GSA Contractor Teaming Arrangements

[dmuir]

We are a small company in a CTA with a larger company. We are the lead company. The larger company's Schedule 70 has automatic escalation on 2/14. Our option year (Jan to Dec) was issued to us by the client based on the 08 rates not the 09 rates for this company (suffice to say we had a pricing snafu that led to this situation).

We are paying this company the 5% discount based on the higher rates (so even if the rates change on the "prime" level they won't change on their level). Can this company require us to charge the client the higher rates which are on their schedule?

I've been tring to find the escalation clauses that apply but I think the issue is really whether we as a CTA partner can determine the discount that these positions are offered at to the govt and if this impedes their ability to negotiate the higher rates on some future activity...

Thanks for your comments...D

[formerfed]

I'm not following your question. Are you asking if your teaming partner can increase its rates based on their GSA Schedule contract price increase? If so, the answer depends on what your client award document says. If the award limits the rates through the term, the answer is no. If not, the normal practice is for contractors to pass long increases consistent with their GSA Schedule contract.

The GSA Schedule contracts usually contain a price esculation clause. Look through the FSC Group 70 solicitation terms and conditions.

[dmuir]

I'm not following your question. Are you asking if your teaming partner can increase its rates based on their GSA Schedule contract price increase? If so, the answer depends on what your client award document says. If the award limits the rates through the term, the answer is no. If not, the normal practice is for contractors to pass long increases consistent with their GSA Schedule contract.

The GSA Schedule contracts usually contain a price esculation clause. Look through the FSC Group 70 solicitation terms and conditions.

My question is: we don't want to apply this other company's escalation on our prime contract, even though we know it is approved by GSA. Do we have to or do we have the right to negotiate a discount for this work?

[formerfed]

Sure you can negotiate a discount. Or the company doesn't have to apply the escalation. Alot of times contractors don't pass the increase along because the agencies will run out of money on the task order award or there's not a lot of time remaining.

[Whynot]

It sounds as though you are the lead contractor (not the same as a prime contractor) and have negotiated an option/renewal to your contract or BPA on your team?s behalf. A CTA is not a subcontract. Under a CTA each GSA partner is essentially a prime contractor. You may be processing orders from your customer as the lead and allocating them to the appropriate GSA partners under your team, but the customer order, or piece of it, belongs to each GSA holder under a CTA.

Your partner will get the revenue, and report the sale under their schedule, at the contract/BPA price. It sounds as though they pay you 5% as a handling fee.

You have an interesting question. Now what happens if they disagree with the contract/BPA price? The CTA between you and the partner should state what the price should be. It probably does not clearly state that it is linked to current GSA prices.

I think you should re-negotiate with your customer ? there was a mistake made. If the customer does not re-negotiate then the partner gets to accept the lower price.

[dmuir]

It sounds as though you are the lead contractor (not the same as a prime contractor) and have negotiated an option/renewal to your contract or BPA on your team?s behalf. A CTA is not a subcontract. Under a CTA each GSA partner is essentially a prime contractor. You may be processing orders from your customer as the lead and allocating them to the appropriate GSA partners under your team, but the customer order, or piece of it, belongs to each GSA holder under a CTA.

Your partner will get the revenue, and report the sale under their schedule, at the contract/BPA price. It sounds as though they pay you 5% as a handling fee.

You have an interesting question. Now what happens if they disagree with the contract/BPA price? The CTA between you and the partner should state what the price should be. It probably does not clearly state that it is linked to current GSA prices.

I think you should re-negotiate with your customer ? there was a mistake made. If the customer does not re-negotiate then the partner gets to accept the lower price.

Yes, this is more like what happened. Thank you for your comments! It's still a pickle but a little clearer now!