“If they [the General Services Administration] want to be responsive to customer agency needs and be a bridge between the commercial market and the customer they need to understand how the commercial market works and seeking arbitrary price reductions is not understanding the value of people,” he [Roger Waldron] said.
“GSA put itself in a position to accelerate the market through schedules consolidation, eliminating stovepipes and making it more dynamic marketplace. But it remains inefficient and counter-productive if the barriers to entry are using this arcane approach and are based on the tyranny of low price, when we are really talking about best value. In some cases, it will be based on low price, but in the services arena, you have to be creating conditions where commercial firms are willing and interested in bringing their capabilities to the federal customer and part of that is reducing risk for all parties and focusing on value. Focusing on low price is not focusing on value.
That was an interesting article, Vendors, consultants describe an increase in ‘bullying’ tactics by GSA to get lower schedule prices. Apparently, the GSA is forcing suppliers to reduce their price by as much as 40 percent across a bulk of their rate categories. One view is that GSA suppliers are charging “unreasonably” high prices compared to commercial market averages. However, the article says:
Two studies in 2018 found pricing on GSA Advantage was lower or equal to commercial pricing, thus creating more frustrations among industry.
I think the Inspector General’s problem wasn’t the price itself, but the process and rigor behind government scrutiny of prices. It found “pricing determination tools were not sufficient and resulted in flawed price determinations.”
But the real question is, did it lead to higher prices than what would exist in competitive markets? And if so, how much of that is due to the government’s own mission and compliance requirements, such as cybersecurity or cost accounting systems?
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