A Most Favored Customer also known as MFC is a category of customers that you offer your best discount pricing. When submitting a proposal for GSA Schedule the agency request that you outline what you offer your MFC. Based on the priced category offered to the MFC the Government wants to be offered similar or better pricing. You need to determine which category of customers is your MFC and negotiate a fair and reasonable price that will be offered to the agency. You should also remember to have a government contract does not mean your business will grow so ensure the pricing negotiated will be profitable not only to the agency, but to your business as well.
A clause will be incorporated into the contract aptly called the MFC Clause. This clause guarantees the price negotiated and ensures fair and reasonable pricing. Your contract will also incorporate a Price Reductions Clause (PRC) in accordance to GSAM 552.238-75. The PRC stipulates if you offer better pricing than what was negotiated within your contract to another customer you are in violation. You should adhere to the prices negotiated and notify the agency of any pricing modifications that are made. If you offer a better discount to another customer and not notify the agency you are in violation of the terms and conditions of the contract. Dependent upon the severity of the violation there are consequences, here are a few examples:
- Backpay to the Government from the date the violation took place.
- Company Audit
- Criminal penalties
- Civil penalties
Do you have any additional input on MFC, I would love to hear it.
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