In public procurement, pricing decisions are governed by the ‘Fair and Reasonable’ litmus test; however, procurement regulations (i.e., the FAR) don’t explicitly define ‘Fair and Reasonable’. While buyers and sellers likely have different ideas about what constitutes a fair price for an item of supply, the fundamental market premise is that buyers want to be able to find the right product, at the right price, and suppliers want to deliver!

Pricing requirements and objectives change over time and are influenced by market and economic conditions. Most recently, we saw how the sharp rise in inflation coupled with supply chain shortages and shifting demand caused by the COVID-19 pandemic, affected GSA’s ability to keep up with supplier price changes.

As the government has aligned itself with commercial purchasing practices, they have also started to leverage lessons learned from the commercial marketplace; for example, allowing market forces to determine the price and availability of goods. So, what does the future of fair and reasonable pricing (and practice) look like for eCommerce Suppliers?

• GSA schedules currently contain numerous clauses that govern economic price adjustments. MV–22–02, an acquisition memo issued by GSA in 2022 (extended through March 2024) suspended the restrictions in these clauses, such as price caps and limits on how many, and how often, a Supplier may request a price increase. GSA is now pursuing a proposed rule to eliminate outdated economic price adjustment rules and establish a single, simplified provision governing price changes. The proposed contract language will make it easier for Suppliers to seek a price adjustment and respond quickly to the market conditions impacting their business.

• GSA recently announced an update to how market threshold pricing will be established. Threshold pricing is used to evaluate and negotiate commercial item pricing by comparing a Supplier’s proposed price to the wider market (for the identical item). The new pricing rules rely more heavily on the median price (vs. low price) and incorporate Transactional (TDR) and commercial web pricing data points when available. Additionally, threshold pricing is demand weighted with price targets set more aggressively for frequently purchased or ‘high demand’ SKUs. GSA has also sought to address price changes driven by inflation by building in an inflation adjustment based on the Consumer Price Index. To help alleviate Supplier confusion over changes in pricing policy, GSA has made the model publicly available via the interact site.

• GSA is also pursuing policy changes to reinforce its goal of achieving ‘best value’ in procurement decisions by balancing price and non-price factors (i.e., service, risk, etc.). The agency is seeking to replace the ‘lowest overall cost alternative’ language with ‘best value’ in the Competition in Contracting Act’s competitive procedures. The proposed changes were submitted to Congress for review in November 2023.

Warwick customers have access to on-demand market intelligence, including procurement history, price benchmarks, and compliance data.

The U. S. government is the single largest purchaser of goods and services in the world. They leverage their purchasing power to ensure the best value in terms of cost, quality, and service. To improve efficiency and simplify the federal government’s ability to buy commercial products and services, GSA revamped its Multiple Award Schedule (MAS) program in 2020. MAS consolidation was an enormous step forward in modernizing federal procurement, eliminating duplication across Schedules, consolidating Special Item Numbers (SINs), and standardizing contract terms & conditions. 24 GSA Schedules and more than 900 SINs were folded into a single comprehensive contract vehicle covering more than 12 million unique parts and services.

1. How the GSA MAS Program is organized.
2. Simple steps every supplier can take to improve sales.
3. SIN and Sales Insights
   > Top 10 SINs by Sales Volume
   > Top Selling Commercial Products by SIN
   > Top Selling Commercial Products by Government Agency

Let’s get started!

Today, the MAS program is organized into 12 large industry categories and about 80 subcategories:

A – OFFICE MANAGEMENT

B – FACILITIES

C – FURNITURE & FURNISHINGS

D – HUMAN CAPITAL

E – INDUSTRIAL PRODUCTS & SERVICES

F – INFORMATION TECHNOLOGY

G – MISCELLANEOUS

H – PROFESSIONAL SERVICES

I – SCIENTIFIC MANAGEMENT & SOLUTIONS

J – SECURITY & PROTECTION

K – TRANSPORTATION & LOGISTICS SERVICES

L – TRAVEL

Under these Subcategories, ~300 Special Item Numbers (SINs) identify products and services that authorized GSA suppliers can sell to federal buyers (including state and local government entities). To simplify the identification process for both buyers and sellers, SINs are associated with standard North American Industry Classification System (NAICS) codes.

It’s a Sin Not to Understand SINs!

Each year, nearly $1B in federal spending flows directly through the government-run eCommerce sites, GSA Advantage! and DoD FedMALL. There are many advantages in using SINs to streamline the acquisition of commercial items.

