While attaining a GSA Multiple Award Schedule (MAS) contract, verbiage can become confusing, especially if this is your first time navigating the acquisition process. As you’ve begun working toward contract acquisition, you may have stumbled across the terms “best value” and “fair and reasonable price.” Though they sound similar, the implications of their definitions are quite different. In this blog, we will go over the true meaning of these concepts and how they play a role in the acquisition of a GSA MAS.
“Best value” has become increasingly important in the world of government contracting, particularly after the introduction of the Fostering Reform and Government Efficiency in Defense (FoRGED) Act. Originally, the outcomes of contract acquisition attempts were decided based on “lowest overall cost alternative” but, in hopes of encouraging higher quality deliverables, the wording now specifies that contracts should reflect the “best value”.
This means that the product or service provides the greatest overall benefit in response to the requirement of the contract. That value is determined by a combination of both qualitative and quantitative factors. This considers characteristics such as pricing, product/service quality, and delivery. Although “best value” is not the primary determinant of the outcome of an acquisition, it plays a large role in successful government contracting, alongside timeframe requirements and meaningful past performance.
While “best value” plays a larger role in federal procurement, “fair and reasonable” pricing is the main factor used in GSA MAS offers. “Best value” determinations are more prominent at the order level, once you receive your GSA MAS contract and you are receiving orders from buyers.
During the MAS offer, once your GSA assigned Contracting Officer (CO) performs a review of your proposed pricing, they will determine whether the price of your product or service is “fair and reasonable.” This implies that in comparison to other awarded contracts that provide “like and similar” products or services, the price point you have proposed is considered appropriate for agencies to purchase with taxpayer money.
Other determining principles include historical market pricing and what other currently available prices are being used for similar contracts. “Fair and reasonable” pricing aligns with “best value” practices because it ensures proper use of taxpayer dollars while also focusing on providing reasonable deals for customers. If your product or service is deemed to be providing the “best value” at a “fair and reasonable price,” you are more likely to succeed in contract acquisition.
In the pricing section of your GSA Schedule proposal, you will be required to complete a Product File or Services Plus File which documents specific line-item level details about the product or service you are hoping to provide. Previously, GSA required a Commercial Sales Practices (CSP) document, indicating a company’s Most Favored Customer (MFC), also understood as the customer who was receiving the best deal, but this is no longer required.
Instead, contractors will be subject to Transactional Data Reporting (TDR). You do, however, still need to propose pricing that is discounted and in line with market research. Your assigned CO will use government transactional-level data and other available research to ensure your prices are “fair and reasonable.” While pricing support under TDR is not mandatory, we suggest you still include it.
The more information you can provide on what led you to your final pricing decisions, the easier it will be for your CO to determine whether the product or service you are proposing falls into both of those categories.
Recently, GSA released a new Pricing 2.0 Algorithm for the MAS program to assist in cost savings for purchasing agencies while still maintaining a competitive and profitable marketplace for the industry. This algorithm helps with the pricing of Commercially Available Off-the-Shelf (COTS) items and accessories. Generally, determined pricing will be influenced by median pricing data in combination with existing pricing on the MAS program for “like and similar” products or services.
Other factors that influence pricing are major commercial catalogs and inflation adjustments. Pricing 2.0 mirrors the sentiment of “best value” because it reflects the government’s commitment to ensuring that every taxpayer dollar is spent wisely. A key component of this process is the Commercial Price Anchor, which establishes a Market Baseline, capping the price at minimum observed commercial price.
As you begin to craft your GSA MAS offer, it is important to be diligent in pricing research, considering costs of other products similar to yours, both in the federal and commercial space.
Now that you have a better understanding of what constitutes a product or service sold at the “best value” for a “fair and reasonable” price, it will be easier to distinguish what proposed price point is best for your contract.
Pricing can be a tricky process but there are many resources to find the information you need to craft your proposal. For products, GSA Advantage! is a fantastic resource, including information on pricing and ordering processes for products and services that mirror what you are hoping to sell. For services, you can use GSA’s CALC tool.
If you have further questions about “best value” and what is considered “fair and reasonable,” or generally want assistance with the creation of your GSA Schedule contract, reach out to one of our consultants. We would be happy to help with your GSA Schedule acquisition or the maintenance of your current contract!