Aronson GSA Schedule Consulting Practice consultants Jennifer Aubel and Jacelyn Ferriell recently presented a webinar The 10 Commandments of GSA Schedule Compliance. The audience had a ton of questions that others may have too. Below is the Q&A recap from the event.
Question: What is the relationship between the Maximum Order Threshold and Price Reduction Clause?
Answer: Each Special Item Number (SIN) on the GSA Schedules has a Maximum Order Threshold (MOT). The MOT is the dollar value for an order at which agencies are instructed to seek deeper discounts from the contractor. As such, GSA assumes that your commercial customers may also be receiving better discounts at this point. Firm, fixed price commercial orders with definite quantities and delivery are exempt from triggering price reductions.
When negotiating your contract, you should identify commercial sales exceeding the MOT and disclose any additional discounts or concessions extended to those customers in your Commercial Sales Practices (CSP). As a best practice, you should continue to monitor your sales practices after contract award and update your CSP to incorporate any new discounting practices, whether or not they are associated with the MOT.
Question: Our company is under GSA IT 70. If our GSA schedule that was done years ago did not include any terms about experience or education substitution (more specifically, all the categories requires Bachelor + Experience), is it possible to renegotiate and modify our schedule so it can include the substitution terms?
Answer: Yes, you can request to modify the awarded labor categories on your contract. In our experience, some GSA contracting officers will not allow you to add substitutions because they view this as diminishing the value of the category. You are more likely to be successful if you can demonstrate that your company uses experience or education substitutions commercially. Consult your GSA contracting officer to determine the type of modification you should submit.
Question: Could you please provide an example for an exception that could be proposed in the CSP?
Answer: While there are broad categories of exceptions to the price reductions clause; ultimately, exceptions need to be tailored to the contractor’s unique business practices, and terms and conditions with their customers. Each contractor should perform an in-depth analysis of its sales practices when negotiating the initial GSA contract and conduct internal reviews at regular intervals after award to ensure the CSP remains current, accurate, and complete. During this process, exceptions should be identified and disclosed.
One example from the webinar was special consideration given to resellers. Resellers typically offer the contractor additional value that justifies a reduction in the sales price. For example, they may market your products, reducing your overhead costs. GSA would never market a company’s products; therefore, GSA should not receive the same level of discount. We recommend you consult with someone who has an in-depth understanding of CSPs to assist in identifying what exceptions may apply to your company.
Question: What happens if you quote GSA pricing, but do not include the contract number?
Answer: Quoting GSA prices alone will not automatically make this a GSA sale, although the burden of proof will be on you to demonstrate why it isn’t. Documentation is important so that GSA does not see that you quoted the customer GSA rates and assume this is a GSA sale. The contract number or solicitation number that was utilized should be included on your quote and invoice. Be sure to properly document when a federal sale is a non-GSA sale on future orders to maintain compliance and avoid the risk of owing IFF on orders that do not utilize your GSA schedule.
Question: If we put a bid in as FFP and use, at least partially, folks that do not meet labor category definitions – but do use some folks that meet them, are we in violation since there is no T&M element and possibly no labor build?
Answer: This is a very complex issue. In an audit, GSA would look to the Firm-Fixed Price (FFP) proposal to see how your pricing was quoted to the customer. If you include a labor breakdown that shows each category and a proposed number of hours to arrive at the total contract price, GSA would expect the employees staffed to be qualified personnel. When labor categories on a proposal are mapped to an employee, the contractor should ensure that employee is qualified based on the awarded labor category descriptions.
In a recent audit we supported that included a large number of FFP orders, the auditor tried to get names and resumes for the personnel who worked on those projects. We argued that they were not entitled to that information because it was not the basis for billing the government. The auditors did not agree with our position. Ultimately, we referred the client to a GSA-focused attorney to resolve the issue.
Question: If the GSA reduces your price because of the [transactional] data, would you be able to reduce your discounts offered?
Answer: Contractors should keep Transactional Data Reporting (TDR) in mind whether it is currently applicable to their contract or not. If GSA continues with this initiative, it will have a direct impact on all contractors’ schedules in the future. TDR will attempt to capture a contractor’s GSA sales data down to the specific product/service purchased and the unit price the customer paid. Because many contractors offer spot discounts at the order level, we assume GSA contracting officers may begin using this data as the basis to renegotiate a contractor’s ceiling rates. Should GSA request a reduction in your prices based solely on the data they see from TDR, your basic discount to GSA customers will increase. This may have implications on the spot discounts you would be able to offer your GSA customers going forward. You would be able to reduce spot discounts on new orders.
Question: Is travel considered an open market item?
Answer: Yes, travel is considered open market and is specifically classified under Other Direct Cost (ODC). As such, travel is not considered part of the GSA sale and should not be reported. Further, the agency does not pay Industrial Funding Fee (IFF) on travel, so you should not include travel when calculating your IFF on a given order.
If you missed the event, watch a recording here. Be sure to subscribe to Aronson’s FedPoint blog to get notifications whenever new information like this is posted. For more information, contact Jacelyn Ferriell at 240.364.2715 or firstname.lastname@example.org.
GSA has released the solicitation refreshes and mass modifications incorporating the Formatted Product Tool (FPT) into Schedules 58I (Professional Audio/Video), 51V (Hardware Superstore), and 72 (Furnishings & Floor Coverings). All new offers under these schedules must utilize the FPT in eOffer for pricing analysis and negotiation.
Pricing proposals will first go through the FPT process to standardize Manufacturer Part Numbers (MPNs). The system will identify products for standardization. Contractors will either need to accept the system-identified MPN or provide rationale to support a system identification error. Pricing will still be evaluated via the Competitive Pricing Initiative (CPI) methodology. The pricing analysis and MPN standardization process may result in the vendor having to edit and resubmit corrections to their offer.
The Formatted Product Tool (FPT) has been established to assist GSA contracting officers in their evaluation and negotiation of all participating contractors’ schedule pricing. The FPT is expected to assist GSA with standardizing Manufacturer Part Numbers in order to streamline analysis of fair and reasonable pricing. The tool will utilize complex algorithms to compare all similar products and ensure pricing is within an established variance.
The Formatted Product Tool will also update and replace the old SIP and CORS systems for processing GSA Advantage price list uploads. The FPT will automatically publish new pricing/products to GSA Advantage upon award of such modifications. Contractors are required to publish their entire product offering on GSA Advantage.
A recent bid protest decision from the Government Accountability Office (GAO) clarifies the critical point at which products and/or services must be awarded on a Federal Supply Schedule (FSS) contract in order for the contractor to properly receive an FSS order for the item. In the matter of AmeriGuard Security Services, Inc., B-411513, Oct. 3, 2015, GAO states that all proposed products and services must be on a contractor’s FSS schedule by the task order award date. When responding to an opportunity for GSA schedule products or services, contractors may therefore propose items not currently awarded on their schedule as long as the items have been added to the schedule by the date the order is awarded.
Federal employees on business travel next year will have more money to spend on hotels and meals.
The General Services Administration announced on August 14th that the per diem rates for fiscal year 2016 will increase.
“The standard lodging per diem rate will raise $6 from $83 to $89,” GSA stated in the notice, which goes into effect Oct. 1. “The meals and incidental expense ranges also are increasing from $46-$71, to $54-$74 per day.”
The decision to increase the 2014 rates came after GSA reviewed the recommendations made by the Governmentwide Travel Advisory Committee (GTAC), to the GSA Administrator in March 2015. GSA also accepted the GTAC’s recommendation that, “GSA review the standard CONUS travel per diem rate annually rather than every three years.”