On July 9th, the Biden administration issued the Executive Order on Promoting Competition in the American Economy. Much of the focus of the Order is on fair and open competition. One way to accomplish this is the elimination of the Price Reduction Clause (PRC). The elimination of the PRC will streamline the Federal Supply Schedule (FSS) program by removing barriers to entry into the federal marketplace. (Federal News Network July 19, 2021)
Robin Carnahan, General Services Administration Administrator, during her confirmation hearing, said, “I’ve talked to businesses that have tried to get on GSA Schedules… [T]hey’ve told me about how difficult that process is, and I’m interested in learning more about how we can streamline that.” The Price Reduction Clause elimination is a start. (ibid)
One could argue the following points to eliminate PRC:
- The advancement of technology and the use of new purchasing practices have all but rendered the PRC obsolete.
- The PRC can keep agencies from purchasing ground-breaking technologies from new vendors.
- The PRC puts an undue compliance burden on small, medium, and large FSS contractors, costing them millions of dollars each year.
- Price and value are driven by competition, at the task order level and in real-time. The PRC pre-determines contract-level pricing, often negotiating against presumed requirements from the past.
- Compliance costs of the PRC can be detrimental to small businesses attempting to address the PRC’s complex compliance requirements.
- The PRC is the only governmentwide contract term that can restrict contractors working with the government from competing in the commercial marketplace. This hurts jobs and economic growth. (ibid)
The elimination of the PRC will increase competition. Small businesses will more easily compete as price and value will drive task order-level competition. Without PRC’s complex compliance requirements, small businesses will finally be able to afford to compete.
Looking to provide services to the government but the PRC has been a stumbling block? Give us a call.