98-31264. Submission for OMB Review; Comment Request Entitled Price Reductions Clause

[Federal Register Volume 63, Number 225 (Monday, November 23, 1998)]
[Notices]
[Pages 64717-64718]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31264]


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GENERAL SERVICES ADMINISTRATION

[OMB Control No. 3090-0235]


Submission for OMB Review; Comment Request Entitled Price 
Reductions Clause

AGENCY: Office of Acquisition Policy, GSA.

ACTION: Notice of request for an extension to a previously approved OMB 
Clearance (3090-0235).

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SUMMARY: Under the provisions of the Paperwork Reduction Act of 1995 
(44 U.S.C. Chapter 35), the Office of Acquisition Policy has submitted 
to the Office of Management and Budget (OMB) a request to review and 
approve an extension of a previously approved information collection 
requirement concerning Price Reductions clause. The information 
collection was previously published in the Federal Register on June 19, 
1998 at 63 FR 33667, allowing for a 60-day public comment period. 
Public comments were received from the Coalition for Government 
Procurement and the Information Technology Services Council.
    Following is a summary of the comments GSA received and GSA's 
response.
    1. The Price Reduction clause is an administrative and financial 
burden.
    The clause was significantly streamlined when modified in 1994. 
Other administrative requirements were also relaxed or deleted. The 
clause requires submission of information in only very limited 
circumstances. The only monitoring required by the clause is for sales 
to the designated customer or class of customer. No special format or 
periodic reporting is required. GSA contacted a sampling of potential 
respondents (small and large business MAS contractors), from various 
schedules to determine the estimated annual burden. It found the 
average number of times the information is reported each year is 2 
times with an estimated time of 15 hours. Several of the small 
businesses consulted said the clause was not a burden. The Price 
Reduction clause is a key safeguard that has been built into the MAS 
procurement process to protect against loss of taxpayer dollars.
    2. The Price Reduction clause is not necessary to ensure price 
reasonableness on MAS contracts.
    The clause simply assures that the government maintains throughout 
the life of the contract the relative price/discount advantage 
negotiated in relation to the contractor's commercial customer upon 
which the contract award is predicated.
    The clause provides that if a contractor sells any item covered by 
a comparable type contract at a price below the negotiated MAS contract 
price to the identified comparable customer, then the contractor must 
give the government an equivalent price reduction on all subsequent 
government orders for the balance of the contract period or until the 
price is furthered reduced.
    Without a mechanism such as the Price Reduction clause to ensure 
that a balance between government prices and commercial prices is 
maintained there are no assurances of continued price reasonableness 
under the contract. The only reasonable alternative would be to have 
shorter contracts and negotiate more frequently, imposing a greater 
burden on the contractor. To eliminate such a clause would be to 
eliminate an important means by which the government insures that it 
receives the best pricing. Most MAS contracts are often three to five 
years in length; price reductions insure that the government is 
receiving current market prices in response to changes in market demand 
and technology. The existence of the price reduction clause helps allow 
MAS contracts to be of longer duration than the more typical one-year 
supply contract. Absent such a clause, the government would be forced 
to enter into contracts of shorter duration in order to maintain 
current pricing. The administrative costs and other burdens associated 
with more frequent negotiations would be increased for contractors and 
government alike.
    3. The Price Reduction clause is not consistent with commercial 
practice.
    GSA acknowledges that there are differences of opinion with 
industry with regard to the Price Reductions clause being consistent 
with commercial practice, however, there are similar type arrangements 
in private industry. GSA's Office of Inspector General (OIG) has found 
that price reduction requirements, in fact, are standard commercial 
practice for many large volume purchasers. The OIG has found commercial 
agreements that contained provisions by which a seller would commit to 
giving the buyer the benefit of any decreases in prices for the subject 
products during the term of the agreement.

DATES: Comment Due Date: December 23, 1998.

ADDRESSES: Additional comments regarding this burden estimate or any 
other aspect of this collection of information, including suggestions 
for reducing this burden, should be submitted to: Edward Springer, GSA 
Desk Officer, Room 3235, NEOB, Washington, DC 20503 and also may be 
submitted to Marjorie Ashby, General Services Administration (MVP), 
1800 F Street NW, Washington, DC 20405.

FOR FURTHER INFORMATION CONTACT: Al Matera, Office of GSA Acquisition 
Policy [phone].

SUPPLEMENTARY INFORMATION:

A. Purpose

    The GSA is requesting the Office of Management and Budget (OMB) to 
review and approve information collection, 3090-0235, concerning the 
Price Reductions clause. The Price

[[Page 64718]]

Reductions clause used in multiple award schedule contracts ensures 
that the Government maintains its relationship with the contractor's 
customer or category of customers, upon which the contract is 
predicated.

B. Annual Reporting Burden

    Respondents: 6,862; annual responses: 13,724; average hours per 
response: 7.5; burden hours: 102,930.
    Copy of Proposal: A copy of this proposal may be obtained from the 
GSA Acquisition Policy Division (MVP), Room 4011, GSA Building, 1800 F 
Street NW, Washington, DC 20405, or by telephoning [phone], or 
by faxing your request to [phone].

    Dated: November 17, 1998.
Ida M. Ustad,
Deputy Associate Administrator, Office of Acquisition Policy.
[FR Doc. 98-31264 Filed 11-20-98; 8:45 am]
BILLING CODE 6820-61-M