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What’s the value of geographic pricing? Share your thoughts! - Dec 3, 2012

The OASIS Team is always soliciting input on our contracts. Recently, we received feedback from federal agency representatives that OASIS would potentially be an even more attractive contract vehicle if it included a geographic pricing structure. This is an intriguing issue and the OASIS team is interested in hearing your thoughts and opinions about potentially adding this feature to the vehicle. Please share what you see as advantages or disadvantages from any or all of the following perspectives:

  • Bid and proposal process
  • Contract administration process
  • Task order competition process
  • Subcontracting subcontract administration process
  • Historical experience your company may have with geographical pricing structures
  • Any other applicable perspective

Additionally, we would like to hear suggestions and ideas about how OASIS might structure such a feature to minimize potential complexity for both the government and industry. Thanks for taking time to consider this important issue. We look forward to reading your responses. As always, if you want to submit your opinions, but don't want them public, you can also provide feedback via oasis@gsa.gov.

Jim

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dblottie
<p>The GSA ANSWER Program provided quite a few of us with insights into the effectiveness and complexities of geographical pricing.&nbsp; The very positive side of the equation is that it seemed to be strongly attractive to the clients in remote areas, who were able to see immediately that the proposed pricing would automatically be tuned to the economic considerations that they operate under.&nbsp; You can argue that in a competitive environment, we price to win and that automatically causes us to discount to the appropriate levels, but that is not readily apparent to the clients who only see the bids that come in response to their own requests and don&rsquo;t see our submissions to clients in other areas.&nbsp; The bottom line is that there are likely to be more remote client users in an environment where geographical pricing is implemented.</p><p>The other side of that coin is the difficulty in producing and managing the large numbers of rate categories that result from the concept.&nbsp; In the GSA ANSWER program we had 136 labor categories that could be bid as either contractor site or client site at each of seven geographic areas with annual changes in rates over 10 years, for a total of 19,040 individual rates.&nbsp; To complicate matters, mobility requirements may require employees to travel between sites, which is not a problem for short TDY assignments, but the length of stay in a TDY status could change the appropriate geographical rate applied to an individual employee, which may not have been planned in bidding.</p><p>As SAIC&rsquo;s ANSWER PM, I had sufficient resources to manage the environment by significantly customizing bid and task order management-related systems, earning us a perfect audit score from GSA.&nbsp; I don&rsquo;t recall any of the other 9 prime contractors, large or small, complaining about the system, because it brought more clients to the table, making it worth the complication.&nbsp; It may be more challenging to smaller businesses, however, so perhaps the implementation of geographical pricing may best be limited to large OASIS.&nbsp; An alternative for OASIS Small might be to:</p><p>a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Requiring bidders to provide a base price and then uplift or discount factors (percentages) for different regions</p><p>b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GSA admonishing users to lock in discounts on cataloging pricing for labor categories not included in the original task order bid but used in task order modifications at the task order level</p>
OASIS Blogger
<p><span id="internal-source-marker_0.9743835077509211" style="font-size:13px;font-family:Arial;color:#000000;background-color:transparent;font-weight:normal;font-style:normal;font-variant:normal;text-decoration:none;vertical-align:baseline;">Thank you so much for the insightful feedback and suggestions. &nbsp;We will definitely take this into consideration. &nbsp;Jim</span></p>
Mark Youman
<p>Jim,</p><p>Thanks for your continued outreach!</p><p>Our recommendation is that OASIS not include regional pricing.&nbsp; While the concept of different rates for different parts of the country sounds appealing, it quickly becomes very unwieldy and would not deliver the desired results.&nbsp; For example, parts of the South could be considered lower cost, but any logical region would include higher priced cities like Atlanta and Miami.&nbsp; The same holds for the Midwest, where parts of the region are lower cost, but not cities like Chicago.&nbsp; Since OASIS may be used by any Federal agency in any locations, vendors will have to bid ceiling rates based on the highest cost areas of any given region.&nbsp; The result would be a set of regional rate cards that would be generally the same and would add complexity and administrative burden to both government and industry.&nbsp;</p><p>Regional rate cards would also add difficulty in drawing the best staff from around the country for any given requirement.&nbsp; What if a client in the Midwest needs an expert from Los Angeles?&nbsp; What rate would apply?</p><p>A structure that allows for broadly applicable ceiling rates that are discounted at the task order level will help maximize use of the contract across Civilian and DOD customers.&nbsp; In this framework, separate rates for government-site and contractor-site are useful, but the addition of further rate cards that differentiate geographic location or multiple clearance levels or other factors would create an unwieldy and inflexible structure.&nbsp; Market competition at the task order level will drive discounted rates to accommodate the unique circumstances of each task order.&nbsp;In fact, allowing flexibility in the application of varied discounts across labor categories on&nbsp;task order competitions will provide the same benefits with a much lower administrative burden. &nbsp;&nbsp;Additionally, this type of flexibility will ensure that federal agencies have access to the full range of talent available in the labor market. &nbsp;As a result, GSA will be able to attract a larger percentage of the spending within the scope of GSA OASIS to this contract vehicle and thereby eliminate the need for other agencies to create similar contract vehicles.&nbsp; This will result in administrative cost savings to the federal government as a whole.</p><p>We also strongly recommend that GSA not divide OASIS into regional contract awards.&nbsp; This approach dramatically increases bid and proposal costs for industry and creates increased complexity and administrative burden without significant benefits.</p><p>Mark Youman<br />ICF International</p><p>&nbsp;</p>
OASIS Blogger
<p><b id="internal-source-marker_0.9152586320415139" style="font-weight: normal;"><span style="font-family: Arial; vertical-align: baseline; white-space: pre-wrap;">Thank you so much, Mark, for the candid and detailed feedback. &nbsp;Your feedback contains a lot of sound points and we will certainly take it into consideration. &nbsp;Thanks again for the question and please continue contributing. &nbsp;Jim</span></b></p>
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