Strategies for increasing your GSA Contract Pricing

Raising Your GSA Contract Pricing

So, you've successfully secured your GSA Schedule, and you're actively engaged in government contracts. However, as always, the business landscape changes, and what once proved lucrative may now seem less so. This prompts the question: Can you adjust your GSA contract pricing before its expiration? And if the answer is yes, how do you go about it? 

This guide will provide the answers you seek.

Check if you Qualify to be a GSA Contractor

Is GSA Open to Contract Price Adjustments?

The short answer is yes, GSA allows for contract price adjustments. The vehicle for such modifications is referred to as an Economical Price Adjustment (EPA), and it comes in two distinct forms:

  1. Commercial Price Escalations
  2. Annual Price Escalations

These alterations adhere to either clause I-FSS-969 or clause 552.216-70, depending on your specific GSA contracting documents.

Commercial Price Escalations

Under commercial price escalations, you can increase your GSA prices as long as your commercial rates have experienced an uptick. This necessitates a modification to your existing GSA contract. Moreover, you must supply a commercial price list or catalog that clearly illustrates how your commercial prices or rates have risen as of a specific date. If you’re a reseller seeking to raise GSA prices due to price hikes from your suppliers, you’ll need to furnish a confirmation letter along with your supplier’s price list.

It’s essential to note that a procurement officer may conduct additional market research before approving your suggested contract modification. Their objective is to ensure that GSA maintains fair and competitive pricing, discouraging arbitrary rate hikes in pursuit of increased profit margins.

Annual Price Escalations

Alternatively, you have the option to negotiate a predetermined percentage increase in your GSA prices each year. The standard increment typically hovers around 2-2.5% annually. Keep in mind that you are still obligated to offer GSA the best possible deals, which means that any GSA rate increase also necessitates annual adjustments to your commercial rates to honor this obligation.

What Are the Limits on GSA Contract Pricing Increases?

Naturally, there are restrictions on how often and how much you can raise your prices. The government allows for up to three price adjustments per year, with an annual caps of 10% for Products, 4% for Human Capital, 5% for Professional Services, and 5% for the Travel Category. This may not cover all eventualities but it offers you a degree of flexibility to remain competitive in the market.

Adjusting GSA Pricing for Product Sellers

For product sellers, the process of changing pricing involves several conditions:

  • The base price list used for contract pricing must have undergone changes, indicating price increases.
  • The contractor must have held the contract for at least 12 months before their initial request for GSA pricing modification.
  • The proposal for a price change must be submitted no earlier than 30 days after the last submission and no later than the last 60 days of the contract expiration date.

If you sell products to GSA and require GSA proposal templates, feel free to reach out to Price Reporter for assistance.

Adjusting GSA Pricing for Service Providers

The procedure for service providers is similar, except their contracts typically fall under clause I-FSS-696. This clause stipulates that all economic price adjustments must be negotiated before the contract signing. Contractors can choose between EPA based on fixed escalation rates or EPA based on predefined market indicators such as public surveys or indices.

Key conditions for service providers include:

  • A maximum of three GSA price increases per year, with subsequent requests not being considered after the third.
  • Proposals for price changes must be submitted within the last 60 days of the contract’s expiration date and no earlier than 30 days after the last submission.
  • Clear evidence must be provided to demonstrate an increase in GSA contractor net labor costs as of a specific date.

If you’re unsure of where to begin, Price Reporter is available to provide GSA proposal templates to facilitate your price increase requests.

In conclusion, it’s important to bear in mind that the government reserves the right to decline or negotiate lower pricing in response to your request. This is a standard part of the process. 

Additionally, GSA schedule rates must remain fair and reasonable, as the government is your Most Favored Customer, and it must receive rates in line with that standard at all times. Failure to substantiate your proposed price increase could result in a declined request.

Given the limitation of three annual requests, any oversight can hinder your ability to secure better prices for your company. 

For this reason, enlisting professionals like Price Reporter, who have 17 years of experience assisting government contractors, may be a wise choice. Don’t hesitate to get in touch with us for support in navigating this process.

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  • Is the contract you are referring to the GSA contract or our agency-specific contracts?

  • Thus, the first year of cooperation with the state can be unprofitable for my firm if all competitors in the market increase prices. And I, apparently, can’t do it? But then what is the point of this cooperation?

  • So, no matter how the market price fluctuates – will I really not be able to change the price specified in the contract during the first year? What if the market price for my service is falling and the government can no longer get its best price? Will the contract be terminated because of this restriction? I read on your blog that the government can terminate the contract unilaterally. Or is the ban on price changes during the first year only valid for price increases, not for price reductions?

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