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Sub has GSA schedule


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Hi everyone,

I am hoping someone can help me out with this issue.

We are hoping to obtain a contract with the Government and have Business X as a subcontractor. Business X holds a GSA schedule (we do not) for the exact services that are needed under the contract. Do we have to charge the Government the prices that are on the Subcontractor's GSA schedule for the work that they do?

Example: We subcontract out the work for an Engineer to Business X. Business X has a GSA schedule with the Engineer Labor Category priced at $80 / hour. Do we have to use that rate when we bill the government, or can we add on our costs to that (G&A, profit, etc..) to say $90 / hour?

Or will the Subcontractor most likely charge us more than the GSA schedule in the first place?

Thank you for reading, and I appreciate any comments on the issue.

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rdedwards2,

I do not have time to get into all the issues with your question except one. The amount your sub charges you.

If the sub charges you LESS than what is on their GSA schedule, then they risk triggering a price reduction IAW 552.238-75 Price Reductions. GSAR 552.238-75 Price Reductions

GSA considers a sale to a prime (in your case, the sub selling to you) a commercial sale regardless if the ultimate customer is the government. This sale can trigger a price reduction unless there is an exception for that type of sale written into their contract. Therefore, (if your sub knows what they are doing) will not sell to you at a rate that will trigger a price reduction in their GSA contract.

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Shikakenin,

You said: "GSA considers a sale to a prime (in your case, the sub selling to you) a commercial sale regardless if the ultimate customer is the government."

Can you point to anything that supports this? I've seen it treated inconsistently within GSA and would like to be able to cite something for the proposition. Also, do you mean GSA considers it a commercial sale only for Price Reduction clause purposes only or do they also consider it a commercial sale for purposes of qualifying as making commercial sales and, thus, being able to get a GSA Schedule contract in the first place?

OLG

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OLG,

Nothing I know to cite. Just go to www.gsaelibrary.gsa.gov, look up MOBIS contracts and start calling CO's. You should be getting the same answer on the commercial sale question.

Regarding if that same type of sale to a prime as proof of price utilization in the marketplace, yes, it is proof. Again, you may get different answers from different FSS CO's, but I believe the answer would be consistent amongst FSS CO's who award contracts for professional services.

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rdedwards2,

I do not have time to get into all the issues with your question except one. The amount your sub charges you.

If the sub charges you LESS than what is on their GSA schedule, then they risk triggering a price reduction IAW 552.238-75 Price Reductions. GSAR 552.238-75 Price Reductions

GSA considers a sale to a prime (in your case, the sub selling to you) a commercial sale regardless if the ultimate customer is the government. This sale can trigger a price reduction unless there is an exception for that type of sale written into their contract. Therefore, (if your sub knows what they are doing) will not sell to you at a rate that will trigger a price reduction in their GSA contract.

Thanks! this was pretty much what I was looking for. Cheers.

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Shikakenin,

You said: "GSA considers a sale to a prime (in your case, the sub selling to you) a commercial sale regardless if the ultimate customer is the government."

Can you point to anything that supports this? I've seen it treated inconsistently within GSA and would like to be able to cite something for the proposition. Also, do you mean GSA considers it a commercial sale only for Price Reduction clause purposes only or do they also consider it a commercial sale for purposes of qualifying as making commercial sales and, thus, being able to get a GSA Schedule contract in the first place?

OLG

I would think there's enough support in the schedule contract language, in which a vendor generally agrees not to give a commercial entitty GSA's price or better. You're a commercial entity. We tried to negotiate our "commercial sales practice format" to except sales to Federal prime contractors as commercial sales, unsuccessfully. I supposed another vendor might be more successful with a different CO but haven't seen an example of that. There's a lot of inconsistency in GSA as to whether and how some regs or contract clauses are enforced even as among COs administering contracts for the same products. Your sub will still have to abide by the commercial sales practice document it agreed to or trigger its Price Reduction Clause in its schedule contract.

As to your second question, GSA commercial "sales" for schedule purposes and FAR-defined commercial "items" are two different things.

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