[29837] in Zephyr_Bugs
GSA: GSA and Most Favored Customer Pricing
daemon@ATHENA.MIT.EDU (Fedmarket)
Sun Oct 23 21:54:23 2005
Date: Sun, 23 Oct 2005 19:47:12 -0600
From: "Fedmarket" <noreply@fedmarket.com>
To: zephyr-bugs@mit.edu
Reply-To: "Fedmarket" <noreply@fedmarket.com>
Content-type: text/plain
Message-Id: <20051024014712.AD20E3CCFBB@wrtlnx07.wrtech.com>
*** GSA Schedules ****
Welcome to our series called "GSA Schedules." This newsletter is the sixteenth installment in a series of rotating weekly email newsletters about GSA Schedules, Proposal Writing and Federal Sales.
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Installment 16 - GSA and Most Favored Customer Pricing
A recent newsletter discussed that the General Service Administration (GSA) has encountered procurement problems and has initiated a "Get It Right" campaign to improve acquisition regulation compliance. The "Get It Right" campaign was necessitated by, among other things, GSA's near fanatical focus on getting "most favored customer (MFC)" pricing from vendors.
MFC pricing and its relationship to GSA prices is the heart of GSA price negotiation. GSA's new focus on obtaining MFC pricing frequently flies in the face of GSA's own regulations.
Part 538.2 of the General Services Administration Acquisition Manual (GSAM) provides as follows:
538.270 Evaluation of multiple award schedule (MAS) offers.
(a) The Government will seek to obtain the offeror's best price (the best price 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.
(b) Establish negotiation objectives based on a review of relevant data and determine price reasonableness.
(c) 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 price negotiation objectives, consider the following factors:
(1) Aggregate volume of anticipated purchases.
(2) The purchase of a minimum quantity or a pattern of historic purchases.
(3) Prices taking into consideration any combination of discounts and concessions offered to commercial customers.
(4) Length of the contract period.
(5) Warranties, training, and/or maintenance included in the purchase price or provided at additional cost to the product prices.
(6) Ordering and delivery practices.
(7) 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 customer 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 certain 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 price is not offered to the Government, you should ask the offeror to identify and explain the reason for any differences. Do not require offerors to provide detailed cost breakdowns.
(d) You may award a contract containing pricing which is less favorable than the best price the offeror extends to any commercial customer for similar purchases if you make a determination that both of the following conditions exist:
(1) The prices offered to the Government are fair and reasonable, even though comparable discounts were not negotiated.
(2) Award is otherwise in the best interest of the Government.
A reasonable interpretation of the regulation quoted above is that the Contracting Officer should, among other things, compare the terms and conditions of the Vendor's commercial sales and compare them with the terms and conditions of the GSA schedule contract. The Contracting Officer should then use his best judgment in determining a fair and reasonable price for the offered product or service. In fact, there is a recognition in the provisions cited above that there may be a reason that the government is not entitled to best customer pricing. However, bureaucrats are uncomfortable with exercising judgment particularly if there are auditors looking over their shoulders. Auditors, in turn, are noted for viewing issues as either black or white. Subjective decisions, even when rational, create the opportunity to be second guessed and contracting officials do not like to be second guessed.
A quandary exists because many vendors cannot offer GSA their most favored customer pricing without losing money. Unfortunately, there isn't a good answer to this problem. We suggest building as strong an argument as possible using the exceptions outlined in GSAM Section 538.2 above. When challenged by GSA's Contracting Officer, stick to your guns and be prepared to fight the fight.
-------------------- ** Become a GSA Approved Vendor ** ----------------------
Complete Your GSA Schedule Proposal in 3 Days.
Stop the pain and procrastination, let us help!
Fedmarket.com's GSA Proposal Preparation eLab is a three-day event held monthly in Bethesda, Maryland. Fedmarket.com developed the GSA eLab for those individuals who have been given the daunting responsibility for preparing their company's General Services Administration (GSA) offer. Our instructors will walk attendees through the offer preparation process and assist them in leaving the eLab with a completed GSA proposal.
Upcoming Dates: November 8 - 10, 2005
December 6 - 8, 2005
Location: The Federal Sales Academy
3 Bethesda Metro Center
Bethesda, Maryland 20814
Participants gain hands-on experience with the workings of GSA schedules.
This experience is invaluable for:
Negotiating with GSA concerning prices and terms and conditions.
Managing and administering schedules
Paying Industrial Funding Fees
Selling using schedules
For more information: http://www.fedmarket.com/seminars/gsa-proposal-elab.shtml
Price: $3,900
Call 888.661.4094 ext 14 for more information
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Thanks for reading and, as always, best of luck in your business. Feel free to contact me with thoughts or suggestions. If you need help with product sales, call or write as follows:
(888) 661-4094 Ext. 8 or sales@fedmarket.com.
Regards,
Richard White, President
Fedmarket.com
The Federal Sales Academy
rwhite@fedmarket.com
(301) 652-9506
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