Small business advocates are raising an alarm about new pricing terms they say are being added to General Services Administration contracting solicitations.

The new terms appear to take aim at current Most Favored Customer pricing practices, and could make it more difficult for small vendors to price their products effectively, the advocates say.

“The GSA has begun adding new language to its solicitations indicating that it will no longer rely merely on Most Favored Customer pricing,” Larry Allen, president of Allen Federal Business Partners, wrote in a recent blog entry on his website.

“Instead, the agency will now look at prices offered by competitors for ‘similar’ items, historical pricing and pricing available in other venues,” Allen wrote.

“Offers which provide Most Favored Customer pricing, but which are not highly competitive, will not be found fair and reasonable and will not be accepted,” Jennifer Aubel, principal consultant at Centre Consulting Inc., wrote in a blog describing the new terms.

Both Allen and Aubel said the new pricing language could have a significant impact on small vendors.

“What was once GSA’s watermark for successful rate negotiations, Most Favored Customer pricing, may no longer be good enough to even warrant contract award,” Aubel wrote. “Clearly, the rules of the game have changed.”

GSA officials did not respond to a request for comment. In previous statements, GSA officials have acknowledged various difficulties with managing pricing in contracts, including Most Favored Customer pricing.

Regarding the new terms, Allen also raised a concern about how the ability to compare prices to similar products will be carried out by contracting officers. “How can they be sure they’re comparing like products?” Allen asked. “Both Chevrolets and Cadillacs are cars. They’re even both made by GM. They are, however, different and meant for different customers. Contractors cannot assume that GSA specialists and contracting officers know enough about their specific market to make ‘similar’ comparisons.”

Another point of contention is whether GSA should have formally issued a rulemaking for the new language.

“Shouldn’t there really be a formal regulatory case?” Allen asked. “If the award criteria is formally changing, shouldn’t there be a rule-making with a comment period?”

More information: Jennifer Aubel blog entry: http://goo.gl/4O4SMw
Larry Allen blog entry: http://www.allenfederal.com/wk-ahead/9-16-2013.php#!