Four Common Questions regarding GSA Schedule Labor Rate Increases

Posted by Robert Kelly on Jun 3, 2011 9:39:00 AM

GSA pricingI am frequently contacted by firms who have received a GSA contract for providing professional services  who want to know how to go about getting an increase to their GSA pricing.  By professional services, I mean firms who hold contracts such as:

  • MOBIS (GSA Schedule 874) for management consulting,
  • Professional Engineering Services firms (GSA Schedule 871),
  •  IT Professional services (GSA Schedule 70),
  • Marketing firms (GSA Schedule 541),
  • Language Services (GSA schedule 738 II),
  • Human resources Consultants (GSA schedule 738X)
  • Financial and Business Solutions (GSA Schedule 520)

Here are some of the more common questions asked and some practical, concise answers .  For more technical and complex answers, you can always refer back to your GSA contract, the GSA solicitation and the FAR!

How often can we raise our rates?

Typically, you can seek a rate increase after the first year.  Rate increases before the end of your first year are rare.  GSA generally wants labor rate increases once per year, because most professional service firms change their labor rates once a year.  It is possible to go in with a rate increase three times in a 12 month period, but this very rare for service firms and  sometimes annoying to your GS Contracting officer.

It is very important to seek price adjustments from GSA yearly, as teher is a cap on how much of an increase GSA can grant. For example, under GSA Schedule 70, labor categories rate increases are capped at 10%.  Under MOBIS or Schedule 871 (Professional Engineering Services (PES)), the labor rate increase is capped at 4%.  

Is there a formal process for submitting GSA Contract rate increases?

Of course – we are talking about government after all! Okay that may be an unfair dig since even contracts with private clients would require a process to change contract rates, although the process may not be quite as tedious.  Most GSA schedules require that you prepare a prescribed set of documents and submit electronically through the GSA eOffer system.  eOffer is simply a system to electronically transfer contract documents (such as excel spreadsheets or word docs) and allows both parties to digitally sign the contract modification.

What percentage increase in our rates is considered customary or industry standard when making such a request?

There really is no such thing and it really depends of company-specific factors and the terms of your contract.  You will need to look at your contract and see which price adjustment clause you agreed to in making such requests.  It would be either Economic Price Adjustment Clause I-FSS-969 for firms that do not have published commercial rate sheets or 552.216-70 for firms that do use commercial rate sheets. 

Some firms may have pre-negotiated a five year rate schedule and therefore need not do anything. This is often used by government contractors who had other long term contracts with set annual rate increases.

If your GSA contract was based on market rates and you did not pre-negotiate a set increase, then you would have specified a market indicator such as those published by the Bureau of labor statistics.  These indicators are published annually and depending on the specific indicator you and your CO selected, it will specify the latest rate increase in your market.  That would then be the rate increase granted in your modification request.  For example, if you selected a market indicator for professional  employees, and BLS’s report states that last year’s increase in private industry was 3.1%, then GSA would grant a 3.1% increase to your GSA rates.

Others GSA Contractors  based their pricing on a commercial rate sheet, and therefore would need to submit their latest rate schedule along with invoices or contracts to substantiate that those rates are actually being used.  If the commercial rate increase is deemed to be reasonable, then the GSA Contracting officer will grant a GSA rate increase corresponding to the commercial rate increase.

What then? GSA Catalog Upload

Once approved, you will need to update your pricing, terms and conditions and upload it to GSA Advantage.  You can then start using the new rates in your bids.

Don’t delay seeking GSA Price Increase

We strongly recommend that you submit an annual rate increase request.  If you don’t, it could come back to haunt you.  I had an IT firm call me and day they had not had an increase in 3 years and would like a large increase of 15%.  The problem is that GSA cannot increase rates by more than a set rate at any one time (e.g., 10% for IT professional service firms).  So if this firm had simply made a request each year, they would have been fine.  But since they let it go for so long, they will find their rate increase capped at 10% in this example. 

Economic Price adjustments under a GSA contract are very important to your firm’s financial well being and should not be neglected.

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Topics: GSA Pricing, GSA Contract

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