Raising Your GSA Contract Pricing

Raising Your GSA Contract Pricing

Ways to Increase GSA Contract Pricing

Ok, your GSA Schedule was finally secured and you were happily doing business with the government. But the market is a market. It’s dynamic. It constantly changes, and at some point continuing to fulfill your obligations for the government may turn out to be less profitable than it was before.

So the question is: can you raise your GSA contract pricing before your currently signed contract expires? And if yes, how to do this? This article answers the question.

Does GSA allow raising contract pricing?

First things first – the answer is yes. This is a typical reason for contract modification, actually, and this is called Economical Price Adjustment (EPA). There are two options to perform EPA in your GSA Schedule contract:

  1. Commercial based escalations
  2. Annual escalations

Regardless of the option, all economic price adjustments are made in accordance with the clause I-FSS-969 or the clause 552.216-70. Which one is yours? This is specified in your GSA contracting documents.

Commercial price escalations

Commercial price escalation you can raise your GSA price as long as your commercial prices have increased too. This requires modification of your current GSA contract. Also, you must provide a commercial price list or a catalog that indicates your commercial prices/rates have increased as of some specific date. If you are a reseller, and want to increase your GSA prices because you suppliers did so, you must additionally provide a confirmation letter and a price list of your supplier too.

Note that a procurement officer may still decide to perform additional market research before the contract modification you suggest will be approved. This is because GSA always wants fair and competitive pricing, so raising you rates just because you want more won’t do.

Annual price escalations

Alternatively, you can negotiate a certain increase of the GSA price every year. The average amount is about 2-2.5% every year. Note that you are still required to provide the best deal to GSA, so increasing your GSA rates will automatically require you to annually increase your commercial rates as well.

To what extent can you raise GSA contract pricing?

Sure enough, as one might suppose, you cannot raise prices any time you want. The government allows you to raise pricing up to 3 times per year, but no more than total of 4% increase annually. Previously, the amount was 10% per year, but than the maximum cap was set to 4%. Nothing extraordinary, but still better than nothing at all.

How to raise GSA pricing if you sell products

The contractor can change product pricing (or, more precisely – send a request to pricing change) under the following conditions:

  1. The price list that was used as a base for contract pricing was changed (i.e. prices have raised up)
  2. The contractor must hold a contract for at least 12 months before the first request to modify GSA pricing.
  3. The proposal to pricing change must be submitted before the last 60 days of the contract period and no sooner than 30 days after the last such submission.

If you sell products to GSA and want some free GSA proposal template, please contact Price Reporter. We would be glad to help you.

How to raise GSA pricing if you sell services

For service vendors, the procedure is nearly the same with the exception that their contracts are typically governed by the clause I-FSS-696. The clause states that all economic price adjustments are negotiated prior to the signing of the contracts. The contractor should select the proposed EPA mechanism: either EPA based on fixed escalation rates, or EPA based on the predefined market indicator such as a public survey or a public index.

The conditions are:

  1. You can submit no more than 3 GSA price increases during each year of the contract period. After the third one, all the subsequent requests will not be proceeded.
  2. The proposal to pricing change must be submitted before the last 60 days of the contract period and no sooner than 30 days after the last such submission.
  3. You provide a copy of the pricing indicator that clearly displays GSA contractor labour rates increase as of some specific date.

If you don’t know where to start, please don’t hesitate to contact Price Reporter for a ready GSA proposal template you can submit to request raising your current pricing.

Conclusion

With all said above, you should keep in mind that the government reserves the right to decline your request or negotiate lower pricing than you require. That is totally normal. Also note that GSA schedule rates must remain fair and reasonable as the government is your Most Favored Customer, and it must receive corresponding rates, all the time. Hence, if you fail to prove your proposed pricing increase, your request will be declined. And since you only can submit no more than three requests, every mistake means you are one step closer to being unable to negotiate better prices for your company. That is why you may want to delegate the price negotiations (including composing and submitting EPA request documents) to professionals such as Price Reporter. We help companies doing business with the government for 12 years already. Don’t hesitate to contact us.

2 thoughts on “Raising Your GSA Contract Pricing

  1. Todd says:

    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?

  2. Stanley says:

    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?

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