Introduction: Provided to VA MSPV staff to highlight the issues facing SDV-MPG members brought on by VA’s failure to timely and reasonable deal with BPA price increase submissions.
SDV-MPG CONCERNS WITH PRICING OF PRODUCTS FOR VA’S MSPV PROGRAM
February 2023
BACKGROUND: Almost 3 years ago, VA negotiated and awarded Blanket Purchaser Agreements (BPAs) for products to be provided to VA through VA’s MSPV program. Most of the BPAs were awarded to SDVOSBs. Awards were based on “fair and reasonable” pricing in a competitive bidding process. To develop their bid price suppliers used their latest manufacturer’s price, added markups to cover business expenses, MSPV program costs (specific to the MSPV program) and a modest profit. Over the past three years, due to COVID demands and high inflation rates, product prices have risen, in some cases substantially. Price changes after award are now based against other government contract pricing, which in many instances is years old and does not reflect the added costs incurred as a result of the MSPV program. As a result, many BPA holders cannot deliver to prime vendors and VA without incurring losses on each delivery.
ISSUE: VA cannot sustain a viable prime vendor program with a vendor community which loses money. Over the past three years, since the award of the BPAs, product price increases from manufacturers to suppliers range from 5 to over 20 percent. VA routinely rejects price increase requests if VA can find lower prices on another BPA, Federal Supply Schedule, or any other published price. Many times VA automatically rejects any price increase request over 5 percent with no consideration of actual expenses. VA gives no consideration to:
1. Age of the price being compared.
2. Additional cost of the MSPV program.
3. Overhead costs of running a business: salaries, rent, utilities, equipment, insurance, taxes, customer support, etc.
4. Requirements of FAR Part 15.404, “Price Fair and Reasonable Evaluation”, in conducting price evaluations.
The BPA process uses VA contracting officers spread around the country, none of whom have been provided any pricing guidance by VA headquarters staff and have not been trained on how to properly perform price evaluations in accordance with FAR Part 15.404.
SUMMARY: MSPV-Gen-Z will have little chance for success if FAR Part 14.404,” Price Fair and Reasonableness Evaluation” is not employed as BPA holders will not be able to continue to make products available to VA when sold at a loss. VA contracting officers must follow FAR guidance for conducting price analysis and not demand lowest published price, not establish an arbitrary price ceiling and be unreasonable in their reviews. VA headquarters needs to provide adequate training and guidance accordingly in the medical products arena to conduct price reviews.