[Federal Register Volume 62, Number 162 (Thursday, August 21, 1997)]
[Rules and Regulations]
[Pages 44518-44525]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22144]
[[Page 44517]]
_______________________________________________________________________
Part II
General Services Administration
_______________________________________________________________________
48 CFR Part 504, et al.
GSA Acquisition Regulations; Acquisition of Commercial Items and Small
Entity Compliance Guide; Final Rules
Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 /
Rules and Regulations
[[Page 44518]]
GENERAL SERVICES ADMINISTRATION
48 CFR Parts 504, 507, 510, 511, 512, 514, 515, 538, 539, 543, 546,
552, and 570
[APD 2800.12A, CHGE 76]
RIN 3090-AF86
General Services Administration Acquisition Regulation;
Acquisition of Commercial Items
AGENCY: Office of Acquisition Policy, GSA.
ACTION: Interim rule adopted as final with changes.
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SUMMARY: On February 16, 1996, GSA published an interim rule revising
the General Services Administration Acquisition Regulation (GSAR) to
implement Items I and III of Federal Acquisition Circular 90-32 which
amended the Federal Acquisition Regulation (FAR) to implement the
portions of the Federal Acquisition Streamlining Act of 1994 (Pub. L.
103-355) dealing with the Truth in Negotiations Act and with the
acquisition of commercial items (61 FR 6164 and corrections published
at 61 FR 10846 and 61 FR 14032). The interim rule revised the GSAR to
conform to the FAR as revised by FAC 90-32 and to implement portions of
the FAR where necessary to provide agency procedures. The interim rule
also canceled the Multiple Award Schedule (MAS) Policy Statement of
October 1, 1982 (47 FR 50242, November 5, 1982). This final rule
modifies certain portions of the interim rule and adopts the balance of
rule as final.
DATES: Effective Date: August 21, 1997. Applicability Date: For
solicitations issued on or after August 21, 1997, use of the new
policies, provisions and clauses is optional for solicitations issued
before December 19, 1997, and mandatory for solicitations issued on or
after December 19, 1997. (See SUPPLEMENTARY INFORMATION for further
guidance.)
FOR FURTHER INFORMATION CONTACT: Al Matera, Office of Acquisition
Policy, (202) 501-1224.
SUPPLEMENTARY INFORMATION: All new solicitations for commercial items
and open season solicitations issued under the multiple award schedule
program after August 21, 1997 may use the policies, provisions and
clauses in this final rule on an optional basis and solicitations
issued on or after December 19, 1997 shall conform to this final rule.
To the maximum extent practical, solicitations for commercial items and
open season solicitations, that have been issued but where no contract
has been awarded shall be amended to conform to this final rule.
However, offerors shall not be required to resubmit information on
commercial sales practices and any requests for additional information
shall be limited to the minimum needed. Existing MAS contracts that
will expire more than three (3) years after the effective date of this
rule shall be modified to conform to the requirements of this final
rule.
A. Background
Recently, GSA has made a number of changes in the MAS program. This
final rule represents a continuation of GSA's efforts to reinvent the
MAS program in order to move the program to a future environment of
greater use of commercial practices, increased competition, and greater
responsibility for making smart buying decisions within the framework
of the MAS program by contracting personnel at the front-line closest
to the need. In moving toward this new environment, GSA is continuing
to promote policies regarding the solicitation, award, and
administration of MAS contracts that will allow GSA to continue to use
the collective leverage of the Federal Government to set up MAS
contracts, that will be easy for our customers to use and that will
provide a wide variety of quality supplies and services at competitive
prices.
GSA initiated this rule in order to simplify and streamline the
process for awarding and administering MAS contracts and to bring GSA's
policies and procedures for the MAS program in line with the Federal
Acquisition Regulation (FAR) as amended to implement the Federal
Acquisition Streamlining Act of 1994 and the Clinger-Cohen Act of 1996.
This final rule makes changes in the program by:
(1) Reducing the information/data required of offerors seeking to
obtain MAS contracts and focusing whenever possible on the offeror's
written pricing policies, or standard commercial sales practices if the
offeror has no written policies, instead of on transactional sales
data.
(2) Emphasizing the use of pre-award audits of information
submitted in support of price negotiations and expressly limiting the
contractual right to conduct post-award audits of proposal information.
(3) Eliminating requirements for offerors to certify sales data as
current, accurate and complete while putting offerors on notice of the
Government's expectations for data submissions.
(4) Maintaining the Government's ability to make price adjustments
so that, in the event the Government learns that inaccurate, not
current or incomplete information was submitted, the Government will
have a contractual remedy to recover any overcharges.
(5) Maintaining a post-award audit provision for monitoring
compliance with specific contract provisions such as the Price
Reduction clause, the Industrial Funding Fee clause and for
overbillings.
