Taking Advantage of GSA Schedule Contracting Opportunities

 

By Jeffrey S. Newman
Foley & Lardner LLP,
Washington, D.C., (202) 672-5442

A General Services Administration (GSA) Schedule contract is one of several streamlined contract vehicles that contractors may use to market and sell their commercial products or services to the government. This contract provides contractors with a viable and potentially lucrative platform on which to service its public sector customers.

The GSA Schedule contract program consists of more than 4 million products and services, provided by approximately, 9000 vendors. All federal agencies may purchase off GSA’s Schedule contracts as well as, in some cases, other interested parties, such as state and local governments and private sector contractors.

Government customers often ask whether a contractor has an existing contract Schedule contract in place, as it enables them to purchase products and/or services more quickly and cost effectively.

However, it is important to note that a Schedule contract by itself does not guarantee any new business. Rather, it offers an opportunity to market and sell products or services to the federal government. A contractor will realize new business only when agencies issue purchase orders – particularly, delivery orders for products and task orders for services – under the contractor’s Schedule contract.

Obtaining a Schedule contract begins with identifying and completing the applicable GSA Schedule solicitation. GSA Schedule solicitations require contractors to provide a good deal of information about the company, the products or services being offered, contract pricing and performance history.

Once the offer is submitted, the Contracting Officer (CO) may request supplemental information about the particular products or services before commencing full-scale negotiations on contract price and other contract terms and conditions. Generally, negotiating a Schedule contract takes approximately three to five months to complete.

During contract negotiations, GSA will try to obtain a contractor’s best available price. This negotiation objective is known as GSA’s Most Favored Customer (MFC) pricing. MFC pricing is based on comparable terms and conditions among a contractor’s commercial customers. The CO will undertake this comparison by requesting that a contractor disclose information about its commercial pricing policies and practices in the Schedule solicitation’s Commercial Sales Practice Format section.

For example, during negotiations, the CO and contractor could agree that a particular customer or category of customer, Entity X, is the basis for award (MFC) such that the price that the government pays for a particular item or service will be equal to Entity X’s price, or the discount provided to the government is the same as afforded Entity X.

After negotiation and award of a Schedule contract, a contractor should immediately distribute its product/price lists to federal agencies announcing its contract award and link its new contract to GSA Advantage!,^® GSA’s online catalog, to facilitate agency purchasing activities.

Although the GSA generally is required to notify agencies of the award, contractors should not rely solely on the government. Contractors should take affirmative steps to make government customers aware of its Schedule contract and the benefits of using its products or services. These efforts are critical to ensure agencies understand how a contractor’s products or services can best satisfy the government’s requirements and demonstrate the return on investment.

Steps in Obtaining a Schedule Contract

Identify and obtain applicable GSA Schedule solicitation.

Complete solicitation.

Submit solicitation to the CO (3-5 month process begins).

Evaluation of offer – respond to CO's requests for additional information.

Contract negotiations – price, and other terms and conditions.

Contract Award.

Work with CO and agencies to market Schedule contract.

Throughout performance, Schedule contractors must carefully comply with the pricing parameters set forth during the contract negotiations with GSA. If the price is reduced or discount increased for the particular customer or category of customer identified during contract negotiations, Entity X (or if a similar reduction/increase occurs in the contractor’s commercial pricing information upon which the contract award was predicated), then this information is required to be reported to the government.

A corresponding price reduction then is generally offered to the government. Similarly, if a contractor decides to issue promotional discounts across the board to its commercial customers these discounts also must be given to governmental ordering activities.

There are occasions, however, where contractors are not required to provide a price reduction to schedule users. Perhaps the most notable is where a federal agency purchases products or services under a contractor’s Schedule contract for less than the designated Schedule pricing. Under this scenario, a price reduction does not have to be offered government-wide to every other federal agency.

Another facet of Schedule contracting is that contractors also must provide an Industrial Funding Fee to fund GSA’s cost of operating the Schedules program. This fee is obtained from government agencies when they purchase items or services from a Schedule contractor. The fee is included in the price and is not a separate line item; therefore, the award prices that appear in contractors’ pricelists already include the fee. The fee is .75 percent of sales made under a contractor’s Schedule contract and must be remitted on quarterly basis.

Obtaining a Schedule contract is a potentially advantageous component of a company’s government sales strategy. If you are an entity that provides commercial items or services and want to sell to the federal government, or would like to increase your existing public sector business, then it may be in your best interest to consider pursuing a Schedule contract.

Note: This update provides information of general interest presented in summary form, and does not constitute individual legal advice.