Skip to content Skip to left sidebar Skip to right sidebar Skip to footer

Small Business

FY26 NDAA Delivers a Turning Point for the GSA Price Reductions Clause

A provision in the proposed Fiscal Year 2026 National Defense Authorization Act (FY26 NDAA) signals another decisive step in GSA’s long-running effort to move away from the Price Reductions Clause (PRC) in the Multiple Award Schedule (MAS) program. The House has already passed the bill, and if enacted, it would further weaken a clause that contractors and GSA alike have long viewed as overly burdensome and a barrier to participation in the MAS marketplace. (JD Supra December 17, 2025)

How the Price Reductions Clause Has Worked

GSA uses the PRC to ensure MAS pricing remains fair and reasonable. Under this approach, contractors disclose their Most Favored Customer (MFC), negotiate a Basis of Award (BOA) customer or group, and agree to give MAS customers pricing that is equal to or better than the BOA. If a contractor later gives the BOA better pricing, the PRC requires that reduction to flow to all MAS customers. (ibid)

In practice, this structure has created significant compliance risk. A single commercial discount, sometimes granted by an individual salesperson, can trigger sweeping price reductions across the MAS contract. Contractors have long described the PRC as one of the most complex requirements in federal contracting. (ibid)

Why GSA Has Tried to Move Away From the PRC

GSA has increasingly acknowledged that the PRC discourages participation in the MAS program, particularly for small businesses. To reduce this burden, GSA introduced the Transactional Data Reporting (TDR) pilot in 2016. Under TDR, contractors no longer track BOA pricing or comply with the PRC. Instead, they report detailed sales and pricing data monthly, allowing GSA to assess price reasonableness through market data rather than rigid price controls. (ibid)

GSA has repeatedly asked Congress to clarify its authority to abandon the PRC, noting that MAS pricing requirements represent its most burdensome information collection and can slow the addition of new products and services agencies need. (ibid)

Why the PRC Has Persisted Until Now

The primary obstacle has been a longstanding disagreement between the GSA and its Office of Inspector General (OIG). The OIG has argued that federal law requires MAS contracts to result in the “lowest overall cost alternative,” effectively mandating the PRC. GSA has disagreed and has pushed Congress to replace that standard with a “best value” approach. (ibid)

What the FY26 NDAA Changes

Section 812 of the FY26 NDAA adopts GSA’s position by changing the statutory standard for MAS contracts under Title 10 from “lowest overall cost alternative” to “best value.” This change aligns MAS contracting with broader federal acquisition principles and removes a key statutory argument for retaining the PRC, at least for defense agencies. (ibid)

What This Means for Contractors

The shift to a “best value” standard strengthens GSA’s ability to fully retire the PRC and expand TDR across the MAS program. GSA has already announced plans to make TDR mandatory for all Special Item Numbers beginning in FY26 and has confirmed its intent to transition all Schedule contractors away from the PRC within the next year. (ibid)

Price will still matter, but GSA will likely rely on reported transactional data and market research rather than automatic price reductions. Contractors with legacy PRC-based contracts should evaluate whether transitioning to TDR makes operational sense and engage early with their contracting officers. Companies considering entry into the MAS program should prepare to demonstrate price reasonableness even under TDR, as GSA can still request supporting pricing data when needed. (ibid)

Looking Ahead

While the NDAA provision applies directly to Title 10 acquisitions, similar language exists in Title 41 for civilian agencies. Congress may ultimately align both statutes to avoid a split standard. As GSA continues this transition, contractors can expect reduced PRC-related audit exposure; however, new compliance expectations regarding data accuracy, pricing support, and documentation will take its place. The era of the Price Reductions Clause is not over yet, but FY26 brings it closer than ever to an end. (ibid)

Do you have questions about how your contract will meet the new guidelines if the Most Favored Customer rules change? Give us a call.

GSA Taps Industry to Transform Federal Contracting with AI

The General Services Administration (GSA) issued a Request for Information (RFI) today, seeking input from suppliers and industry associations to create a single, integrated, and highly efficient procurement ecosystem. This new system will incorporate Artificial Intelligence (AI) to drive collaboration and strengthen the federal acquisition lifecycle. (General Services Administration Press Release August 18, 2025)

“President Trump, through his executive orders and AI Action Plan, is prioritizing the consolidation ​of federal procurement ​and acceleration of AI adoption across government. GSA ​plays a central role in both these efforts and will deliver a more effective, data-driven, and unified acquisition lifecycle,” said Federal Acquisition Service Commissioner Josh Gruenbaum. “Leveraging AI to consolidate procurement processes and provide insightful recommendations is critical to this transformation. We welcome our industry partners’ expertise as we build an acquisition system that reduces waste, delivers better value for taxpayers, and better results for government.” (ibid)

The RFI represents GSA’s initial outreach to industry partners to gather their perspective on its vision for modernizing procurement. On behalf of the federal government, GSA seeks innovative solutions that apply AI and automation to existing data, structured and unstructured, to achieve greater efficiency and scalability in acquisition practices. (ibid)

GSA invites input from suppliers and associations with expertise in information technology, data architecture and storage, AI and Machine Learning, data analytics, user experience design, and innovative small businesses and startups. (ibid)

Interested parties should review the draft RFI package, which outlines the scope, objectives, functional and non-functional requirements, information about current systems, and related challenges. Respondents may submit White Papers up to 10 pages. (ibid)

Responses are due August 29, 2025. GSA will use the feedback to inform follow-on engagements, including additional RFIs, draft solicitations, and potential individual discussions. GSA anticipates issuing solicitations in support of this initiative shortly after reviewing feedback. (ibid)

Should you have questions concerning the creation of the White Paper or need guidance, give us a call.