GSA's Office of Acquisition Policy will continue to work with
procurement officials in GSA's Federal Supply Service and the
Department of Veterans Affairs (VA) and the Inspectors General of GSA
and VA to ensure that contracting personnel and contract auditors fully
understand the new rules, work together to protect the Government's
interests, and put the new policies into effective operation.
Contractors and prospective contractors have long expressed their
view that their participation in the Multiple Award Schedule (MAS)
Program is hampered by rules they believe are unduly burdensome and
difficult to implement. GSA believes that by making the changes
embodied in this final rule it has removed many of the barriers to
participation or full participation by both large and small business
concerns, including small disadvantaged and women-owned small business
concerns. By employing procedures that are more consistent with
commercial practice, GSA expects to increase competition and thereby
provide a wider range of choices at competitive prices to customer
agencies.
On February 16, 1996, GSA published an interim rule revising the
GSAR to implement Items I and III of Federal Acquisition Circular 90-32
which amended the FAR to implement the portions of the Federal
Acquisition Streamlining Act of 1994 (Pub. L. 103-355) dealing with the
Truth in Negotiations Act and with the acquisition of commercial items
(61 FR 6164). The interim rule revised the GSAR to conform to the FAR
as revised by FAC 90-32 and to implement portions of the FAR where
necessary to provide agency procedures. The interim rule also canceled
the Multiple Award Schedule (MAS) Policy Statement of October 1, 1982
(47 FR 50242, November 5, 1982).
On September 4, 1996, a notice was published in the Federal
Register to familiarize the public with the status of finalizing the
interim rule. The notice also extended the period for public
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comment and provided notification of a public meeting to be held
September 19, 1996. GSA provided the public commentors with the
proposed final rule, a line-in-line out of the interim rule to
illustrate the specific changes reflected in the final rule, the
reconciliation of public comments, and an option paper that discussed
the options being considered on the issue of post-award audit rights
relating to information other than cost and pricing data submitted in
connection with the contract or modification. GSA made revisions to the
interim rule to address public comments and to take into account the
enactment of the Federal Acquisition Reform Act of 1996 (renamed the
Clinger-Cohen Act). Others in the public who did not comment during the
public comment period were invited to request a copy of the
information.
Comments on the interim rule were received from the American Bar
Association (ABA), AT&T, Canon U.S.A., Inc., the Coalition for
Government Procurement (CGP), the Council of Defense and Space Industry
Associations (CODSIA), the Department of Justice (DOJ), the Department
of Veterans Affairs (VA), the Federal Bar Association (FBA), Federal
Schedules Incorporated, Hewlett Packard (HP), the Information
Technology Association of America (ITAA), the Information Technology
Industry Council (ITI), the Office of Inspector General for GSA, the
Square D Company, and the Xerox Corp.
The major issues raised and GSA's resolution of those issues are
outlined below.
Most Favored Customer Pricing Goal
Several commentors suggested that the negotiation objective of
``most favored customer'' should be eliminated in favor of a goal of
``fair and reasonable'' prices. The commentors indicated that GSA's
pricing policy is inconsistent with the FAR and the goals of Congress
and the Administration. They also assert that the most favored customer
discount objective is inconsistent with FASA which defined fair and
reasonable pricing as the objective for the Federal Government.
Commentors argue that a fair and reasonable price does not have to be
an offeror's most favored price and GSA's insistence on this policy
runs counter to numerous actions that have been taken by Congress and
the Administration. Industry commentors indicate that such a policy is
not appropriate for an agency which has a history of pursuing civil
fraud settlements and judgments. They suggest that as long as this
policy remains, commercial companies must make a significant investment
in risk aversion infrastructure.
The final rule provides for GSA to continue to seek to obtain the
offeror's best price (most favored customer) based on its evaluation of
discounts, terms, conditions, and concessions offered to commercial
customers for similar purchases.
The suggestion that FASA created a new standard by referring to
``fair and reasonable pricing'' is not accurate. A ``fair and
reasonable'' price has long been the goal of the Federal procurement
system and has been reflected in regulations for years. The pursuit of
``most favored customer'' pricing as a goal is consistent with
commercial practice and totally consistent with the objective of
negotiating a fair and reasonable price. In fact, the GAO specifically
recommended that the GSA Administrator ``amend MAS policies to clearly
state that the price analysis GSA does to establish the Government's
MAS negotiation objective should start with the best discount given to
any of the vendor's customers but that GSA must consider legitimate
differences in terms and conditions identified and valued by the
offeror when negotiating the Government's MAS discount.'' (GAO/GGD-93-
123, Multiple Award Schedule Contracting, August 1993). The final rule
is consistent with GAO's recommendation.
GSA agrees that to be fair and reasonable a price does not have to
be the offeror's most favored price and the final rule reflects that
position. The final rule expressly states that the Government
recognizes that the terms and conditions of commercial sales vary and
that there may be legitimate reasons why the best price is not
achieved. The final rule also states that the contracting officer may
award a contract containing pricing which is less favorable than the
best price the offeror extends to any commercial customer making
similar purchases when the contracting officer determines that the
prices offered to the Government are fair and reasonable even though
comparable discounts were not negotiated, and award of a contract is
otherwise in the best interest of the Government.
