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Most Favored Customer


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Are there fixed rules defining how the customer of a contract is determined, or does it all depend upon how a company defines "most favored customer" in their submission for establishing a GSA Schedule?

1) I interpret the customer of a Government Task Order under a GSA Schedule as the "issuing office", not GSA. And no, I can't find any particular regulation or defination to support this - it just seems common sense to me.

2) We are a contractor with a potential sub for work under a Task Order issued under a Government Agency BPA under our GSA Schedule.

Who is the customer for the subcontractor? I would say my company, the contractor. (same concept as issuing office above).

But if the subcontractor has defined the "Government Agency" (who issued the order and BPA) as their "Most Favored Customer" would their rates to a Prime Contractor trigger the automatic discount clause?

I would think that would only apply if the subcontractor submitted work done through a Prime Contractor (could it be any Prime Contractor or just the company submitted?) as the basis for their rates to the Government Agency designated as their "most favored customer".

Or would that be an error and if they submitted rates to a Prime Contractor only the Prime Contractor would be the "Most Favored Customer"?

(And if it matters the potential subcontractor in question has submitted for a GSA Schedule but it has not yet been awarded & the sub is concerned that rates negotiated with us will affect their proposed rates to GSA). I don't think it will, but what to give the best advice possible to our potential sub.

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Who is the sub's BOA? GSA will generally not allow a federal agency to serve as basis of award, as the Price Reductions Clause states:

Well, I don't actually know what their basis of award is. The concern over the rate to us affecting what their rates on their GSA Schedule was raised to our PM and I'm trying to figure out how to mitigate the situation.

I'm unclear as to the significance of the term "Basis of Award" vs "Most Favored Customer". Would Basis of Award be commercial price list vs. past rates to most favored customer?? Would you be able to describe a scenario where work with us would affect their Basis of Award? (They've never worked for us before.)...

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Well, I don't actually know what their basis of award is. The concern over the rate to us affecting what their rates on their GSA Schedule was raised to our PM and I'm trying to figure out how to mitigate the situation.

I'm unclear as to the significance of the term "Basis of Award" vs "Most Favored Customer". Would Basis of Award be commercial price list vs. past rates to most favored customer?? Would you be able to describe a scenario where work with us would affect their Basis of Award? (They've never worked for us before.)...

The basis of award is the tracking customer or class of customers that is monitored for price reductions. You need to first know who it is.

Scenario 1: Basis of award is all commercial customers.

Scenario 2: Basis of award is federal primes

Scenario 3: Basis of award is all non-state and local governments

Etc.

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The basis of award is the tracking customer or class of customers that is monitored for price reductions. You need to first know who it is.

Scenario 1: Basis of award is all commercial customers.

Scenario 2: Basis of award is federal primes

Scenario 3: Basis of award is all non-state and local governments

Etc.

Thank you. So would "most favored customer" be your largest customer in your "basis of award" category?

Also, could "federal primes" be considered "commerical customers"? I have heard some people consider it commercial work even though the end client is Federal Govt although I didn't think it really was commercial...

I appreciate your patience with my questions...Thank you!

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Thank you. So would "most favored customer" be your largest customer in your "basis of award" category?

Also, could "federal primes" be considered "commerical customers"? I have heard some people consider it commercial work even though the end client is Federal Govt although I didn't think it really was commercial...

I appreciate your patience with my questions...Thank you!

BOA and MFC are often conflated, including by FAS.

MFC: GSA's goal is most-favored customer pricing; that is, your lowest price without regard to terms and conditions or quantity. In negotiating the schedule contract, GSA will attempt to secure such pricing, based on your disclosures of your standard and nonstandard commercial sales practices.

A separate part of that negotiation is the basis of award. GSA may attempt to use your most-favored customer as your basis of award, but this is not necessarily the case. GSA generally attempts to negotiate the broadest BOA possible, i.e., "all commercial customers," which GSA interprets to mean all non-federal customers. This includes distributors, federal primes, commercial end users, state and local governments, etc.

GSA absolutely considers "federal primes" as commercial customers, unless you have specifically negotiated "federal primes" out of this class.

The simplest way to determine this is to read the contract.

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BOA and MFC are often conflated, including by FAS.

MFC: GSA's goal is most-favored customer pricing; that is, your lowest price without regard to terms and conditions or quantity. In negotiating the schedule contract, GSA will attempt to secure such pricing, based on your disclosures of your standard and nonstandard commercial sales practices.

A separate part of that negotiation is the basis of award. GSA may attempt to use your most-favored customer as your basis of award, but this is not necessarily the case. GSA generally attempts to negotiate the broadest BOA possible, i.e., "all commercial customers," which GSA interprets to mean all non-federal customers. This includes distributors, federal primes, commercial end users, state and local governments, etc.

GSA absolutely considers "federal primes" as commercial customers, unless you have specifically negotiated "federal primes" out of this class.

The simplest way to determine this is to read the contract.

Thank you! Now I know what I am looking for. Of course, in this case (because it is a sub) I am not privy to the proposal and can only advise in general terms.

One more question if you would be so kind (because I have read the GSA Solicitation Documents before but am fairly certain they don't really address these issues): so what kind of language would a company's standard and non-standard commercial sales practices include in order to clarify that the basis of award should be the class of customers with the non-discounted rate? (I'm thinking of a case where the discounts are legitimate overhead mark-ups to a Federal Prime.) Because the rate is lower to the federal prime, that company would be a "most favored customer", right?

Thank you again for your clarifications - I appreciate hearing that the terms are used somewhat loosely (so no wonder I'm confused) but shouldn't be.

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Thank you! Now I know what I am looking for. Of course, in this case (because it is a sub) I am not privy to the proposal and can only advise in general terms.

One more question if you would be so kind (because I have read the GSA Solicitation Documents before but am fairly certain they don't really address these issues): so what kind of language would a company's standard and non-standard commercial sales practices include in order to clarify that the basis of award should be the class of customers with the non-discounted rate? (I'm thinking of a case where the discounts are legitimate overhead mark-ups to a Federal Prime.) Because the rate is lower to the federal prime, that company would be a "most favored customer", right?

Thank you again for your clarifications - I appreciate hearing that the terms are used somewhat loosely (so no wonder I'm confused) but shouldn't be.

Yes, most-favored customer generally means lowest price.

Examples of excluding primes from BOA:

"Basis of award is commercial end users, excluding prime contractors."

"Basis of award is national accounts" (so long as that account class excludes federal primes).

Etc.

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Yes, most-favored customer generally means lowest price.

Examples of excluding primes from BOA:

"Basis of award is commercial end users, excluding prime contractors."

"Basis of award is national accounts" (so long as that account class excludes federal primes).

Etc.

But what is the justification for stating that the Basis of award excludes prime contractors?

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