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Want a Discount? Just Ask!

Agencies are encouraged to seek discounts when ordering through GSA Schedules and GSA Schedule Blanket Purchase Agreements (BPAs). The Office of Management and Budget’s (OMB) Office of Federal Procurement Policy (OFPP) urges agencies to seek discounts in its memo, Achieving Better Value from Our Acquisitions.

When establishing a BPA to fulfill recurring needs, discounts should always be requested from vendors. To achieve best value, agencies must actively negotiate with Schedule vendors for better pricing, deeper discounts, and more favorable delivery terms. While ordering activities are encouraged to seek price reductions for any size Schedule contract order, they are required to seek price reductions if an order requirement, or the estimated total value of orders expected under a BPA, exceeds the simplified acquisition threshold.

GSA has determined that prices under GSA Schedule contracts are fair and reasonable. And while GSA has determined that labor hour rates for services are fair and reasonable, GSA has not determined that the level of effort or mix of labor categories proposed in response to a specific requirement represents best value. Therefore, when buying services that require a statement of work, you must consider the level of effort and the mix of labor categories proposed. Make a determination if the total price is reasonable and represents best value.

While vendors provide most discounts, they need not provide them to all other governmental ordering activities. Contractors’ ability to provide on-the-spot discounts to a particular BPA allows for a more fluid contracting atmosphere with flexible and dynamic pricing, allowing contractors to respond to discount requests quickly and for ordering activities to receive best value easily.

To learn more about seeking discounts, read the steps provided in the OFPP memo and visit the Schedule program’s page on price reductions.

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Comments

Nell
<p>My apologies, but I&#39;m back with a related question.&nbsp;If you compete a GSA Schedule order (not a BPA order), over the SAT, on a lowest price, technically acceptable basis, are you still required to seek a price reduction as discussed under FAR 8.405-4, Price reductions? I thought that you were required to seek a price reduction when the order is over the SAT, but some folks interpret FAR 8.405-4 to only apply to best value competitions. Thank you so much for your assistance.</p><p>&nbsp;</p><p>&nbsp;</p><p>&nbsp;</p>
MAS Blogger
<p>The requirement is for the government to ask for a discount when exceeding the Simplified Acquisitiion Threshold (SAT) on an order. However, it is a best practice to always ask for a discount, even on a lowest price technically acceptable basis. You may receive a discount and save your agency some money--the worst the vendor can do is say &quot;no,&quot; to your request. And the vendor can decline the discount request since it is uner the SAT. Remember, it is best to ALWAYS ask for a discount.</p>
Nell
<p>Thank you for the clarification. The reference to obtaining a price reduction when the order exceeds the MOT is contained in GSA Ordering Procedures for Services Requiring a Statement of Work (<a href="http://www.ch2m.com/corporate/about_us/contracts/assets/Ordering-Through-GSA.pdf">http://www.ch2m.com/corporate/about_us/contracts/assets/Ordering-Through-GSA.pdf</a>).</p>
Nell
<p>We will be awarding an order under a BPA. The BPA includes CLIN pricing for all of the labor categories for a base and four option periods. It appears as though discounts were obtained at the time of the award of the BPA. The order is estimated at $900K, well above the SAT, but does not exceed the MOT. FAR 8.405-4 states that a price reduction shall be sought when the order or BPA exceeds the SAT. The GSA website states that the ordering activity shall seek a price reduction when the order exceeds the MOT. First question: 1) In this scenario where the BPA includes CLIN pricing and most likely discounted labor rates&nbsp;were obtained at the time of award of the BPA, and at $900K, the order exceeds the SAT but not the MOT, is there a requirement to seek a further price reduction? Second question: 2) Same scenario as the first question, but does the answer change if the order exceeds the MOT? Third question: 3) What I&#39;m trying to&nbsp;get at is if discounted prices were obtained at the time of the award of the BPA, then has&nbsp;the requirement for a price reduction&nbsp;been satisfied such that no further price reductions are required to be sought for orders issued under that BPA?</p>
Steve Sizemore
<p><span style="line-height: 1.5em;">The requirement is for the government to ask for a discount when exceeding the SAT on an order or BPA. &nbsp;The MOT has nothing to do with the requirment to ask for a discount. &nbsp;Prior to May 2011 the threshold which required the government to ask for a discount was the MOT, but it was changed to the SAT. &nbsp;I will look for the information you saw on the website referencing the MOT and ensure it is changed; we inadvertently overlooked it. &nbsp;However, if you could provide the link to the information it would be most helpful.&nbsp;</span></p><p>The requirement for the government to seek a discount at the BPA level is found at FAR 8.405-3(b)(1)(ii)(C). &nbsp;You may seek a discount at the order level at anytime whether in a single or multiple-award BPA, however, if you are in a multiple-award BPA environment you will be competing for best-value and the order level and I would recommend that you seek additional discounts. &nbsp;FAR 8.405-3(c)(2)(iii) requires orders above the SAT to be competed with ALL BPA holders or the ordering activity must prepare an LSJ.&nbsp;</p><p>&nbsp;</p>
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