GSA and its contracting officers have a fiduciary responsibility to
the taxpayers and to customer agencies to take full advantage of the
Government's leverage in the market in order to obtain the best price
(most favored customer) based on an evaluation of discounts, terms,
conditions and concessions offered to commercial customers for similar
purchases.
Pricing Disclosure/Information Submission Requirements
Industry commentors suggested the interim rule requires disclosures
of singular transactions at lower prices than those offered the
Government unless they involved erratic, ad hoc discounting. Commentors
also found the provisions on ad hoc discounting to be confusing and
subject to a wide range of interpretations. In addition, industry
commentors suggested that the requirement to distinguish ad hoc
discounts would require establishment of a database.
In addition, some commentors suggested that the requirement to
disclose information on discounts other than those given to commercial,
large volume end user customers was inappropriate.
Some commentors suggested the statement in the instructions for the
Commercial Sales Practices Format, which indicated that GSA expects
information submitted to be current, accurate, and complete, is an
implied or constructive (de facto) certification.
The interim rule has been revised to clarify GSA's intent to obtain
information on the offeror's written pricing policies, or standard
commercial sale practices if the offeror has no written policies, and a
general explanation of the circumstances and frequency of deviations
from those policies or standard practices. Generally, only in cases
where the offeror is deviating from its policies or practices to such
an extent that the policies or practices alone cannot be relied upon by
the contracting officer to make a determination that the prices offered
are fair and reasonable, will the contracting officer ask for
transactional information. In cases where information is requested, the
request will be targeted to limit the submission of sales data to that
needed by the contacting officer to establish whether the price is fair
and reasonable.
In the final rule, the use of the terminology ``ad hoc
discounting'' is eliminated. If the offeror deviates from its written
discount policies or standard commercial sales practices, the offeror
is requested to explain the circumstances surrounding the deviations
and to explain how often the deviations occur. The offeror is also
asked to describe the controls employed to assure the integrity of the
offeror's pricing. Generally, only in cases where the offeror is
deviating from its policies or practices to such an extent that the
policies or practices alone cannot be relied upon by the contracting
officer to make a determination that the prices
[[Page 44520]]
offered are fair and reasonable, will the contracting officer ask for
transactional information.
The final rule provides for GSA to continue to seek information on
the customer(s) or category of customer(s) that receives the offeror's
best discount as well as customers or categories of customers that
receive better prices (discounts and concessions in any combination)
than those offered to the Government. Contracting officers cannot
negotiate the best price for MAS products and services unless they
consider the discounts that MAS offerors give to their best customers.
Discounts offerors give to dealers, distributors, and original
equipment manufacturers (OEMs) should not be considered ``off limits''
simply because the Government does not perform certain functions that
those types of customers perform. GSA believes that an offeror's best
discount should generally be the starting point of the price analysis
GSA uses to establish the Government's MAS negotiation objective. GSA,
however, recognizes the need to consider legitimate differences in the
terms and conditions of sale between the Government's MAS purchases and
vendor's other customers.
The final rule maintains the statement regarding GSA's expectation
of receiving current, accurate, and complete data. GSA does not view a
statement putting offeror/contractors on notice of its expectations as
a de facto certification.
Post-Award Audit Rights
Industry commentors vigorously opposed the portions of GSA's
interim rule and proposed final rule made available in August 1996
which maintained authority for post-award audits of data provided in
support of price negotiations prior to award or contract modification.
The commentors argued that the post-award access to pre-award data
presented to support price negotiations is directly in conflict with
the intent of Congress as contained in the Federal Acquisition Reform
Act of 1996 (FARA) (renamed the Clinger-Cohen Act of 1996). In
addition, industry commentors suggested that it is not a commercial
practice to allow post-award audits of information provided during
negotiations concerning pricing. Contractors have also expressed the
view that the MAS contracts provide a relatively low profit margin and
make it difficult for contractors to justify the investment in
infrastructure required.
On the other hand, the Department of Justice (DOJ), GSA and VA
Inspectors General (IG's) argued for retention of the post-award audit
rights for data provided in support of price negotiations prior to
award or contract modification. DOJ and the IGs believe that retention
of the post-award audit is necessary to protect the Government from
fraudulent and inaccurate disclosures.
Some comments also were received on the post-award compliance audit
rights. The Information Technology Association of America indicated
that they agree that GSA needs to have access to records to determine
compliance with the administration of the contract; i.e., price
reductions, billing, etc. The Coalition for Government Procurement
expressed a willingness to work with GSA on ways to give GSA the
ability to check for billing errors if the post-award audit rights of
information submitted in support of price negotiations prior to award
or contract modification were eliminated.
