The Next 20 Years Webinar – You Had Questions, We Have Answers

Blog
December 27, 2017

Thank you to everyone who participated in our recent webinar, The Next 20 Years: Strategic Considerations for GSA Schedule Holders. Due to the large number of attendees, we were not able to answer questions live during the event. As promised, we compiled the questions submitted into the online classroom and are publishing the responses below.

Q: If our new contract isn’t awarded by the expiration date of the legacy contract, we cannot do new business until new contract # is awarded correct?

A: Correct, you cannot accept new General Services Administration (GSA) contract orders during the gap between your expired legacy contract and the award of your new schedule contract. While new orders cannot be placed on the expired legacy contract, Federal Acquisition Regulation (FAR) 52.216-22 Indefinite Quantity does allow existing orders, including options, to extend for up to 60 months after the contract has expired. Once the new contract is awarded, all future business must be placed on new contract.

 

Q: If a previous contract ended and we’re submitting a new offer (new IT70 SIN), does old contract pricing come into play at all?

A: If the previous Schedule contract ended recently and had the same or similar offerings and Special Item Numbers (SINs) as the new offer, it is likely that GSA will consider previous contract pricing. Don’t count on being able to negotiate substantially higher rates on new offer, as GSA will compare your new offered pricing to previous contract pricing, current commercial customer pricing, and other contractors’ pricing. Be prepared to justify the difference in pricing between your legacy contract and new Schedule offer.

 

Q: If the BPA cannot extend beyond the expiration of the underlying Schedule, do I need a new Schedule before I exercise my last 5 year option on my current GSA Schedule in order to obtain a 5 year BPA?

A: Yes, if you are in the last five-year option of your existing contract, you will need a new contract in order to compete for future Blanket Purchase Agreements (BPAs). Contractors cannot bid on BPAs with periods of performance that extend beyond the schedule contract’s final expiration date. Per FAR 8.405-3(d)(3), “Contractors may be awarded BPAs that extend beyond the current term of their GSA Schedule contract, so long as there are option periods in their GSA Schedule contract that, if exercised, will cover the BPA’s period of performance.” Definitely consider taking advantage of the Continuous Contract and Streamlined Offer initiatives to submit a new offer.

 

Q: If you have an existing schedule based on CSP, can you request to change to TDR?  For example, if submitting a mod to add LCATs/SINs can the contractor ask to move to TDR from CSP at that time?

A: Transactional Data Reporting (TDR) pilot program participation is now voluntary when adding covered SINs. Therefore you have a choice, (a) remain with the traditional pricing structure – and provide current, accurate, and complete Commercial Sales Practices (CSP) and related supporting documentation, or (b) move to the TDR pilot program – and CSP disclosures and Price Reductions clause (PRC) tracking requirements will be removed for the entire contract, and you will begin reporting itemized, order-level GSA sales data on monthly basis.

 

Q: If I am applying for Schedule 70 and have SINS that are both TDR eligible and non-TDR eligible, can my entire application be TDR?  Thank you

A: The Professional Services Schedule (PSS) and IT Schedule 70 both include some SINs that are part of the TDR pilot and some that are not. If you submit a “mixed offer,” you will need to decide whether to participate in TDR. This is an all-or-nothing choice. If you choose to participate, ALL SINs will be subject to the TDR requirements. If you do not participate, ALL SINs will be subject to the CSP disclosure and Price Reductions clause (PRC) tracking requirements.

 

Q: Where do we find this comparison data?

A: There are a number of free sources you can use to find GSA pricing comparison data. Some are more sophisticated and user-friendly than others. GSA eLibrary and GSA Advantage are good options if you are looking for information on a few specific part numbers or competitors’ contracts. GSA’s Contract-Awarded Labor Category (CALC) website is a better option if you want to do a deeper dive into labor rates based on title, qualifications, and more.

Competitive pricing data for products is more difficult to come by. At one point, there was a searchable database on GSA’s Data2Decisions website, but it is not there right now.

 

Q: Can you identify some of the “pricing subscription services”?

A: As we mentioned, there are some paid subscription services that provide GSA contract pricing data. Keep in mind that a lot of the information they provide is publicly available. The major benefit these services offer is that they make the data easier to search and analyze. Aronson uses Deltek’s GovWin, which is an excellent resource for services pricing data. For products companies, the primary solution I am aware of is from XSB. I have not personally used any XSB products, but GSA used XSB’s Price Point database internally for product pricing analysis for several years. The Warwick tool is XSB’s commercial vendor equivalent.

 

Q: GSA is using past wage rates to establish escalation rate. Industry uses future projections, salary surveys etc. Do you have any successful strategies to negotiate reasonable escalation of labor rates?

A: In cases where labor rates are market-based, as opposed to published on a commercial price list, GSA allows for the use of market indicators as the basis for escalation rates (I-FSS-969). While GSA primarily relies on the Department of Labor’s Employment Cost Index (ECI) Table 5, the clause does allow for the use of an “originally released public index, public survey or other public-based market indicator” if the parties agree. I have had a few clients who have negotiated rate increases based on salary surveys such as the Mercer Index. Keep in mind that these surveys can be expensive. Another option is to provide historical pay increase information from your company or escalation rates from awarded contracts to show the reasonableness of your request. GSA will try to keep as close to the ECI rate as possible, but you have options.

 

Q: How does competitive pricing work with services as each company’s services are not really comparable as each company has different education and experience requirements for the category, i.e., a project manager for one company does not have the same requirements/qualifications as a project manager from another company. In addition, the duties of each may be different. How can valid comparisons be made?

A: Proper comparison of rates for professional services has been one of the largest concerns raised by industry about GSA’s new pricing analysis techniques. There is extensive discussion of this issue in the final rule for the TDR program (81 FR 41103). GSA asserts that “[w]hile transactional data is most useful for price analysis when comparing like items, it does not mean the data is not useful when perfect comparisons cannot be made” (i.d at 46). The contractors’ most important role here will be to point out when GSA makes poor comparisons and propose better ones. It is smart to maintain a library of comparable rates and positions to use in these cases. Better yet, include them with your modification request or proposal.

 

Q: The slide says 60 month. Do you mean 60 days?

A: Please refer to FAR 52.216-22(d), Indefinite Quantity, which states that “any order issued during the effective period of this contract and not completed within that period shall be completed by the Contractor within the time specified in the order…provided, that the Contractor shall not be required to make any deliveries under this contract after the completion of customer order, including options, 60 months following the expiration of the basic contract ordering period.”

 

Q: Wow. I have several multiyear with escalations. So we can’t use the escalation for future years even if the award states all the escalations.

A: The problem with the escalation would be if that escalation takes the order rate above the final awarded GSA schedule contract rate. At that point, you would be overcharging the government. As long as the escalation stays below the final GSA rate, you can continue to bill the full amount.

  Final GSA Rate Order Discount Order Escalation Order Year 1 Order

Year 2

Order

Year 3

Order

Year 4

Order

Year 5

Scenario #1 $100.00 5.0% 3.0% $95.00 $97.85 $100.79 $103.81 $106.92
Overcharge per billed hour None None ($0.79) ($3.81) ($6.92)
Scenario #2 $100.00 15.0% 2.0% $85.00 $86.70 $88.43 $90.20 $92.01

Miss the webinar? You can download a recording from Aronson’s website. For any additional questions, please contact Vanessa Payne at 240.364.2663 or vpayne@aronsonllc.com or Jennifer Aubel at 301.231.6253 or jaubel@aronsonllc.com.