Sometime reader L. Gaga of New York, NY writes, “We submitted a price decrease
request to our CO two weeks ago, but haven’t heard back. Should we keep waiting?” Interesting question, L. In fact, we just had this in a recent
Schedules class. The short answer to your question
is “no”. There is usually no
reason to wait for formal CO approval on a price decrease, especially if it is
temporary or to maintain compliance with your GSA Schedule Price Reductions
Clause. The government likes lower
prices. The key is to ensure that the CO
knows that the discount is temporary, if in fact it is, and when normal
Schedule pricing will be restored. On
the other hand, you must wait for a price increase request to be approved. This approval must come from the GSA
CO, not a customer agency CO or GSA contract specialist. Typically, your GSA Schedule price will lag
behind your commercial prices.
This is because GSA wants to see evidence that you have billed, and been
paid, on the higher amount before they will consider an increase to the
Schedule price. Many companies, though, go years
without increasing Schedule prices and then expect to catch up all at once with
one modification. Schedule
contracts typically don’t allow for prices to go up by more than 10% in any one
year, though. As such, we
recommend setting a calendar reminder to review pricing on a regular basis or
trying to “catch up” during your five year extension process. Managing your Schedule prices properly helps
your company stay in compliance.
Your boss may even exclaim, “A star is born!”
While most national media outlets focused on the
border wall issue during last week’s Congressional action, the real good news for
contractors is that the legislation provides full funding for DHS, State,
Justice and other agencies for the remainder of the fiscal year. That’s very good news for both contractors
and agencies, both of whom had recently been nervously eying the prospect of a
shutdown or a “permanent” FY’19 CR. New
project starts may now be possible by the end of March. That’s about a month earlier than last year
and a two month improvement over FY’17. Budget
analysts predict that larger or mission critical projects will still be able to
move forward as planned. It’s
smaller or less needy projects that may be pushed to the side. The compressed time frame, though, does mean that
projects that go through assisted acquisition service shops will have to be
initiated quickly. Indeed, all
business for the impacted agencies will have to be done in about half a year,
though agencies should now be accustomed to that pace given previous
year constraints. Of course, DOD and
other agencies that accounted for 70% of discretionary spending have had their
funding all along. Overall, this
means that FY’19 should be better for business than the previous two.
Studies
conducted by the Coalition for Government Procurement and Navy Post Graduate
School show that prices for certain goods are cheaper – sometimes substantially
so, on GSA Advantage than on Amazon Business.
The studies were originally reported last week by the Federal News
Network. While the price difference is
not a surprise to GSA Schedule supporters, the study findings do pose challenges for
GSA and potential e-commerce suppliers as they move forward the
e-commerce portal project. First,
it’s obvious that “faster” doesn’t always mean “cheaper”. Congress was perhaps under the assumption
that commercial providers automatically got better deals from suppliers than
did the federal government. If that’s
not the case, then a key foundation for e-commerce program is shaky. Second, the Navy Post Graduate School report
did find that buyers preferred the user experience offered by commercial
platforms over GSA Advantage. How/can
does GSA work to update Advantage to match that experience? One obvious answer would be to outsource the
operation of Advantage to a third party since GSA likely lacks the funding and
resources to upgrade Advantage internally. That option, however, could face
internal hurdles. Third, for potential e-commerce
providers, will they be able to lower their prices to more closely match those
on Advantage, or at least come close enough so that their total value
proposition makes their platforms a viable acquisition method? If Congress believes that federal agencies
will spend more for items than they can get from existing acquisition sources,
they may rescind the project.
All of these issues are in play as GSA drafts a report
due to Congress next month on their progress to date in meeting the existing
Congressional requirement. The report
will be in the hands of a different party majority than the one that initiated
the project and whether they place the same priority on it as their
predecessors is unknown. Whether
and how the questions above are addressed will likely shape the future of the
project.
Steady
increases in the federal IT budget may result in a total federal IT budget in
excess of $90 billion in FY’20 according to recent analysis conducted by
Bloomberg Government.
Bloomberg states that IT spending in FY’18 was nearly $65 billion and
that IT budgets are currently on a 5% annual upward trend. Overall, IT spending is divided
almost equally between civilian agencies and the Department of Defense. While spending on existing infrastructure is
still the largest single area of where funds are allocated, cloud,
agile technology, and emerging areas such as AI are all experiencing increased
spending. This is great news for
contractors that can offer comprehensive, multi-faceted solutions. While feds still need equipment, it is more
and more the services that come from the equipment that they want, rather than
the machines themselves. GSA
officials recently reinforced this with a prediction that almost all IT
business will be service-based in the near future. Larger companies are, frankly, generally
better situated to conduct DOD business than smaller or newer market entries. While DOD leaders do want innovation, many
larger projects have at least one established company as part of the team. The risk-averse nature of acquisition
decision making is one thing that hasn’t changed.
Annual training on ethics and contract compliance is an established best
practice for government contractors.
Like the flu vaccine, it can greatly reduce (but not eliminate) the
impact of any adverse actions government agencies may take against your company
if incidences of non-compliance are found.
Training should be mandatory and participation be recorded. Allen Federal has trained many companies on
what to do – and not do – in the pursuit of government business. Don’t be a contract “anti-vaxxer”. Get your training scheduled today! Contact
Allen Federal at info@allenfederal.com
to see what we can do for you.