The final rule deletes the contract clause that automatically
provides post-award audit rights for pricing information in every
schedule contract. GSA expects to shift its emphasis to use of pre-
award audits of information submitted in support of price negotiations.
In addition to other contract pricing tools, this shift will provide
the contracting officer a mechanism for verifying information submitted
by offerors and will help avoid the potential problem of overpricing by
revealing inaccurate, incomplete or defective data before the contract
is awarded. This approach is designed to avoid problems instead of
uncovering problems after contract award. Notwithstanding this shift to
pre-award audits, GSA recognizes that there may be circumstances which
warrant a contractual right to access in order to conduct post-award
audits of information provided during negotiations. However, GSA
anticipates such instances will involve a limited number of schedules.
Therefore, the final rule allows the contracting officer to modify the
Examination of Records by GSA (Multiple Award Schedule) clause to
provide for post-award access to records to verify the pre-award/
modification pricing, sales or other data submitted related to the
supplies or services offered under the contract which formed the basis
for award or modification was accurate, current, and complete. Such a
modification can only be made after the contracting officer makes a
determination that there is a likelihood of significant harm to the
Government without access to verify the information and obtains the
Senior Procurement Executive's approval. In such cases, the right to
access expires 2 years after the award or modification. Such
determinations must be made on a schedule-by-schedule basis. This
approach is expected to enhance the Government's relationship with its
contractors because it more nearly approximates commercial practice.
This change reflects a policy decision to make post-award audit
provisions for information submitted in support of price negotiations
prior to award or modification the exception rather than the general
rule. GSA believes, as a legal matter, that GSA can conduct post-award
audits of information submitted in support of price negotiations prior
to award or contract modification. Expressly limiting the contractual
post-award audit access for information provided during negotiations
concerning pricing does not impact the Inspector General's independent
authority under the Inspector General Act; nor would it preclude a
contractor from voluntarily providing audit access should circumstances
so warrant. It also does not impact independent authority granted by
virtue of other statutes, for example 38 U.S.C. 8126.
Post-award compliance audits for overbillings, billing errors,
compliance with the Price Reduction clause and the Industrial Funding
Fee clause are maintained for all schedule contracts in the final rule.
Price Adjustment Clause
Industry commentors suggest that GSA's inclusion of a price
adjustment clause, which covers situations after award in which
incomplete, not current, or inaccurate pricing information is
discovered, is not consistent with the spirit and intent of the Federal
Acquisition Streamlining Act and the Federal Acquisition Reform Act
(renamed the Clinger-Cohen Act), and is more restrictive than similar
provisions used in commercial practice.
The final rule retains the Price Adjustment clause. Even though GSA
has limited post-award audits of information submitted in support of
price negotiations, there are other circumstances that may result in
the Government discovering that the offeror/contractor submitted
inaccurate, not current or incomplete information. For example, the IG
may perform an audit based on its authority under the Inspector General
Act. The IG may not find fraud but may find that incomplete, not
current or inaccurate information was provided GSA and that the lack of
information impacted the price the contracting officer negotiated.
Without a clause, GSA has no recourse other than to try and convince
the contractor to
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negotiate an equitable settlement. The contractor would be under no
contractual or legal obligation to do so.
B. Executive Order 12866
This final rule was submitted to the Office of Management and
Budget (OMB) under Executive Order 12866, Regulatory Planning and
Review. This rule is not a major rule under 5 U.S.C. 804.
C. Regulatory Flexibility Act
A Final Regulatory Flexibility Analysis (FRFA) has been prepared
and may be obtained from the Office of Acquisition Policy, 18th & F
Streets, NW., Washington, DC 20405. A copy of the FRFA has been
submitted to the Chief Counsel for Advocacy of the Small Business
Administration. The analysis is summarized as follows:
This rule revises the GSAR to bring it into conformance with the
Federal Acquisition Regulation (FAR) as amended by Items I and III of
Federal Acquisition Circular 90-32 which implemented portions of the
Federal Acquisition Streamlining Act of 1994 (Pub. L. 103-355) dealing
with the acquisition of commercial items and the Truth in Negotiations
Act. The two Final Regulatory Flexibility Analyses (one for Commercial
Items, FAR Case 94-790, and the other for TINA, FAR Case 94-721) that
support the FAR changes serve the same purpose for this implementation.
This regulatory flexibility analysis focuses on the GSAR changes
relating to the Multiple Award Schedule (MAS) Program.
MAS solicitations will require the submission of information from
each offeror on its pricing and discount policies, business practices,
commercial terms and conditions, and commercial pricelists. This
submission is in accordance with FAR 15.804-5, which provides for
submission of information other than cost or pricing data. Such
information is considered to be the least burdensome for offerors, yet
still provide sufficient information to determine price reasonableness.
