In plain English, the GSA Schedule Price Reduction Clause says:

GSA negotiated a Basis of Award customer(s) with you. You specified in your proposal and during negotiations the discounts you give to your Basis of Award customer(s). GSA used these discounts to the specified customers to negotiate the prices in your contract. Your prices will be recalculated and money returned to GSA if you offer your Basis of Award customer(s) better discounts than those disclosed to GSA during contract negotiations.

The Price Reduction Clause ensures that your discounting practices and the GSA price are kept at a fixed relationship. If you provide a larger discount to a Basis of Award customer than what was agreed upon in your contract, your GSA price will go down proportionately and retroactively.

Effective PRC compliance procedures will protect you if your discounting practices are fully and accurately disclosed in your original proposal to GSA and then are used as a basis for compliance over the term of the contract.

Although not ideal, a compliance system implemented after contract award can bring a contract into compliance, although sometimes at the expense of profits. If you are implementing a system in the middle of a contract period, correct any inaccuracies that turn up immediately, and let your GSA contracting officer know about them.

PRC compliance systems/procedures can range from simple to complex. A simple, manual system would be for a service contractor with standard labor rates that are not discounted.

A complex system would be required for a reseller with thousands of products and different discounting policies for groups of products. Fedmarket will assist you in developing a GSA compliance procedure that fits your company (including an online database for use by your sales force if required). Alternatively, Fedmarket offers an online database service for GSA price compliance.