At Winvale, we often consider the pricing section of a GSA Schedule offer the most important to focus on because a lot of time and effort needs to be put into making certain that a prospective GSA Schedule contractor is putting forward the best pricing package that they can offer to GSA while maintaining a healthy profit margin. We have been through many scenarios with contractors and come across a number of mistakes that are commonly made when crafting, or modifying, GSA Schedule pricing. I would like to take you through a list of common mistakes contractors make with their GSA Schedule pricing, so that you can avoid them when dealing with your own GSA Multiple Award Schedule or offer.
I will start off with some of the mistakes that apply to those crafting an offer, though they can also apply to Schedule holders who are drafting modifications.
When proposing new offerings under a GSA Multiple Award Schedule, either as part of the initial offer or a subsequent modification, you should be aware that your GSA Contracting Officer (CO) is trying to get the most advantageous pricing possible for GSA. With that in mind, your Contracting Officer is likely to negotiate for lower pricing, especially during the offer process. As such, it is generally advisable to not offer the absolute lowest pricing you can with your initial submission since you will want some wiggle room. You should bear in mind that you are not required to immediately accept any negotiation objectives and can counteroffer, like any other negotiation
There are two different sales reporting methods used by contractors on the GSA Multiple Award Schedule program, traditional quarterly reporting for contractors who are required to disclose their Commercial Sales Practices, and TDR for contractors who have a TDR eligible SIN. As of Solicitation Refresh #28, all GSA Schedule contractors whose Schedules contain a TDR eligible SIN are required to opt into TDR reporting.
TDR is a great option for many GSA Multiple Award Schedule holders because it removes the requirement to disclose your Commercial Sales Practices and Most Favored Customer/Basis of Award, ending the requirement to track price reductions. This means that those contractors under TDR are not required to offer GSA at or lower than the pricing offered to commercial customers in the way that non-TDR GSA contractors are in most circumstances. You also aren’t required to track price reductions, so you can provide any discount you want to commercial customers without being concerned about how it will affect the basis of award relationship with GSA Schedule pricing.
That being said, there is the tradeoff of additional sales reporting requirements. However, those contractors who can handle the additional sales reporting requirements and want more peace of mind around how their commercial pricing affects their GSA Schedule pricing should consider finding a relevant TDR eligible SIN and adding it to their offer or Schedule.
GSA provides a number of resources that can help you conduct market research and see other contractors’ GSA Schedule pricing. This can help you develop a plan for the pricing on your own GSA Multiple Award Schedule by showing you what GSA has approved for other GSA Multiple Award Schedule holders. Product offerors can find competitor’s pricing by searching in GSA Advantage!. GSA’s CALC tool can be used to find labor category ceiling rates. GSA also publishes product demand data, which contains information on the average transaction price of many part numbers.
When you submit an offer for a GSA Schedule or subsequent modification, you should be aware that GSA may not award your proposed pricing if you cannot provide supporting documentation for it. If you cannot provide an invoice, quote, order, published price list, or similar document that substantiates the pricing of your offering, then GSA is likely to reject that offering. It is worth noting that supporting pricing documentation is not technically required for TDR eligible offers or Schedule, but Contracting Officers are still authorized to ask for it if necessary to determinate that pricing is “fair and reasonable.” They often exercise this authority, especially for services and labor categories that do not have many direct competitors.
The following mistakes occur to those who already have a GSA Multiple Award Schedule, but prospective GSA Schedule holders should still keep them in mind when drafting their pricing sections.
GSA recently consolidated the Economic Price Adjustment (EPA) clauses into one as part of Refresh #29, however the methods to affect a price increase largely remain the same. Unless you are awarded with GSA Schedule pricing based on a fixed escalation, you will need to modify your Schedule in order to update its pricing, whether increasing or decreasing.
Modifications are required to change pricing for contractors whose GSA Schedule pricing is based on either a commercial pricelist or a market index. Contractors who base their EPA on a market index in particular often forget to increase their pricing annually when the data on the annual increase in the market index is released. As a contractor, you will not be able to charge more than the currently awarded pricing until a modification has been awarded by your Contracting Officer.
Non-TDR contractors are required to monitor the pricing they offer to commercial customers to avoid accidentally triggering the Price Reductions Clause. When the basis of award discount relationship is disturbed, a GSA Schedule contractor is usually required to inform their Contracting Officer and submit a modification to lower their GSA Schedule pricing proportionally to the price reduction provided to the commercial customer.
As such, it is imperative that GSA Multiple Award Schedule holders enact internal controls and ensure that sales personnel are educated and aware of the impact that giving commercial customers discounts greater than disclosed in the company’s Commercial Sales Practices can have on GSA Schedule pricing.
Your GSA Schedule pricing should be applied to all orders under your GSA Multiple Award Schedule. This means that if a federal customer wishes to purchase items from you without mentioning another contracting vehicle, you should at least offer your GSA Schedule pricing to them. They may choose a different contracting vehicle, but the important part is to get written confirmation that they wanted to use a method other than the GSA Schedule, because this helps prove that GSA Schedule pricing requirements should not apply to that order.
GSA provides a handy flowchart that can help you determine whether or not an order is a GSA sale, and thus whether GSA Schedule pricing is required. Keep in mind that if your GSA Schedule pricing includes a Quantity/Volume and/or Prompt Payment discount, those also must be applied to all applicable orders.
You should remember that your GSA Schedule pricing is the awarded ceiling rate. You can always offer additional discounts to entice customers and make your pricing more competitive. Offering spot discounts does not require a modification and does not oblige you to offer that same discount to future GSA customers.
This has become less of an issue as more contractors have made their way over to the FAS Catalog Platform (FCP), which streamlines modification and publishing of updated catalogs. However, those who have not yet transitioned need to be aware that award of a modification through eMod will not automatically publish their updated pricing or offerings. These contractors are still required to upload their new catalog either through SIP or EDI after approval of a modification so that it can be displayed in GSA Advantage and eLibrary.
This list is certainly not exhaustive, but hopefully it has given some food for thought for some of the mistakes GSA Multiple Award Schedule holders can make when crafting their GSA Schedule pricing. One of the most important things to keep in mind when drafting your GSA Schedule pricing is that, like any other element of your GSA Schedule, you have to consistently maintain compliance with it, so you need to make sure the pricing is beneficial to the government but also something you can be happy with. If you would like help devising your GSA Schedule pricing, reach out to Winvale, and our team of experts will be happy to develop a strategy with you.