This rule will apply to all offerors responding to MAS
solicitations and to MAS contractors. Of the estimated 4,000 offers
submitted annually in response to the various MAS solicitations,
approximately 75 percent are received from small businesses. Thus, this
rule is expected to have an impact on approximately 3,000 small
businesses.
This rule will not have a significant economic impact on small
businesses. As noted above, the commercial item and TINA changes merely
bring the GSAR into conformance with recent FAR changes. For the MAS
element, the policies and procedures are deemed to be the least onerous
and least intrusive ones for offerors and contractors, but still
provide GSA with sufficient information to fully evaluate offers and
determine price reasonableness.
Since the establishment of the MAS Improvement Project in 1990, GSA
has considered and tested numerous alternative data submissions under
the MAS Program. Of note are the pilot test solicitations conducted in
accordance with the Federal Register notice dated February 18, 1992,
two National Performance Review Reinvention Pilot test solicitations
issued by GSA's Information Technology Service, and the pilot test
solicitations issued pursuant to FSS Acquisition Letter FC-94-3. The
conduct of those procurement actions has been fully evaluated and
considered in developing this final rule. All public comments also have
been considered. The policies and procedures set forth herein are
deemed to be the least onerous and least intrusive ones for potential
contractors, but still provide GSA with sufficient information to fully
evaluate offers and determine price reasonableness.
This final rule is expected to have a beneficial impact on small
entities because the rule simplifies procedures for the MAS program,
reduces the amount of information provided to support price
negotiations and limits post-award audits of contractors records.
D. Paperwork Reduction Act
The Paperwork Reduction Act applies to this final rule. The
information collection requirements in 515.804-6 and related provisions
and clauses have been approved by the Office of Management and Budget
(OMB) under OMB Control Number 9000-0013. The information collection
requirements in 552.212-70, Preparation of Offer (Multiple Award
Schedule), represent customary commercial practice and are approved
under OMB Control Number 3090-0250.
List of Subjects in 48 CFR Parts 504, 507, 510, 511, 512, 514, 515,
538, 539, 543, 546, 552, and 570
Government procurement.
Accordingly, the interim rule amending 48 CFR Parts 504, 507, 510,
511, 512, 514, 515, 538, 539, 543, 546, and 552 and 570 published at 61
FR 6164, February 16, 1996, and corrections published at 61 FR 10846
(March 15, 1996) and 61 FR 14032 (March 29, 1996) is adopted as a final
rule with the following changes:
1. The authority citation for 48 CFR Parts 504, 507, 510, 511, 512,
514, 515, 538, 539, 543, 546, 552 and 570 continues to read as follows:
Authority: 40 U.S.C. 486(c).
PART 515--CONTRACTING BY NEGOTIATION
2. Section 515.106-70 is revised to read as follows:
515.106-70 Examination of records by GSA clause.
(a) The contracting officer shall insert the clause at 552.215-70,
Examination of Records by GSA, in solicitations and contracts, other
than multiple award schedule contracts, that
(1) Involve the use and disposition of Government-furnished
property,
(2) Provide for advance payments, progress payments based on cost,
or guaranteed loan,
(3) Contain a price warranty or price reduction clause,
(4) Involve income to the Government where income is based on
operations that are under the control of the contractor,
(5) Include an economic price adjustment clause,
(6) Are requirements, indefinite-quantity, or letter type contracts
as defined in FAR part 16,
(7) Are subject to adjustment based on a negotiated cost escalation
base, or
(8) Contain the provision at FAR 52.223-4, Recovered Material
Certification. The contracting officer may modify the clause to define
the specific area of audit (e.g., the use or disposition of Government-
furnished property, compliance with the price reduction clause).
Counsel and the Assistant Inspector General--Auditing or Regional
Inspector General--Auditing, as appropriate, must concur in any
modifications to the clause.
(b) The contracting officer shall insert the clause at 552.215-71,
Examination of Records by GSA (Multiple Award Schedule), in
solicitations and multiple award schedule contracts. With the Senior
Procurement Executive's approval, the contracting officer may modify
the clause to also provide for post-award access to and the right to
examine records to verify that the pre-award/modification pricing,
sales or other data related to the supplies or services offered under
the contract which formed the basis for the award/modification was
accurate, current, and complete. Such a modification of the clause
shall provide for the right of access to expire 2 years after award or
modification. Before modifying the clause, the contracting officer
shall make a determination that absent such access there is a
likelihood of significant
[[Page 44522]]
harm to the Government and submit it to the Senior Procurement
Executive for approval. Such determinations must be made on a schedule-
by-schedule basis.
3. Section 515.804-6 is revised to read as follows:
515.804-6 Instructions for submission of cost or pricing data or
information other than cost or pricing data.
(a) Contracting officers should use Alternate IV of the FAR
provision at 52.215-41, Requirements for Cost or Pricing Data or
Information Other Than Cost or Pricing Data, to provide the format for
submission of information other than cost or pricing data for multiple
award schedule (MAS) contracts. To provide for uniformity in requests
under the MAS program, contracting officers should insert the following
in paragraph (b) of the provision.
