GSA schedule contracts are an ideal vehicle for selling products and services to federal vendors. This is particularly true for small- to medium-sized businesses that cannot afford to obtain more than one multiple award schedule contract.
However, GSA schedules do have drawbacks. Obtaining a GSA schedule contract can cost a small business around $15,000. The return on investment is low unless (annual?) sales exceed $150,000 (approximately what is needed to recoup the initial investment). Other drawbacks include:
- Schedules are the preferred way to do business for many federal agencies, but federal contractors don't look at GSA schedule contractors like they're the Yellow Pages. GSA schedule companies that successfully win contracts have a focused federal sales program, whether it's "feet on the street" or "ear to the phone". Do not underestimate the necessity of personal contact with federal buyers You must introduce yourself to potential clients, talk to them, listen to what they want, take note of the problems they've encountered in the past, and work to convince them that your company is uniquely qualified to fulfill the agency's goals and expectations.
- The schedule contract reduces pricing flexibility and may result in lower prices and profits.
- GSA Schedule contractors pay a 0.75 percent funding fee to GSA that can reduce profits. However, GSA encourages vendors to include the funding fee as part of their proposed pricing in contract negotiations. Be sure to factor it in when you write your proposal.
- Your ability to increase prices is restricted.
- Contractual terms require that you carefully control your discounting practices. Uncontrolled discounting can lead to automatic reductions in GSA prices.
- Schedules do not cover all industries, notably architectural and engineering services and construction.
- A GSA schedule contract is cancelled if you do not have sales of $25,000 over the first two years.
The following types of companies do not need a schedule:
- Companies selling products/services not covered by schedules
- Companies selling to agencies not using schedules as a purchasing method.
- Companies selling products under a multiple award schedule contract offered by agencies other than GSA, e.g., Defense Logistics Agency contracts for military parts.
Drawbacks aside, a GSA schedule is the selling vehicle of choice if a company intends to sell through a single multiple award schedule contract.
