Changes to GSA Schedules are happening and GSA has begun releasing their latest solicitation refreshes. This time around we are noticing something different. In this latest set of refreshes there are two clear additions to the language in the Solicitation Cover Page as well as the Proposal Pricelist Preparation Spreadsheet. (here is one example). The solicitation now includes these two statements:
Full Products and Broad Services Offerings: Offeror must provide a full and broad offering on services and/or products. Offers will not be accepted with only limited item/offering (product, labor category, training course, or fixed-price service) unless it represents a total solution for the Special Item Numbers (SINs).
Fair and Reasonable Pricing: To determine fair and reasonable pricing, the GSA Contracting Officer may consider many factors, including pricing on competitor contracts, historical pricing, and currently available pricing in other venues. Offers which provide Most Favored Customer pricing, but which are not highly competitive will not be found fair and reasonable and will not be accepted.
GSA Contracting Officers have mentioned in conversations with ColeyGSA that we should expect some big changes in GSA specifically related to these statements. We have already seen an active initiative by GSA to remove underperforming contractors who are not meeting GSA’s minimum sales requirements of $25,000 annually. The Contracting Officers we spoke to also mentioned that GSA is looking to reduce vendors and the range of products offered to reduce administrative burden and standardize pricing.
For some, it will be harder to get awarded.
GSA’s statements on offering full product and broad service offerings, allows us to conclude that GSA will no longer accept contractors who only want to offer limited products or services. They prefer vendors who can offer the full range of products and services to cover the entire scope of the Special Item Number – though they were not clear on how this would be applied, we know their goal is to reduce the use of “Open Market” quotes through the schedule.
Price Competition will be (more) fierce.
Another change coming for GSA Schedules is on the fair and reasonable pricing statement. , GSA will not only compare your GSA pricing to other GSA vendors but they will also consider outside factors (commercial competitor pricing) and historical sales information to make sure that the price you are offering to GSA is fair and reasonable.
In addition, there has been a buzz that leads us to believe that GSA is creating a new system so contracting officers can more easily research competitor pricing and recommend potential vendors what GSA would consider “fair and reasonable.” If this materializes, we fear it may lead to price-fixing which will restrict margins and limit some business entry into the market.
New “Commerciality” Requirement?
Another term we have heard being thrown around by GSA is “test of commerciality.” A commercial item is defined in FAR 2.101 basically as any item or service that is customarily used by and available to the general public in the commercial marketplace. This also includes items/services that may not currently be available in the commercial marketplace, but through advances in technology, will soon be available in the commercial marketplace. FAR 6.502 further explain that “agency and procuring activity competition advocates are responsible for promoting the acquisition of commercial items…” GSA will become more stringent in only approving products or services that have presence in the commercial marketplace; they will be more restrictive in accepting products or services designed specifically for the Government’s needs.
Why does the Government only want to by commercial items? The main reason is, if an item is a “commercial item,” there would be adequate price competition that will allow Contracting Officers to conduct price analysis and decide if the price offered is fair and reasonable. The idea of commerciality really came about in the 1990’s with the Governments acquisition reform (you may recall the Government’s $100 hammer). GSA may now begin asking for evidence of commerciality before accepting a new line of products or services.
We do not see much concern in the test of commerciality as it has always been the intent of the GSA Schedule to offer commercially available products/services to the Federal Agencies through a streamlined procurement vehicle, as per FAR 8.
However, now they are requiring all products be identified by the Manufacturer’s Part Number and not a reseller or dealer part number. If you are a Value-Added Reseller, you will be required to substantiate the value you are providing compared to the price you are charging.
These upcoming changes to GSA Schedules could have substantial impact on GSA schedule holders and Small Business who may not be able to compete purely on price with the “Big Guys”. It may become more difficult to modify your schedule or even obtain a GSA schedule. GSA is planning an Industry day in August to discuss these upcoming changes and we urge you to get involved.
Contact ColeyGSA if you have any questions on how these changes may affect you.
Since 2001 Coley GCS has helped companies worldwide successfully win and manage more than $1 Billion in Government Contracts. We specialize in GSA Schedules but support any contracting vehicle. We build long term relationships with clients –many who have put their trust in our advice for over a decade.