New SBA Recertification Rule Brings Major Changes for Small Business Contracting

On December 17, 2024, the Small Business Administration (SBA) implemented significant changes to its recertification rules, affecting small businesses and larger companies involved in mergers and acquisitions (M&A). These changes directly impact eligibility for new contracts and existing work under recertified business size or program statuses. Below are key highlights. (Pillsbury December 23, 2024)

New Terminology Clarifies Certification Status
The SBA’s new rule introduces disqualifying and qualifying recertifications and places them in the new section 13 C.F.R. 125.12. (ibid)

  • Disqualifying recertification occurs when a contractor certifies it is no longer small or eligible for specific small business programs. (ibid)
  • Qualifying recertification confirms that a business remains eligible for set-aside awards. (ibid)

A qualifying recertification allows businesses to compete for new set-aside orders for up to five years unless a disqualifying event follows. (ibid)

Timing for Size Determinations
The Small Business Administration’s (SBA) rule reiterates that size is determined at proposal submission, not at contract award. However, for most unrestricted multiple-award contracts (MACs), size is set at proposal submission for individual orders, except under the Federal Supply Schedule (FSS), where size depends on the latest recertification. (ibid)

Recertification Events (exceptions to the general rule)
Certain events trigger mandatory recertifications:

  • Mergers, acquisitions, or novations require recertification within 30 days of the event. (ibid)
  • Long-term contracts exceeding five years require recertification before the fifth year and each option period. (ibid)
  • Contracting officers may request recertification for specific orders or agreements. (ibid)

Impact on Set-Aside MACs

The new rule will prevent agencies from awarding new set-aside task orders or options after a disqualifying recertification under MACs. However, this prohibition will not take effect until January 17, 2026, giving businesses time to adjust. (ibid)

Transactions Between Small Businesses
If a merger or acquisition involves two small businesses, the contractor remains eligible for set-aside awards and options, though the contract terms may impose additional limitations. (ibid)

New Size Protest Rights
SBA now permits size protests for recertifications under MACs, empowering other contract holders to challenge competitors’ size status. (ibid)

Could you use some guidance navigating the new recertification rule? Give us a call.

The Army’s end of year checklist for Small Businesses

Prepare for success in 2025 by reviewing your business strategy and making key updates. Use this checklist to stay on track and position your business for growth.

  • Update Legal Documents and Certifications Keep your licenses, permits, and registrations current. Apply for SBA certifications at Certify.SBA.gov, and refine your Capability Statements to highlight past performance. (Army Office of Small Business December 23, 2024)
  • Explore New Contracting Opportunities Check Acquisition.gov and the GSA Forecast Tool to discover upcoming federal contracts. Use SubNet to find subcontracting opportunities posted by large prime contractors. (ibid)
  • Tap Into Mentorship and Support Connect with your local APEX Accelerator for personalized advice and free resources. SCORE Mentors offer expert insights on strategy, marketing, and operations. (ibid)
  • Plan Your Finances Review financial statements, gather tax documents, and visit IRS.gov for updates. Consider working with a tax professional to maximize deductions and stay compliant. (ibid)

Action taken today can lead to big successes in the year ahead. Find more information at army.mil/osbp. (ibid)

If you would like assistance updating licenses and permits, crafting a capabilities statement, or exploring new opportunities, give us a call.

The Rule of Two to Transform Small Businesses

The SBA proposed a rule on October 25, 2024, aiming to transform small business contracting by requiring agencies to apply the “Rule of Two” to task and delivery orders under multiple-award contracts (MACs). The Rule of Two ensures contracts go to small businesses when at least two qualified small firms can meet price, quality, and delivery standards. This rule will apply to orders exceeding the micro-purchase threshold, with exemptions for orders placed under the General Services Administration’s Federal Supply Schedule or in cases where there are supply chain risks or national security concerns. (HSToday.US November 7, 2024)

Driven by concerns over declining small business participation, the SBA estimates this rule could increase small business contracts by $6.1 billion annually. It supports the Biden administration’s goal of 15% federal contract spending with small disadvantaged businesses (SDBs) by 2025. In fiscal 2023, 28.4% of federal contract dollars went to small businesses, yet new entrants to federal contracting have dropped nearly 60% since 2010. (ibid)

The SBA proposal requires agencies to document their decision when they choose not to set aside a contract under the Rule of Two. Agencies must conduct market research, justify their rationale, and coordinate with small business specialists. For orders under MACs with fewer than two small business contract holders, agencies must explain their decision, with exceptions for contracts under the Federal Supply Schedule and other specific exemptions. (ibid)

This proposal builds on a January 2024 memorandum from the Office of Federal Procurement Policy, which directed agencies to document such decisions. The SBA aims to address inconsistencies in applying the Rule of Two, which arose from differing interpretations by the Court of Federal Claims and the GAO regarding its use in MACs.aiming to improve compliance and Public comments are open until December 24, 2024, with the SBA encouraging input from stakeholders. If adopted, the rule promises to level the playing field, boost small business participation, and diversify the federal supply chain. (ibid)

Questions concerning the Rule of Two? Give us a call.