A Maximum Order Threshold (MOT) is specified in the GSA Request for a Proposal (RFP). The amount of the MOT is negotiable, and its significance is often missed. The key is that the Price Reduction Clause does not apply to orders exceeding the MOT. Thus, vendors seek the lowest possible MOT and GSA wants the amount of the MOT to be the amount specified in the solicitation.

The second reason that the MOT is important is that if an order exceeds a Schedule contract's maximum order threshold it automatically kicks in a federal purchasing rule requiring the buying agency to seek price reductions. The following information is published at gsa.gov.

While ordering activities are encouraged to seek price reductions for any size Schedule contract order, they are required to seek price reductions if a requirement exceeds a Schedule contract's maximum order threshold. The maximum order under a GSA Schedule contract is the dollar value threshold at which the ordering activity must seek additional price reductions for its requirement. The maximum order varies from contract to contract and is listed in every GSA Schedule contractor's pricelist and on GSA Advantage. In response to the ordering activity's request for a price reduction, the contractor may offer a lower price, offer the current Schedule contract price, or decline the order. If further price reductions are not offered, the order may still be placed if the ordering activity determines that it is appropriate, since GSA has already determined the contract prices to be fair and reasonable.

GSA's position on requesting price reductions for orders below the Maximum Order Threshold is as follows:

Ordering activities are advised to seek further price reductions when requirements warrant. Price reductions allow ordering activities to take advantage of the flexible and dynamic pricing in the commercial marketplace. By requesting a price reduction, the ordering activity can maximize its use of GSA Schedule contracts by taking advantage of such factors as competitive forces, technological changes, labor conditions, supply and demand, industry sales goals, and inventory reductions.

Reasons to seek price reductions include instances where the ordering activity has determined that a supply or service is available elsewhere at a lower price, or when establishing Blanket Purchase Agreements (BPAs) to fill recurring requirements. The potential volume of orders under BPAs offers the opportunity to secure price reductions/increased discounts, regardless of the size of individual orders. Ordering activities should also seek price reductions when the annual review of a BPA reveals that estimated quantities/amounts have been exceeded.

You probably won't be surprised to learn that you can offer lower prices to agencies buying under GSA Schedules without triggering the Price Reduction Clause.