Under Schedules, we award fixed ceiling prices for supplies. Services are priced at either hourly rates or at fixed prices for specific tasks. The GSA Schedule Contracting Officer (CO) determines this pricing to be fair and reasonable before awarding the contract.
Schedule contracts are negotiated to achieve the contractors' "most favored customer" pricing/discounts under similar conditions. To ensure that they receive the best value at the lowest overall cost when using Schedule contracts, agencies are always encouraged and empowered to seek price reductions at any time before placing an order. By seeking discounts on all orders, the government can take advantage of flexible and dynamic pricing in the commercial marketplace.
Schedule prices represent not-to-exceed, ceiling prices, and contractors establish Schedule prices with all order sizes, types, complexities, geographical regions, etc., in mind, anticipating the opportunity to discount prices at the order level.
Specific reasons to seek price reductions include;
- Instances where the buyer has determined that a supply or service is available elsewhere at a lower price, or
- When establishing a BPA to fill recurring requirements and the potential volume of orders under BPAs offers the chance to secure price reductions, regardless of the size of individual orders, or
- The order is above the maximum order threshold
Contractors may be motivated to offer discounts based on factors other than order value, including competitive forces, technological changes, labor conditions, industry sales goals, and inventory reductions.
Buyers are required to seek a price reduction for all orders or BPAs that exceed the Simplified Acquisition Threshold (SAT). This requirement applies to all Schedule orders or BPAs over the SAT, regardless of the level of competition, discounts offered at the Schedule level, type of product or service being acquired, or any other factors surrounding the procurement.
Can COs order without discounts?
Yes, even though COs must seek discounts when required, they may place orders or establish BPAs when no price discounts are offered in response to a discount request. The GSA Schedule CO has already determined contract prices fair and reasonable, and contractors are not obligated to discount their Schedule prices.
Do your market research!
For all acquisitions, COs should conduct market research to get a sense of what prices they should expect to pay, including what, if any, discounts may be appropriate. Understanding the marketplace by examining prices paid data, current commercial pricing practices, and other industry trends can help COs identify when more discounts may be warranted. The Acquisition Gateway is one potential source for this information.
Maximizing competition is another way the government can leverage its buying power and encourage price discounts. Buying activities are encouraged to engage industry early in the acquisition planning process to allow contractors adequate time to prepare for upcoming competitions. Contracting activities are also encouraged to post RFQs to eBuy, even when the FAR doesn't require it, to increase RFQ visibility and the pool of interested contractors. Contractors may be more likely to offer discounts in a more competitive environment.
Ask and Ask Again
When issuing a written RFQ, it is a best practice to request a price discount in the initial RFQ and after quotes have been received and evaluated. The RFQ should always request that contractors offer their best pricing with their initial quotes, including all discounts. For example, in the the RFQ price submission instructions, the RFQ could state, "GSA is seeking price reductions from the awarded Schedule pricing according to FAR 8.405-4. Quotes should include the offeror's best pricing, including all discounts, as there may not be another opportunity to offer further discounts."
Even when only one quote is submitted, COs should request a discount before placing the order. Contractors may be willing to offer more discounts or concessions after submitting their initial quote to secure award.