There are many variables that drive best value pricing. Suppliers take into consideration many factors, including pricing to address excess inventory, pricing to meet sales goals or drive market penetration, and pricing in response to the buyer’s requirements. This blog will focus on requirements in the context of the federal government. Sound requirements drive best value pricing and performance for customer agencies and the American people. Here are some commonsense observations regarding the nexus between requirements, pricing, and performance.
- Volume commitments drive pricing. Agency volume commitments translate into increased competition and lower prices. Where firm commitments are not made, negotiating volume discounts is an effective tool in delivering savings for customer agencies and business for contractors.
- Single award Blanket Purchase Agreements (BPAs) under the Multiple Award Schedule (MAS) program leverage agency requirements to achieve lower pricing. Currently, just over 50% of the volume going through the MAS program are orders purchased under BPAs. However, this number, and the corresponding savings, could be higher. The current Federal Acquisition Regulation (FAR) Subpart 8.4 ordering procedures create a strong preference for multiple award BPAs rather than single award BPAs. Multiple award BPAs, by their very terms, do not leverage collective requirements. The preference for multiple award BPAs is a bureaucratic hurdle that disincentives BPA acquisition strategies that leverage requirements. It should be removed from FAR Subpart 8.4.