Installment 13: Pre-approved Government Price Lists

Outsider Perception: Federal work is awarded only after a lengthy public bid process takes place.

Reality: A great deal of federal business is conducted through companies with "pre-approved federal price lists" rather than through the public bid route.

Lesson: In order to compete, you must get one of the aforementioned pre-approved federal price lists.

Background: We have previously discussed how closing a federal sale is different than closing a sale in the commercial market. Federal sales must be closed under federal purchasing rules which most often require that some type of competition take place. Established federal contractors usually close their sales using pre-approved federal price lists. These special contracts are awarded to a selected number of companies (those which submit an offer for consideration and are deemed of merit by GSA). The contracts reduce, and sometimes eliminate, competition because sales opportunities are offered to only the companies holding the contracts.

From our perspective, the best pre-approved price list contracts for small businesses are General Services Administration (GSA) Schedule contracts. To get a GSA Schedule contract, you must have sold your offered product or service to others first. As a result, GSA Schedules have limitations for start-ups and for companies hoping to offer new or beta products. In spite of these limitations, Schedule contracts are ideal for small businesses because they are open to all qualified businesses.

In the simplest terms, GSA Schedule contracts make your company's products and services available to any federal buyer at prices pre-negotiated with the federal government. Products prices are negotiated on a unit basis; service prices are negotiated on an hourly basis. In essence, the Schedule contract is a pre-negotiated federal price list that can be used by federal buyers to make purchases from your business quickly and with limited paperwork or red tape.

The following is an example of how a GSA Schedule sale is transacted. Let's assume you run a small office supply business located near a military base. Your sales staff has been calling on the base for an extended period of time but has not yet had success. In fact, the base has been using the same large office supply company for years and is reluctant to change this practice. It is late August and it appears that the base's printing center will have around $300,000 remaining in its annual budget. Furthermore, the government's fiscal year ends on September 30th and the printing center doesn't want the $300,000 to go unspent (under the axiom "use it or lose it"). The base's management directs its procurement staff to send work to small businesses so that the base meets its annual small business participation goals.

The printing center manager calls and asks if your company can deliver 10,000 cases of multi-purpose printer paper to the base for the sum of $300,000. Because he is familiar with the costs associated with office supplies, the manager knows that $30 a case is a fair price for a high-volume order. He tells your sales person that the base has several thousand cases in inventory but it can always use printer paper and that the $300,000 needs to be spent by September 30th. He further states that you may take your time in delivering the product since the base's store room is fairly full at this point. The center manager then says, "I hope you have a GSA Schedule contract because we do not have time for a public procurement and this buy needs to be inked ASAP." Thankfully, your company does indeed hold a GSA Schedule contract for office supplies and your pre-approved price for the product in question is $36 per case. Knowing that GSA allows a Schedule contractor to agree to pricing that is lower than your awarded GSA pricing - especially in instances in which a high-volume order is involved - you strike a deal. Imagine if your business had not held a Schedule contract. The opportunity would have slipped through your hands.

To summarize, a GSA Schedule contract may be the only way that a small business may be able to compete the larger, more experienced federal contractors. You should focus your efforts immediately on getting on the GSA Schedule so that you can close deals quickly and efficiently.

Fedmarket offer's a GSA Proposal Solution Designed Specifically for Small Businesses:
The GSA eLab - Develop your GSA proposal in 2 days at our eLab. Fedmarket provides you with a Request for Information (RFI) prior to your arrival at our eLab. You are instructed to bring the requested corporate data with you to the course. Attendees,with the assistance of our GSA staff, will complete their GSA offer prior to the end of the eLab. If you are unfamiliar with the proposal process, the GSA eLab is the solution for you.

Installment Series:

Installment 1: The Best Offense is a Good Defense
Installment 2: Make the World's Biggest Customer Your Own
Installment 3: Market Research in the Federal Sector
Installment 4: Become an Insider in the Federal Market
Installment 5: Competition and Price Sensitivity in the Federal Market
Installment 6: Are Federal Bids Wired?
Installment 7: Fundamentals of Federal Contracting
Installment 8: Making a Federal Sale
Installment 9: Closing a Federal Sale
Installment 10: Start with the Credit Card and Quick Buy Markets for Smaller Transactions
Installment 11: Consider Starting as a Subcontractor to a Prime
Installment 12: Selling Directly to Prime Contractors
Installment 13: Pre-approved Government Price Lists
Installment 14: Getting a Pre-approved Federal Price List for Your Company
Installment 15: Small Business Preference Programs
Installment 16: Distinguishing Messages Win in the Federal Market
Installment 17: Selling to Federal Agencies Located in Your Backyard
Installment 18: Getting Started in Federal Sales
Installment 19: Don't Get Caught Up in Red Tape
Installment 20: Steps to Take After Winning Your First Federal Contract 
Installment 21: Learn How to Write Federal Proposals
Installment 22: Prosper in the Federal Market

Fedmarket has been helping companies win government business since 1995. We have been featured in the Wall Street Journal, the Washington Post, and other trade publications. Our customer testimonials speak to our competence and expertise in helping customers win federal business. We have been singled out by public and private organizations -- including the Small Business Administration and federally-funded Procurement Technical Assistance Centers -- as the most comprehensive government contracting resource in the industry. Our web site's free content includes informative newsletters on GSA Schedules, Proposal Writing and Federal Business Development.

Visit Fedmarket
For inquiries, call 888 661 4094. Press 2.

This article has been viewed: 5382 times

Rate This Article

Be the first to rate this article