[Federal Register Volume 59, Number 36 (Wednesday, February 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-3707]


[[Page Unknown]]

[Federal Register: February 23, 1994]


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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]
BILLING CODE 6820-61-M