(1) An offer prepared and submitted in accordance with the
clause at 552.212-70, Preparation of Offer (Multiple Award
Schedule);
(2) Commercial sales practices. The Offeror shall submit
information in the format provided in this solicitation in
accordance with the instructions at Table 515-1 of the GSA
Acquisition Regulation; or submit information in the Offeror's own
format.
(3) Any additional supporting information requested by the
Contracting Officer. The Contracting Officer may require additional
supporting information, but only to the extent necessary to
determine whether the price(s) offered is fair and reasonable.
(4) By submission of an offer in response to this solicitation,
the Offeror grants the Contracting Officer or an authorized
representative the right to examine, at any time before initial
award, books, records, documents, papers, and other directly
pertinent records to verify the pricing, sales and other data
related to the supplies or services proposed in order to determine
the reasonableness of price(s). Access does not extend to Offeror's
cost or profit information or other data relevant solely to the
Offeror's determination of the prices to be offered in the catalog
or marketplace.
(b) Contracting officers shall insert the following format for
commercial sales practices in the exhibits or attachments section of
the solicitation (see FAR 12.303).
COMMERCIAL SALES PRACTICES FORMAT
Name of Offeror ____________ SIN(S) ________
Note: Please refer to clause 552.212-70, PREPARATION OF OFFER
(MULTIPLE AWARD SCHEDULE), for additional information concerning
your offer. Provide the following information for each SIN (or group
of SINs or SubSIN) for which information is the same.
(1) Provide the dollar value of sales to the general public at
or based on an established catalog or market price during the
previous 12 month period or the offerors last fiscal year.
$________. State begining and ending of the 12 month period.
Beginning ________ Ending ____________. In the event that a dollar
value is not an appropriate measure of the sales, provide and
describe your own measure of the sales of the item(s).
(2) Show your total projected annual sales to the Government
under this contract for the contract term, excluding options, for
each SIN offered. If you currently hold a Federal Supply Schedule
contract for the SIN the total projected annual sales should be
based on your most recent 12 months of sales under that contract.
SIN ________ $ ________; SIN ________ $ ________; SIN ________ $
________
(3) Based on your written discounting policies (standard
commercial sales practices in the event you do not have written
discounting policies), are the discounts and any concessions which
you offer the Government equal to or better than your best price
(discount and concessions in any combination) offered to any
customer acquiring the same items regardless of quantity or terms
and conditions? YES ____ NO ____. (See definition of ``concession''
and ``discount'' in 552.212-70).
(4)(a) Based on your written discounting policies (standard
commercial sales practices in the event you do not have written
discounting policies), provide information as requested for each SIN
(or group of SINs for which the information is the same) in
accordance with the instructions at Table 515-1 which is provided in
this solicitation for your convenience. The information should be
provided in the chart below or in an equivalent format developed by
the offeror. Rows should be added to accommodate as many customers
as required. See definition of ``concession'' and ``discount'' in
552.212-70.
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Column 3 quantity/ Column 5
Column 1 Customer Column 2 discount volume Column 4 FOB term concessions
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(b) Do any deviations from your written policies or standard
commercial sales practices disclosed in the above chart ever result
in better discounts (lower prices) or concessions than indicated?
____YES ____NO. ____. If YES, explain deviations in accordance with
the instructions at Table 515-1 which is provided in this
solicitation for your convenience.
(5) If you are a dealer/reseller without significant sales to
the general public, you should provide manufacturers' information
required by paragraphs (1) through (4) above for each item/SIN
offered, if the manufacturer's sales under any resulting contract
are expected to exceed $500,000. You must also obtain written
authorization from the manufacturer(s) for Government access, at any
time before award or before agreeing to a modification, to the
manufacturer's sales records for the purpose of verifying the
information submitted by the manufacturer. The information is
required in order to enable the Government to make a determination
that the offered price is fair and reasonable. To expedite the
review and processing of offers, you should advise the
manufacturer(s) of this requirement. The contracting officer may
require the information be submitted on electronic media with
commercially available spreadsheet(s). The information may be
provided by the manufacturer directly to the Government. If the
manufacturer's item(s) is being offered by multiple dealers/
resellers, only one copy of the requested information should be
submitted to the Government. In addition, you must submit the
following information along with a listing of contact information
regarding each of the manufacturers whose products and/or services
are included in the offer (include the manufacturer's name, address,
the manufacturer's contact point, telephone number, and FAX number)
for each model offered by SIN:
(a) Manufacturer's Name
(b) Manufacturer's Part Number
(c) Dealer's/Reseller's Part Number
(d) Product Description
(e) Manufacturer's List Price
(f) Dealer's/Reseller's percentage discount from List Price or
net prices
(End of Format)
(c) The contracting officer should include the instructions for
completing
[[Page 44523]]
the commercial sales practices format in Table 515-1 in solicitations
issued under the multiple award schedule program.
