General Services Administration Acquisition Regulation; Multiple Award Schedule Price Reductions Clause

GENERAL SERVICES ADMINISTRATION

48 CFR Parts 538 and 552

[GSAR Notice 5-388]

RIN 3090-AF15

General Services Administration Acquisition Regulation; Multiple

Award Schedule Price Reductions Clause

AGENCY: Office of Acquisition Policy, GSA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would amend the General Services

Administration Acquisition Regulation (GSAR) to prescribe a Price

Reductions clause for use in multiple award schedule (MAS)

solicitations and contracts. The clause is a modification of that

currently in use. The modifications clarify the clause's applicability,

reduce contractor reporting requirements and eliminate MAS price

reductions based on a low price to an individual Federal agency.

DATES: Comments are due in writing on or before April 25, 1994.

ADDRESSES: Comments should be addressed to the GSA Desk Officer, room

3235, NEOB, Washington, DC 20503 and Marjorie Ashby, Office of GSA

Acquisition Policy, 18th and F Streets, NW., room 4006, Washington, DC

20405.

FOR FURTHER INFORMATION CONTACT:

Ida M. Ustad, Office of GSA Acquisition Policy (202) 501-1224.

SUPPLEMENTARY INFORMATION:

A. Background

On June 14, 1993, GSA solicited comments (58 FR 32890) on proposed

changes to the current MAS Price Reductions clause. The proposed clause

would have eliminated certain reporting requirements and increased the

time given contractors to notify the Government of price reductions.

Public comments received generally supported the changes, but felt that

further changes should be made to reduce the burden on MAS contractors.

To address these comments GSA proposes to further revise the clause to

require that the Government be extended price reductions under the same

terms and with the same effective dates which the contractor extends to

commercial customers.

The National Performance Review recommended that line managers be

given greater flexibility to buy the same or comparable MAS products

for less. In order to remove any disincentive to MAS contractors

offering agencies a lower price on individual orders, GSA proposes to

eliminate paragraph (c) of the current clause entitled ``Price

Reductions to Federal Agencies.''

B. Executive Order 12866

This rule was submitted to and approved by the Office of Management

and Budget (OMB) in accordance with Executive Order 12866, Regulatory

Planning and Review.

C. Regulatory Flexibility Act

An initial regulatory flexibility analysis has been prepared and

submitted to the Acting Chief Counsel for Advocacy of the Small

Business Administration. Copies of the initial regulatory flexibility

analysis are available from the office identified above. The initial

regulatory flexibility analysis indicates that the proposed rule will

affect contractors, including small businesses, that are awarded

contracts under GSA's MAS program. Historically, approximately seventy

percent of MAS contractors have been small businesses. Based on the

number of MAS contracts currently in effect, it is estimated that 4,288

small businesses will be impacted by the new rule.

D. Paperwork Reduction Act

The Price Reductions clause is an information collection subject to

the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., and has been

submitted to OMB for approval under the Act. Comments on the

information collection requirements may be submitted to the Office of

Information and Regulatory Affairs of OMB, Attention: Desk Officer for

GSA, Washington, DC 20503. The title of the information collection is

``GSAR 552.238-75 Price Reductions.''

The Price Reductions clause is intended to ensure that the

Government maintains its price/discount (and/or term and condition)

advantage in relation to the contractor's commercial customer(s) upon

which the MAS contract is predicated. The customer or category of

customer upon which the award is predicated is identified at the

conclusion negotiations and reflected in the MAS contract.

The Price Reductions clause requires MAS contractors to notify the

contracting officer of price reductions at the same time that

commercial customers are notified.

The Price Reductions clause is needed to assure that the Government

maintains the relative discount position, negotiated at the time of

contract award, throughout the term of the contract.

The estimated annual burden for the Price Reductions clauses is

24,508 hours. This is based upon an estimated average burden per

response of 2 hours, a frequency of 2 responses per respondent, and an

estimated number of likely respondents of 6,127.

