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Most Favored Customer Questions

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I work for a wholesale company that is considering applying for a GSA contract. The most favored customer clause in the schedule is a major concern for us because we have recently (last 6 months) begun selling products to a very small group of local customers at a significantly higher (30% higher) discount than our standard in an effort to help stimulate our local economy and specifically local small businesses. The sales to these customers represent less than 10% of our sales.

Because we have now sold products at the steeper discount, does that mean that we must give at least the same discount as part of our GSA offer? If yes, could we immediately discontinue offering our products at that discount to avoid listing them as our most favored customer? What historical time frame does GSA consider at in reference to MFC?

Thank you for your help!

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You're required to disclose all your discounting practices, and not limit it to your MFC. GSA attempts to negotiate discounts equal or better than your MFC. Iif I were you, I would submit an offer to GSA and explain everything including why you provide the steeper discounts to local firms. The GSA CO will evaluate your offer and then will want to negotiate. You can stand firm in your position and explain the motivation and need to stimulate your local economy but can't afford to provide the same to GSA. The worse case is GSA just won't award a contract.

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There are rare circumstances where the GSA will establish the Basis Of Award (BOA) as a customer different than the MFC. The BOA is what GSA uses when enacting the Price Reductions Clause. An offeror should indicate to GSA why their MFC should not be their BOA. Most common reasons are different buying patterns or differing T&Cs than what the Government offers. Putting together a GSA offer is not a cheap or easy task, so perhaps you can try to have a conversation with the GSA office hosting the Schedule you are considering offering for prior to submitting an offer?

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