to pricing analysis. Contracting Officers will utilize horizontal pricing analysis to determine whether the prices you’ve proposed are viable within the public sector.
With access to data such as GSA Advantage! catalogs, previously awarded pricing data, additional Blanket Purchase Agreement (BPA) pricing data, etc., GSA Contracting Officers are able to pull from extensive amounts of data to determine if what you’ve proposed to GSA is actually fair and reasonable considering competitors within the market. If there are no other sellers of the exact product or service you are proposing to add, they will analyze similar examples within the market.
Whether your GSA Schedule is subject to TDR or not, it is absolutely essential to remember that the GSA awarded rates on your Schedule pricelist are ceiling rates – meaning that work for government buyers under the GSA Schedule must be billed either at or below those awarded rates, NEVER above.
Pricing to Help You Win GSA Schedule Contracts
Once you have gotten the appropriate products or services awarded to your GSA Schedule, it’s time to start seeking out opportunities under the Schedule your company can deliver on. As previously noted, you may propose rates for these line items up to the ceiling rate awarded to your GSA Schedule, however, you may need to concede to a potentially lower price point in order to remain competitive and win the bid.
There is a common misconception within the federal marketplace that the lowest price always wins, but that is not the case. Yes, it is true that discounting to the government extensively and proposing lower rates than your competitors may win you the business, but there are other factors to consider when awarding contracts under the GSA MAS program – especially larger contracts like multi-year Blanket Purchasing Agreements (BPAs). When reviewing proposals from contractors who have responded to a bid, Contracting Officers utilize FAR Part 8 to analyze the viability of a contractor’s proposal. Outlined within this section, additional factors that may come into play when determining award for “best value” include:
- Past Performance
- Special features of the supply or service required for effective program performance
- Trade-in considerations
- Probable life of the item selected as compared with that of a comparable item
- Warranty considerations
- Maintenance availability
- Environmental and energy efficiency considerations
- Delivery terms
As you can see, price isn’t the only consideration for awarding contracts under the GSA MAS program, but it is important. Simply undercutting competitors isn’t always guaranteed to win the business, however, the flexibility that GSA allows in terms of discounting to government buyers beyond the ceiling rate awarded to your GSA Schedule is certainly a useful tool.
Make Sure to Do Your Research Before You Draft Your Pricing Proposal
When compiling a pricing proposal for a government contract, whether in effort to add additional line items to your GSA Schedule itself or win business under the GSA Schedule, we know that research is key. Perform your own market analysis utilizing the tools and data that are made available to you at the beginning of your contract award. Look at what others are offering for their price. To see what other competitors in your field are offering pricewise, you can check out GSA Advantage!. This will help your team craft a more competitive and compelling proposal.
We know the process of analyzing price and drafting a pricing proposal for GSA can be overwhelming, especially if you are a newer GSA Schedule contractor. Do you have any more questions on pricing analysis and market research? Reach out to one of our consultants—they are expertly trained and ready to help your company strategize GSA pricing to help you succeed in FY 2021 and beyond!