Compromising Over Prices on a GSA Contract

How do you negotiate a price point which is reasonable to the GSA and profitable for your company? The General Services Administration (GSA) appears to be placing more emphasis on obtaining the lowest possible price when negotiating GSA schedule contracts. The dollar acquisition regulations say the dominion should get fair and reasonable pricing. However, because of this new emphasis, the price GSA seeks may not be fair and reasonable. Excerpts from the GSA Acquisition Manual are as follows.The Government will seek to obtain the offeror's best price (the best cost given to the most favored customer). However, the Government recognizes that the terms and conditions of commercial sales vary and there may be legitimate reasons why the best price is not achieved.

When establishing negotiation objectives and determining price reasonableness, compare the terms and conditions of the MAS solicitation with the terms and conditions of agreements with the offeror's commercial customers. When determining the Government's cost negotiation objectives, digest the following factors:

Aggregate volume of anticipated purchases.

The purchase of a minimum quantity or a pattern of historic purchases.

Prices taking into deliberation any combination of discounts and concessions offered to commercial customers.

Length of the contract period.

Warranties, training, and/or maintenance included in the purchase cost or provided at additional price to the descendants prices.

Ordering and delivery practices.

Any other relevant information, including differences between the MAS solicitation and commercial terms and conditions that may warrant differentials between the offer and the discounts offered to the most favored commercial customer(s). For example, an offeror may incur more expense selling to the Government than to the client who receives the offeror's best price, or the customer (e.g., dealer, distributor, original equipment manufacturer, other reseller) who receives the best price may perform definite value-added functions for the offeror that the Government does not perform. In such cases, some reduction in the discount given to the Government may be appropriate. If the best cost is not offered to the Government, you should ask the offeror to identify and interpret the reason for documents differences. Do not need offerors to provide elaborate cost breakdowns.

You may award a contract containing pricing which is decreasing favorable than the best cost the offeror extends to documents commercial customer for similar purchases if you make a visualization that both of the following conditions exist:

The prices offered to the Government are dispassionate and reasonable, even though comparable discounts were not negotiated.

Award is otherwise in the best interest of the Government.

The regulations clearly state that GSA should consider value and contract terms and conditions when important fairness and reasonableness.

In summary, a GSA schedule price bid and subsequent telephone negotiations are just like documents business negotiation, e.g., buying a car. It's a give and take derive and the companies making the most convincing arguments supporting their cost (on paper and duration telephone discussions) will obtain the best pricing.

The most confusing aspect of a GSA proposal is the requirement to uncover your discounting practices. GSA uses the disclosures to bargain a discount equal to or better than the best discount you have extended to your commercial customers. Proposal writing and the subsequent verbal price negotiations with GSA are part of the sales process. The prices negotiated during this process are driven by the discounting practices you disclosed in your proposal. Under Terms and Conditions, GSA regulations essentially property the following: "Commercial terms and conditions may be different than the terms and conditions of GSA schedule contracts. These differences may result in GSA prices that are higher than prices offered to your favored commercial customer(s)." But the reality is quite different. GSA will almost always say: "We are the world's biggest customer, and we should have better than your best cost even if the terms and conditions vary."

GSA is an adversarial party when negotiating with you and you must convince them that the "world's biggest customer" dispute doesn't devote to you. Explain that it may devote to a large prime contractor with thousands of established federal relationships, but not to a dwarf business new to the market. To the small company owner, GSA may in fact be the world's most expensive market. The market is spread across thousands of agencies worldwide. Finding and selling end users in individual federal agencies requires significant business growth and sales costs, and there can be a long lag time between submitting a proposal and making a profit. The cost of making individual GSA sales may far exceed the average cost of a commercial sale. Don't be shy; bring these points up in your proposal and during verbal price negotiations. GSA regulations say that the contracting officers should listen. They just don't dreamy to. Learn more about GSA Schedules Fedmarket.com offers a one-day class on GSA Schedules doormat the fundamentals of GSA Schedules including all aspects of GSA pricing.