TABLE 515-1--INSTRUCTIONS FOR COMMERCIAL SALES PRACTICES FORMAT
If you responded ``YES'' to question (3), on the COMMERCIAL
SALES PRACTICES FORMAT, complete the chart in question (4)(a) for
the customer(s) who receive your best discount. If you responded
``NO'' complete the chart in question (4)(a) showing your written
policies or standard sales practices for all customers or customer
categories to whom you sell at a price (discounts and concessions in
combination) that is equal to or better than the price(s) offered to
the Government under this solicitation or with which the Offeror has
a current agreement to sell at a discount which equals or exceeds
the discount(s) offered under this solicitation. Such agreement
shall be in effect on the date the offer is submitted or contain an
effective date during the proposed multiple award schedule contract
period. If your offer is lower than your price to other customers or
customer categories you will be aligned with the customer or
category of customer that receives your best price for purposes of
the Price Reduction clause at 552.238-76. The Government expects you
to provide information required by the format in accordance with
these instructions that is, to the best of your knowledge and
belief, current, accurate, and complete as of 14 calendar days prior
to its submission. You must also disclose any changes in your price
list(s), discounts and/or discounting policies which occur after the
offer is submitted, but before the close of negotiations. If your
discount practices vary by model or product line, the discount
information should be by model or product line as appropriate. You
may limit the number of models or product lines reported to those
which exceed 75% of actual historical Government sales (commercial
sales may be substituted if Government sales are unavailable) value
of the special item number (SIN).
Column 1--Identify the applicable customer or category of
customer. A ``customer'' is any entity, except the Federal
Government, which acquires supplies or services from the Offeror.
The term customer includes, but is not limited to original equipment
manufacturers, value added resellers, state and local governments,
distributors, educational institutions (an elementary, junior high,
or degree granting school which maintains a regular faculty and
established curriculum and an organized body of students), dealers,
national accounts, and end users. In any instance where the Offeror
is asked to disclose information for a customer, the Offeror may
disclose information by category of customer if the offeror's
discount policies or practices are the same for all customers in the
category. (Use a separate line for each customer or category of
customer.)
Column 2--Identify the discount. The term ``discount'' is as
defined in solicitation clause 552.212-70 Preparation of Offer
(Multiple Award Schedule). Indicate the best discount (based on your
written discounting policies or standard commercial discounting
practices if you do not have written discounting policies) at which
you sell to the customer or category of customer identified in
column 1, without regard to quantity; terms and conditions of the
agreements under which the discounts are given; and whether the
agreements are written or oral. Net prices or discounts off of other
price lists should be expressed as percentage discounts from the
price list which is the basis for your offer. If the discount
disclosed is a combination of various discounts (prompt payment,
quantity, etc.), the percentage should be broken out for each type
of discount. If the price lists which are the basis of the discounts
given to the customers identified in the chart are different than
the price list submitted upon which your offer is based, identify
the type or title and date of each price list. The contracting
officer may require submission of these price lists. To expedite
evaluation, offerors may provide these price lists at the time of
submission.
Column 3--Identify the quantity or volume of sales. Insert the
minimum quantity or sales volume which the identified customer or
category of customer must either purchase/order, per order or within
a specified period, to earn the discount. When purchases/orders must
be placed within a specified period to earn a discount indicate the
time period.
Column 4--Indicate the FOB delivery term for each identified
customer. (See FAR 47.3 for an explanation of FOB delivery terms.)
Column 5--Indicate concessions regardless of quantity granted to
the identified customer or category of customer. Concessions are
defined in solicitation clause 552.212-70 Preparation of Offers
(Multiple Award Schedule). If the space provided is inadequate, the
disclosure should be made on a separate sheet by reference.
If you respond ``YES'' to question 4(b) in the Commercial Sales
Practices Format, provide an explanation of the circumstances under
which you deviate from your written policies or standard commercial
sales practices disclosed in the chart on the Commercial Sales
Practices Format and explain how often they occur. Your explanation
should include a discussion of situations that lead to deviations
from standard practice, an explanation of how often they occur, and
the controls you employ to assure the integrity of your pricing.
Examples of typical deviations may include, but are not limited to,
one time goodwill discounts to charity organizations or to
compensate an otherwise disgruntled customer; a limited sale of
obsolete or damaged goods; the sale of sample goods to a new
customer; or the sales of prototype goods for testing purposes.
