BEST OF MAILBAG: HAVE YOUR SCHEDULE PRICES KEPT PACE WITH COMMERCIAL INCREASES?
Long-time reader G. Hawn of Agoura Hills, CA writes, “My company has had a GSA Schedule contract for 13 years. Our Schedule prices are the same today as they were at award, even though our commercial prices are now 30% higher. How can we adjust our Schedule prices to reflect commercial reality?” This is a very common problem, G. Most Schedule contractors don’t keep up with commercial price increases and, as a result, their Schedule price can be much more of a loss leader price than it needs to be. The good news is that the Schedules program does have an Economic Price Adjustment Clause that allows contractors to periodically increase its prices if such an increase can be justified by commercial practices. The down-side is that you may not be able to catch up all at once. Most GSA offices allow a company to increase its prices only 10% per year. So, if you’re pricing is 30% higher, you may not be able to “catch up” until a full 5 year renewal option. Sometimes GSA has been known to be flexible in unusual circumstances, such as a hurricane that wipes out significant forests, causing lumber prices to skyrocket. The best advice, though, is to put at least an annual tickler on your calendar to double check that your Schedule pricing is at least somewhat in line with prices you may have increased commercially months before.