If you want to sell your products or services to the government, one of the most popular contract vehicles is the Multiple Award Schedule (MAS) program. In order to get a GSA Schedule contract awarded, you need to prepare an offer consisting of 3 parts: administrative, technical, pricing.
The pricing section is the final step in the GSA Schedule proposal process. The pricing section is the most complex section of the GSA proposal. Here, you must set out your prices and price justification. Based on this, the GSA Contracting Officer (CO) assigned to your application will decide if your prices are "fair and reasonable" according to the Federal Acquisition Regulation (FAR) Part 15.
The GSA has strict guidelines to gain the "best value" for the goods and services being provided to them by the contractor. In this blog, we will help you understand what is included in the pricing section of the GSA Schedule proposal and how to best set yourself up for success.
Requirements for the Pricing Section
The first step in a thriving pricing section is understanding the marketplace you are attempting to enter. This can be accomplished through market research. This research gives you insight into competitor prices and the amount of business being done in your industry through the GSA Schedule.
Now that you have a better understanding of the landscape of the marketplace, you can begin putting together your pricing section. Several important documents are included in the pricing section, and the main document is your Price Proposal Template (PPT).
This template will allow you to show all your pricing data, such as your proposed Special Item Numbers (SINs), a unit of sale (per hour, per item, etc.), the product or labor description, and price list and discounts for your proposed GSA customers. It is essential to note that the information included will depend on your pricing support and whether you use Commercial Sales Practices (CSP) or Transactional Data Reporting (TDR).
Determining Price: Commercial Sales Practices or Transactional Data Reporting
CSP is used to support your pricing data by providing publicly available pricing as seen on the Commercial Price List (applicable for GSA product vendors) or the Market Rate Sheet (for service vendors). You should submit past invoices, catalogs, or pricing from similar contracts as supporting documents. The CSP describes what you offer to your commercial customers compared to what you provide the federal government through GSA.
Commercial Sales Practices are also used to determine which of your customers or customer class is offered the lowest price. So, contractors must report on their Most Favored Customer (MFC) and other discounting and sales practices.
With TDR, you do not have to go through all those hoops. Fair and reasonable pricing is determined based off market indicators. However, you will still need to include several aspects of the pricing section including a PPT, pricing narrative (as discussed below), and pricing support, you just won’t need to disclose various discounts your company provides to commercial customers. You will need to report your sales monthly instead of quarterly and file a more robust sales report.
The GSA seeks to move away from CSP and shift to more of TDR, however, this program is still in the pilot phase and only applicable to specific SINs. Choosing CSP or TDR depends on your solutions and needs as a company, so we suggest you thoroughly review the two options before deciding which one to opt into.
Pricing Narrative and Economic Price Adjustment
A Pricing narrative accompanies the PPT, and the narrative shows the thought process behind your pricing strategy and shows that you understand GSA compliance regulations.
Another critical component of the pricing section is the Economic Price Adjustment, also called EPA. This allows you to increase your prices at a fixed annual rate or as a modification request later. EPAs are negotiated before the contract award, and you can select from three methods.
- EPA Clause 552.216-70: This clause usually applies to GSA product vendors whose pricing is based on their publicly available Commercial Price List. Under this clause, you can request GSA price increases when your commercial prices increase; the first request can be made 12 months after the original contract award. Price increases range from 4 – 10% depending on your Schedule Large Category.
- EPA Clause I-FSS-969: GSA service contractors typically use this clause.
- (b)(1): Price increases under this clause are subject to a fixed escalation rate set before your contract award. Your prices will be increased automatically every 12 months, so you do not need to submit any requests.
- (b)(2): Price increases are determined by agreed-upon publicly available market indicators, usually linked to the Bureau of Labor Statistics Employment Cost Index.
Creating a Competitive GSA Schedule Offer
While the pricing section can be laborious, it gives the contractor a chance to explain why their products and services should be set at the proposed prices. Understanding what the GSA looks for is critical in completing a well-thought-out pricing section. It can be difficult as each company is different in how they do the pricing for their products and services, but that is where Winvale can assist.
Whether you are new to GSA Schedules and want to know more or are a seasoned veteran, Winvale is happy to help and provide resources that enable you to reach your government contracting needs. If you want to learn more about the GSA Schedule acquisition process and tips for getting a GSA Schedule, check out our blog and monthly newsletter. If you have questions about acquiring a GSA Schedule, reach out to one of our consultants today.
