GSA sought bids from contractors holding Federal Supply Schedule (FSS) Schedule 70 contracts for certain professional services. At the time it submitted its proposal, Perot was in the process of negotiating a five-year extension of its Schedule 70 contract. Perot had proposed new labor rates for the five-year extension, but those rates had not yet been approved by the GSA contracting officer. In its proposal, Perot use its proposed, but unapproved labor rates. The contracting officer excluded Perot’s proposal from consideration because the labor rates included in the proposal did not match Perot’s current Schedule 70 contract labor rates.
Approved GSA Prices Are A “Cap” On Prices
Perot raised several arguments as to why its new, but unapproved, rates were fair and reasonable. First, Perot argued that the RFQ required that a contractor’s approved rates be “derived from” its GSA Schedule rates, and its proposed rates were, in fact, “derived from” its GSA Schedule rates. Second, Perot argued that even though a few of its proposed rates had increased slightly, the majority of its rates were lower. Finally, Perot argued that its rates were fair and reasonable because its overall price was lower than the awardee’s price. GAO rejected each of these arguments. Relying on FAR 8.404(d), GAO found that even if the lower rates proposed by Perot could be considered a discount from its current rates, the categories for which higher rates were proposed were improper. Thus, the contracting officer correctly eliminated Perot’s proposal as unacceptable.
Approved GSA schedule rates are a ceiling when bidding on task orders issued under FSS contracts. Contractors should take care to make sure that prices offered are approved GSA Schedule prices or lower. Not only may proposing prices higher than those approved by GSA result in rejection of a bid, it also could result in allegations of overcharging in the event of a later audit by the GSA Inspector General. Thus, GSA contractors should make sure that federal sales personnel and any authorized dealers permitted to sell under the contractor’s GSA contract are adequately trained in this subject.