Does My GSA Schedule Contract Affect My Commercial Business?
Yes! The GSA Schedule is a fixed contract, including set prices, with the government. The Price Reduction Clause states that it is unlawful for a company to award a price reduction to a commercial client that is less than the fixed price in the GSA Schedule. The Price Reduction Clause can be violated when a company changes their commercial price list, in an unfavorable manner or offers larger discounts to commercial clients. This is a common way for companies with commercial business on a GSA Schedule to be penalized.
If there is a need for a price reduction, the price reduction must be done formally through GSA. Price reductions will be awarded when prices are not deemed fair and reasonable by GSA. This can occur when there are changes in the level of effort and mix of a labor force or skill. This can also occur when there is a realization that the activity or product is being sold at a lower price elsewhere.
Therefore, the biggest way that a GSA Schedule affects a company’s commercial business is in the way that they control prices. Essentially, the prices sold commercially cannot be any lower than the prices set on the GSA Schedule because it is a binding contract to the government. A lower price to a commercial client violates the set contract with the government, making it unfair to the government. It is critical for a company to be conscious of the prices they are using in their GSA Schedule in comparison to the prices they set commercially.