List of Subjects in CFR Parts 538 and 552

Government procurement.

Accordingly, it is proposed that 48 CFR parts 538 and 552 be

amended as follows:

1. The authority citation for 48 CFR parts 538 and 552 continues to

read as follows:

Authority: 40 U.S.C. 486(c).

2. Section 538.203-71 is amended by revising the heading and adding

paragraph (e) to read as follows:

538.203-71 Solicitation provisions and contract clauses.

* * * * *

(e) Contracting officers shall insert the clause at 552.238-75,

Price Reductions, in all MAS solicitations and contracts.

3. Section 538.272 is added to read as follows:

538.272 MAS price reductions.

(a) Prior to the award of an MAS contract, the contracting officer

and the offeror shall reach an agreement as to the customer (or

category of customer), price lists, and discounts which will serve as

the basis of contract award. The award document shall expressly state

the price/discount relationship between the Government and the

identified commercial customer which is the basis of contract award.

The Price Reductions clause is intended to maintain this price/discount

relationship (and/or term and condition) between the Government and the

offeror's customer or category of customer upon which the MAS contract

was predicated, for the contract term.

(b) During the term of the contract any changes in discount/pricing

practices by the contractor which result or will result in a less

advantageous relationship between the Government and the customer or

category of customer upon which the MAS contract discount/price was

predicated, shall result in a price reduction to the Government to the

extent necessary to reflect the original relationship.

4. Section 552.238-76 is added to read as follows:

552.238-76 Price reductions.

As prescribed in 538.203-71(e), insert the following clause:

Price Reductions (XXX 1994)

(a) Before award of a contract, the Contracting Officer and the

Offeror will agree upon (1) the customer (or category of customers)

which will be the basis of award, and (2) the Government's price or

discount relationship to the identified customer or category of

customers. This relationship shall be maintained throughout the

contract period. Any change in the Contractor's commercial pricing

arrangement applicable to the identified customer or category of

customers, which disturbs this relationship, will constitute a price

reduction.

(b) During the contract period, the Contractor shall report to

the Contracting Officer all price reductions to the Contractor's

identified customer or category of customers upon which the contract

award was predicated. The Contractor's report shall include an

explanation of the conditions under which the reductions were made.

(c) A price reduction shall apply to purchases under this

contract if, after the date negotiations conclude, the Contractor:

(1) Reduces prices (or grants any more favorable discounts, or

terms and conditions) contained in the commercial catalog,

pricelist, schedule or other documents upon which contract award by

the Government was predicated; or

(2) Grants special discounts to the identified customer or

category of customers, upon which the contract award by the

Government was predicated, so as to disturb the discount/price

relationship of the Government to the identified customer or

category of customers.

(3) The price reduction shall be offered to the Government with

the same effective date, and for the same time period as extended to

the commercial customer or category of customers.

(d) The Contractor shall extend to the Government, any general

price reductions (including temporary reductions) offered to all

customers (or category of customers). The price reduction shall be

offered to the Government with the same effective date, under the

same terms and conditions, and for the same time period as extended

to commercial customers.

(e) The Contractor may offer the contracting officer a voluntary

Government wide price reduction at any time during the contract

period.

(f) The Contractor will notify the Contracting Officer of any

price reduction subject to this clause as soon as possible, but not

later than 15 calendar days after its effective date.

(g) The contract will be modified to reflect any price reduction

which becomes applicable in accordance with this clause.

(h) This clause does not apply to price reductions based upon:

(1) firm fixed price definite quantity contracts with specified

delivery in excess of the maximum order limitation specified in this

contract, or (2) any sale caused by an error in quotation or

billing, provided adequate documentation is furnished by the

Contractor to the Contracting Officer.

(End of Clause)

Dated: December 28, 1993.

Richard H. Hopf, III,

Associate Administrator for Acquisition Policy.

[FR Doc. 94-3707 Filed 2-22-94; 8:45 am]

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