[Federal Register Volume 59, Number 200 (Tuesday, October 18, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25703]
[[Page Unknown]]
[Federal Register: October 18, 1994]
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GENERAL SERVICES ADMINISTRATION
48 CFR Parts 538 and 552
[APD 2800.12A, CHGE 57]
General Services Administration Acquisition Regulation; Multiple
Award Schedule Price Reductions Clause
AGENCY: Office of Acquisition Policy, GSA.
ACTION: Final rule.
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SUMMARY: The General Services Administration Acquisition Regulation
(GSAR) is amended 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 lower price to an
individual Federal agency.
EFFECTIVE DATE: October 19, 1994.
FOR FURTHER INFORMATION CONTACT:
Ida M. Ustad, Office of GSA Acquisition Policy (202) 501-1224.
SUPPLEMENTARY INFORMATION:
A. Public Comment
A notice of proposed rulemaking was published in the Federal
Register on February 23, 1994 (59 FR 8590). Public comments and
comments received from other Federal agencies and GSA activities were
considered in formulating this final rule. The significant issues and
concerns raised during the comment period are summarized below:
Two organizations suggested the entire Price Reductions clause be
eliminated because it is confusing and inconsistent with commercial
practice. GSA has clarified the aspects of the clause that commentors
found to be confusing. GSA does not agree that the clause is
inconsistent with commercial practice. Some large commercial contracts
contain similar price protection provisions.
GSA believes the clause is necessary to assure that the Government
maintains the relative discount position, negotiated at the time of
contract award, throughout the term of the contract.
Two organizations offered comments in support of the change in the
Price Reductions clause that eliminates certain reporting requirements,
increases the time given contractors to notify the Government of price
reductions, and requires that the Government be extended price
reductions under the same terms and with the same effective dates which
the contractor extends to the commercial customers.
Comments were mixed on the elimination of paragraph (c) of the
current clause which deals with price reductions to Federal agencies.
Federal agencies submitted comments in support of the change, while
some contractors and associations representing them opposed the change
and argued the MAS price would become the starting point for
negotiation on orders and eliminate the need to negotiate a schedule
contract. GSA disagrees; the final rule provides that there shall be no
price reduction for sales to Federal agencies. GSA believes this
change, when combined with revised MAS ordering procedures, gives
agencies the flexibility to obtain reductions within the MAS
contractual framework and will lead to greater MAS usage.
Several organizations suggested the requirement in paragraph (d) of
the proposed clause to pass on general price reductions be deleted as
unnecessary. The suggestion was adopted and the provision is not
included in the final rule.
B. Executive Order 12866
This rule was submitted to the Office of Management and Budget
(OMB) in accordance with Executive Order 12866, Regulatory Planning and
Review.
C. Regulatory Flexibility Act
The rule is not expected to have an economic impact on a
substantial number of small entities as defined under the Regulatory
Flexibility Act. An initial regulatory flexibility analysis was
prepared and submitted to the Chief Counsel for Advocacy of the Small
Business Administration. Copies of the initial regulatory flexibility
analysis were made available for public comment. No comments were
received on the impact of the rule on small business. The final
regulatory flexibility analysis indicates that the 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. The final regulatory
flexibility analysis has been submitted to the Chief Counsel for
Advocacy of the Small Business Administration. Copies of the final
regulatory analysis are available from the office identified above.
D. Paperwork Reduction Act
The Price Reductions clause contains an information collection
requirement which is subject to the Paperwork Reduction Act, 44 U.S.C.
3501 et sequentia. The information collection has been approved by OMB
and assigned OMB Control Number 3090-0235. 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 of 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 clause 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.
Any comments concerning the accuracy of the burden may be directed
to the Director, Office of GSA Acquisition Policy (VP), 18th & F
Streets, NW, Room 4006, Washington, DC, 20405 and to the Office of
Information and Regulatory Affairs of OMB, Attention Desk Officer for
GSA, Washington, DC 20503.
List of Subjects in CFR Parts 538 and 552
Government procurement.
Accordingly, 48 CFR parts 538 and 552 are amended to read as
follows:
PARTS 538 AND 552--[AMENDED]
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 552.238-76,
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 a MAS contract, the contracting officer
and the offeror shall reach an agreement as to the customer (or
category of customers), 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 relationship) between the
Government and the offeror's customer or category of customers upon
which the MAS contract was predicated for the contract period.
(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 customers 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 (Oct 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
or discount arrangement applicable to the identified customer (or
category of customers) which disturbs this relationship shall
constitute a price reduction.
(b) During the contract period, the Contractor shall report to
the Contracting Officer all price reductions to the customer (or
category of customers) that was the basis of award. The Contractor's
report shall include an explanation of the conditions under which
the reductions were made.
(c) (1) A price reduction shall apply to purchases under this
contract if, after the date negotiations conclude, the Contractor--
(i) Revises the commercial catalog, pricelist, schedule or other
document upon which contract award was predicated to reduce prices;
(ii) Grants more favorable discounts or terms and conditions
than those contained in the commercial catalog, pricelist, schedule
or other documents upon which contract award was predicated; or
(iii) Grants special discounts to the customer (or category of
customers) that was the basis of award, and the change disturbs the
price/discount relationship of the Government to the customer (or
category of customers) that was the basis of award.
(2) The Contractor shall offer the price reduction 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) There shall be no price reduction for sales--
(1) To commercial customers under firm, fixed-price definite
quantity contracts with specified delivery in excess of the maximum
order limitation specified in this contract;
(2) To Federal agencies; or
(3) Caused by an error in quotation or billing, provided
adequate documentation is furnished by the Contractor to the
Contracting Officer.
(e) The Contractor may offer the Contracting Officer a voluntary
Governmentwide price reduction at any time during the contract
period.
(f) The Contractor shall 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.
(End of Clause)
Dated: August 18, 1994.
Arthur E. Ronkovich,
Acting Associate Administrator for Acquisition Policy.
[FR Doc. 94-25703 Filed 10-17-94; 8:45 am]
BILLING CODE 6820-61-M