UPDATE: GSA Initiatives Focus on Price Variability on Multiple Award Schedule Contracts

This is an update regarding the Competitive Pricing Initiative, under which the GSA is contacting vendors to address pricing differences among identical or similar products and/or services. Here is a sample “Addressing Pricing Variability under the Federal Supply Schedules Program” letter that GSA is currently sending to selected GSA contract holders. The notices also contain a spreadsheet that compares similar products from GSA Advantage! and provides the (1) lowest and highest awarded price, (2) number of listings found on Advantage!, and (3) GSA’s “competitive price threshold” for each of the line items that GSA has identified as having “prices that are much higher than other FSS partners for the same item.”

Additionally, GSA has introduced a new “Contract Award Labor Category (CALC)” pricing research tool as part of the Common Acquisition Platform (CAP) initiative that will streamline the pricing analysis process by assisting agencies in determining if a proposed labor category rate is fair and reasonable. According to GSA, the CALC tool provides market and industry research and price analysis for professional labor categories across a database of GSA contract awarded prices for 48,000 labor categories from more than 5,000 current GSA contracts.

The CALC is available in the Professional Services Category Hallway and allows a contracting officer to search for a labor category starting with a position title and then down selecting by education, experience, work location, business size, and/or Schedule – such as a program manager with a master’s degree and 5-10 years of experience (see example screenshot below) – without wasting time searching through databases and contracts.

CALC searches awarded prices only on the following GSA professional services schedules:

• Mission Oriented Business Integrated Services (874)
• Environmental Services (899)
• Logistics Worldwide (874 V)
• Professional Engineering Services (871)
• Language Services (738 II)
• Advertising and Integrated Marketing Services (541)
• Financial and Business Solutions (520)
• The Consolidated Schedule (00CORP)

The CALC web site currently lists AIMS and FABS as newly-added categories with “limited” search results. It does NOT include labor categories awarded under SIN 132-51, IT Professional Services.

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The General Services Administration (GSA) is proposing the use of data analytics to meet its objective of ensuring competitive pricing on its multiple award schedule (MAS) contracts. In order to keep the $35 billion a year GSA schedules program competitive, GSA management is finding that it has to change its business practices to benefit its customers, taxpayers and vendors. GSA’s goal is for the MAS program to be the best federal procurement vehicle, especially now that the program has stagnated.

To accomplish this goal, GSA is focusing on data-driven pricing, flexible contracting, and enhanced customer service. Pricing being fair and reasonable, as well as competitive, is the critical issue for GSA, so GSA is aggressively looking at price variability across schedule contracts. Price variability was the primary factor in the Department of Defense’s recent class deviation to GSA ordering procedures under FAR 8.4, which demonstrates agencies’ decreasing confidence in GSA’s price negotiations at the master contract level.

As a result, GSA’s fair and reasonable determination has shifted from an analysis of how the vendor’s proposed price compares to the rest of its commercial customers, to also include how the price compares to other GSA vendors. The evolution of determining fair and reasonable pricing continues as GSA seeks to assure its federal agency customers that they are receiving the best price and value for their products and services.

Through initiatives such as Strategic Sourcing, the proposed Transactional Data Reporting rule, Category Management, and the Common Acquisition Platform (where most of the data will reside), GSA hopes to provide better purchasing tools and more transparency for the federal customer.

Another initiative that GSA is executing is the Competitive Pricing Initiative, where GSA is contacting vendors to address pricing differences among identical or similar products and/or services. Vendors with out-of-range pricing will receive data packages very soon, and GSA intends to have discussions with about 2,000 of its industry partners by year end. The discussions will focus on higher-priced items and whether those prices should be reduced given any variations with similar products or services on schedule contracts.

Industry has to be concerned with these initiatives. What will be the cost and burden of compliance? How is contractors’ competitive pricing information being protected, or is there a chance that pricing information can be compromised? What are the costs for a system to collect the pricing data information? Stay tuned to Aprio FedPoint for more information on this important federal contracting topic.

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