Reduced Acquisition Lead Times

Buyers can quickly identify those sellers offering the specific products and services they’re looking to buy; this saves time and effort in searching for suppliers who can meet an agency’s needs and reduces procurement cycle times.

Reduced Administration Time & Cost

Suppliers can offer a full range of products and services (across all SINs) under a single MAS contract; this means increased efficiency and far less administrative cost and time spent managing multiple contracts with different terms and conditions. Additionally, a single contract means suppliers work with a dedicated GSA Contracting Officer who can get to know you and your business, reducing friction in the administration process.

Simple Steps You Can Take to Improve Sales

While MAS consolidation has been overwhelmingly positive, there are potential drawbacks for suppliers, including increased competition! However, there are simple steps that every supplier can take to improve their sales:

1. Review your product and service offerings regularly! Make sure your contract reflects your current business and that all applicable SINs are aligned with your MAS contract so you don’t miss out on potential sales opportunities.
2. GSA has a formal process for adding new SINs. Familiarize yourself with that process for the specific SINs you want to add and ensure you have the documentation needed to substantiate your request before reaching out to your GSA CO!
3. GSA’s eBuy platform is an excellent way to find new business. Invest the time to learn how to navigate eBuy and review open Request for Quotes for the SINs listed on your contract.
4. As the government is required by law to consider buying from small businesses, pay attention to set-aside opportunities if they apply.
5. The MAS PMO hosts monthly webinars so that suppliers can engage directly with policy makers and program managers. Take advantage of this opportunity and ensure you stay up to date on changes impacting your contract.
   Even if you’re not full of questions, join a webinar because you might hear great questions from other sellers and you might gain some valuable information.
6. Last, but not least…Do your homework! Less than 5% of all items available for sale are purchased in a given. year. Don’t waste time and resources managing SKUs that no one buys. Research the market, identify the top selling products for your approved SINs, and price them competitively!

We’ve compiled some incredible data on GSA Advantage! sales by SIN to kickstart your market research.

SIN and Sales Insights

The table below highlights the most popular SINs listed across all GSA MAS contracts. The most popular SIN, 33411 – Purchasing of new Electronic Equipment, is listed on 695 supplier contracts. This category includes desktops, laptops, servers, routers, switches, and other electronic equipment.

Below are the top 10 SINs by GSA Advantage! sales volume over the last year.  We’ve included the total number of MAS contracts that had sales in each SIN and the annual sales volume.

Top Selling Commercial Products by SIN

Drilling deeper into the top selling SINs, we’ve identified the top products in each over the last year.

Top Selling Commercial Products by SIN within an Agency

Ever wonder which agencies are buying the products you sell and where to focus your marketing efforts? We’ve identified the top agencies by procurement dollars spent in each of the top 5-SINs. We’ve also  analyzed spend for the top 3 agencies down to the SKU level so you can see what items each agency is most likely to buy.

Small Business is Making a Big Impact

When GSA announced their plans for MAS consolidation, they predicted it would provide numerous opportunities for small and disadvantaged businesses by eliminating many of the burdensome requirements for suppliers looking to obtain a GSA contract.  As we analyzed sales transaction data, we were thrilled to see the huge impact small and disadvantaged businesses are having in the market.

Sales by small businesses under the MAS program have increased by more than 30%. Small businesses (under 500 employees) and certified 8a/other disadvantaged businesses account for the majority of sales in each of the top 5 SINs we analyzed.

Final Thoughts

GSA took the initiative to revise the MAS program, the largest commercial item contracting vehicle in the federal government. It’s easier than ever before to offer a full range of products across all SINs to government buyers looking for exactly what you sell.

We’ve amassed some great data on MAS sales by SIN and included some tips on how you can leverage this data to drive sales and kickstart your company’s success in FY 2024. We urge you to take a few minutes to go through our report and discover new insights into what’s selling and how you can refocus your sales strategy ahead of the new federal fiscal year. There may be a new SIN you want to add to your contract, or SKUs you should be promoting to new potential customers. 

If you need a deeper dive into a particular category, let us know and we’ll see if we can help provide additional intelligence that’s specific to your target business.

If you have any suggestions or need additional information or metrics, please contact us at 678.457.9634 or g.bousquet@xsb.com.

You can learn more about XSB and how Warwick can help you modernize your federal eCommerce sales strategy at https://xsb.com/warwick/

Thank you!