The FoRGED Act is the procurement blueprint for the National Defense Authorization Act (NDAA) of 2026 and it could mean an end to the Price Reduction Clause for GSA Schedule holders and applicants.
The Price Reduction Clause (PRC) of the General Services Acquisition Manual (GSAM) is a key regulatory requirement for the Multiple Award Schedule (MAS) that requires a Contracting Officer to consider an offeror’s commercial discounting practices when they make a decision to award a contract. The goal of the Price Reduction Clause is to ensure the offeror is providing the best discount possible to the federal government. Critics of the Price Reduction Clause, however, say it can work against best value acquisition, innovation, and efficiency. What does this mean for the GSA MAS? What should a current or prospective MAS vendor know about the Price Reduction clause? These answers and more are covered in this article.
FoRGED Act: What Will it Do to Federal Procurement?
Were it to pass in 2026, the FoRGED Act would amend the legal basis GSA has in applying the current “lowest overall cost alternative” language to “best value” by adopting the statutory language of “best value.” This could spell an end to the PRC, which would mean significant changes to how GSA and its contractors on MAS negotiate discounting, and how current MAS contractors manage their government sales requirements against commercial practices.
Background on Price Reduction Clause
The Price Reduction Clause requires GSA contract offerors to identify their Most Favored Customer (MFC), i.e. the customer or class of customers that receive the best discount from them commercially.
Then, once the contract is awarded, that contract holder is required to maintain the discount relationship with GSA as their best possible discount. In other words, a vendor on the GSA Schedule cannot offer a better discount than is what is represented on their MAS contract pricing.
While it can be an effective way to support GSA MAS’s goal of providing premier rates on high quality goods and services to its buyers, the administrative work of identifying and abiding by commercial sales practices can hamstring a MAS vendor’s ability to be flexible in their commercial activities.
Another point critics of the PRC state is that, while GSA MAS promotes their acquisition strategy as capturing “best value offerings,” the stipulations of the Price Reduction Clause, including MFC identification, can drive the strategy more towards “lowest price offerings.”
What Does Best Value Mean?
“Best value” is a term used by GSA to describe the strategy they use to manage the MAS vendor ecosystem. Essentially, it is the acknowledgement that “lowest price” is not always a key indicator for federal buyers that purchase off the MAS. Rather, sometimes quality, innovation, or efficiency is the deciding factor for determining a contract award over price alone.
Despite GSA moving towards “best value” acquisition in its management of MAS, the term is not statutory. This would change under the FoRGED Act. Under it, current Defense Acquisition Requirements would change the “lowest overall cost alternative” strategy to “best value.”
What is the Current State of the PRC within GSA MAS?
The Price Reduction Clause for now continues to apply to GSA MAS, with a couple notable exceptions that either waive the requirement to abide by Commercial Sales Practices (CSP), or grant some flexibility in how a contractor defines the discounting relationship dictated by their CSP.
What is Transactional Data Reporting?
In 2016, GSA rolled out a pilot program, Transactional Data Reporting (TDR), for select Special Item Numbers (SINs) on GSA MAS to waive the requirement of disclosing commercial sales practices (CSP), or identifying an MFC. Since then, more and more SINs have become included in TDR eligibility.
Many GSA contractors opt to participate in TDR to avoid the restrictions that PRC imposes on their contract. Instead of disclosing and abiding by their commercial discounting mechanisms, GSA relies on market research to determine that these contractors represent the best value to GSA MAS. In turn, contract holders subject to TDR requirements report their sales to GSA more frequently for the purpose of providing GSA and its partner agencies with market intelligence that drives their decision making.
If you’re interested in learning more about TDR and if your contract could be eligible for TDR, Winvale’s team of consultants and proposal writers have strategic expertise in deciding to opt into TDR or not for prospective and current contractors.
Non-Standard Discounts
Besides TDR, there are other ways contractors can have some flexibility under PRC requirements. Under CSP requirements, a vendor is required to define an MFC, which typically becomes the “Basis of Award (BOA)” customer, but this is not always the case. While the MFC is the customer or class of customers that gets the best possible discount commercially, the BOA customer is the customer class that determines the discounting relationship a vendor must abide by with GSA.
A prospective or current contract holder can define the discount a customer class receives as a “non-standard discount” to exclude it from the requirements of the PRC. For example, if a contractor works with Value Added Resellers (VAR) and offers them a significant discount because the VAR takes on the liability of stocking inventory, marketing, shipping, etc., they can classify that discounting relationship as non-standard because it would be unsustainable through GSA MAS vendor practices.
Do You Have Questions on Managing Your Commercial Sales Practices with GSA?
While the Price Reduction Clause can effectively keep prices fair and reasonable for buyers on GSA MAS, it can also be so restrictive it impairs a vendor’s ability to find success through the contracting vehicle. If you find yourself wrestling with Commercial Sales Practice requirements on your current MAS contract or your MAS contract proposal, Winvale’s team of experts can help you find a solution that works for you. Contact us today for more information.
