Since the Schedule prices are presumed to be fair and reasonable, ordering offices need not seek further competition outside of the FSS. Pricing is the most critical aspect of the Schedule and the GSA’s negotiating objective is to obtain the "most favored customer" pricing. This means that the prices are equal to or better than the prices a company offers its best commercial customer or category of customers. To help make this comparison, offerors are required to disclose information about their commercial pricing policies and practices. This information was previously obtained through completion of Discount Schedule and Marketing Data (DSMD sheets) that were certified by the contractor and subject to audit for compliance with the Truth in Negotiations Act. In August 1997 the DSMD sheets were eliminated and replaced by the Commercial Sales Practices (CSP) Format.

The CSP Format emphasizes the contractor’s pricing policies and practices rather than transactional data as before with DSMD. Now the contractor identifies a customer or category of customers and the best price offered to it without regard to quantity. A "customer" is defined as any entity that acquires the supplies or services being offererd and can include commercial customers, national accounts, resellers, distributors, dealers, state and local governments and educational institutions but does not include federal government agencies. Discounts, concessions and other relevant terms are also fully identified and explained. After receiving the offer the government will establish negotiation objectives based on a review of price reasonableness. To the extent they are relevant the government will consider such factors as (1) aggregate volume of anticipated purchases (2) net prices offered to commercial customers after discounts, concessions, etc. (3) length of contract period (4) inclusion of warranties, training and maintenance included in the price (5) ordering and delivery practices and (6) other factors that may warrant a higher price to the government such as more expense or the most favored customer performs certain functions not performed by the government.

If the best price is not offered to the government the contractor must be prepared to explain why. Detailed price breakdowns are not required and the CO may award a higher priced contract if the following conditions exist: (1) prices offered to the government are fair and reasonable even though comparable discounts were not negotiated and (2) award is otherwise in the best interest of the government.

The contractor and not the government is charged with compliance with the Price Reduction clause. The fact the GSA never asks why the contractor has not reported a pricing concession is no defense to the failure to report. The clause applies to all customers within the COC and to all items on the Schedule sold to the government. A pricing concession to a COC customer must be reported to the GSA contracting officer 15 days after its effective date and the report must include an explanation of the conditions under which the price reduction or other concessions were made. The contractor must offer the price reduction to the government with the same effective date and the same time period as extended to the commercial customer. Though it is the government’s right to demand the pricing concession the government must be purchasing the Schedule items under similar terms and conditions as the COC customer and if not, then the contractor has a basis to argue the government is not entitled to the same price reduction or at least not to the same degree. In addition, the Price Reduction clause spells out four exceptions: (1) when the sale to the customer exceeds the maximum order threshold specified in the contract (2) for sales to federal agencies (allows for "spot price" reductions to other agencies) (3) for sales to state and local government entities when the order is placed under the contract and the state and local government entity is the agreed upon COC and (4) when the price reduction results from an error in quotation or billing, provided adequate documentation is provided to the CO.

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