If deviations from your written policies or standard commercial
sales practices disclosed in the chart on the Commercial Sales
Practices Format are so significant and/or frequent that the
Contracting Officer cannot establish whether the price(s) offered is
fair and reasonable, then you may be asked to provide additional
information. The Contracting Officer may ask for information to
demonstrate that you have made substantial sales of the item(s) in
the commercial market consistent with the information reflected on
the chart on the Commercial Sales Practice Format, a description of
the conditions surrounding those sales deviations, or other
information that may be necessary in order for the Contracting
Officer to determine whether your offered price(s) is fair and
reasonable. In cases where additional information is requested, the
Contracting Officer will target the request in order to limit the
submission of data to that needed to establish the reasonableness of
the offered price.
(d) The contracting officer shall insert the clause at 48 CFR
552.215-72, Price Adjustment--Failure to Provide Accurate Information,
in solicitations and contracts to be awarded under the multiple award
schedule program.
(e) The contracting officer should use Alternate IV of the FAR
clause at 52.215-42, Requirements for Cost or Pricing Data or
Information Other Than Cost or Pricing Data--Modifications, to provide
for submission of information other than cost and pricing data for MAS
contracts. To provide for uniformity in requests under the MAS program,
the contracting officer should insert the following in paragraph (b) of
the clause.
(1) Information required by the clause at 552.243-72,
Modifications (Multiple Award Schedule);
(2) Any additional supporting information requested by the
Contracting Officer. The Contracting Officer may require additional
supporting information, but only to the extent necessary to
determine whether the price(s) offered is fair and reasonable.
(3) By submitting a request for modification, the Contractor
grants the Contracting Officer or an authorized representative the
right to examine, at any time before agreeing to a modification,
books, records, documents, papers, and other directly pertinent
records to verify the pricing, sales and other data related to the
supplies or services proposed in order to determine the
reasonableness of price(s). Access does not extend to Contractor's
cost or profit information or other data relevant solely to the
Contractor's determination of the prices to be offered in the
catalog or marketplace.
PART 538--FSS SCHEDULE CONTRACTING
4. Section 538.270 is revised to read as follows:
538.270 Evaluation of multiple award schedule offers.
(a) The Government will seek to obtain the offeror's best price
(the best price given to the most favored customer). However, the
Government recognizes that the terms and conditions of commercial sales
vary and that there may be legitimate reasons why the best price is not
achieved.
[[Page 44524]]
(b) The contracting officer will establish negotiation objectives
based on a review of relevant data and determine price reasonableness.
(c) When establishing negotiation objectives and determining price
reasonableness, contracting officers will compare the terms and
conditions of the MAS solicitation with the terms and conditions of
agreements with the offeror's commercial customers. The contracting
officer will consider the following factors when determining the
Government's price negotiation objectives:
(1) Aggregate volume of anticipated purchases;
(2) The purchase of a minimum quantity or a pattern of historic
purchases;
(3) Prices taking into consideration any combination of discounts
and concessions offered to commercial customers;
(4) Length of the contract period;
(5) Warranties, training and/or maintenance included in the
purchase price or provided at additional cost to the product prices;
(6) Ordering and delivery practices; and
(7) Any other relevant information including differences between
the MAS solicitation and commercial terms and conditions that may
warrant differentials between the offer and the best prices offered to
the most favored commercial customer(s). For example, if it is more
expensive for an offeror to sell to the Government than to the customer
who receives the offeror's best price or if the customer (e.g., dealer,
distributor, OEM, other reseller) who receives the best price performs
certain value-added functions for the offeror that the Government does
not perform, then some reduction in the discount given to the
Government may be appropriate. In cases where the best price is not
offered to the Government, the contracting officer should ask the
offeror to identify and explain the reason for any differences.
Offerors shall not be required to provide detailed cost breakdowns.
(c) The contracting officer may award a contract containing pricing
which is less favorable than the best price the offeror extends to any
commercial customer for similar purchases, when the contracting officer
makes a determination that:
(1) The prices offered to the Government are fair and reasonable
even though comparable discounts were not negotiated, and
(2) Award of a contract is otherwise in the best interest of the
Government.
5. Section 538.271 is amended by revising paragraph (a) to read as
follows:
538.271 MAS contract awards.
(a) MAS awards will be for commercial items as defined in FAR
2.101. Contracts will be negotiated as a discount from established
catalog prices.
* * * * *
PART 543--CONTRACT MODIFICATIONS
6. Section 543.205 is amended by revising paragraph (c) to read as
follows:
543.205 Contract clauses.
* * * * *
(c) The contracting officer shall insert the clause at 48 CFR
552.243-72, Modifications (Multiple Award Schedule), in solicitations
and multiple award schedule contracts.
PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
7. Section 552.212-70 is revised to read as follows:
552.212-70 Preparation of Offer (Multiple Award Schedule)
As prescribed in 48 CFR 512.301(a)(1), insert the following clause:
PREPARATION OF OFFER (MULTIPLE AWARD SCHEDULE) (AUG 1997)
(a) Definitions. Concession, as used in this solicitation, means
a benefit, enhancement or privilege (other than a discount), which
either reduces the overall cost of a customer's acquisition or
encourages a customer to consummate a purchase. Concessions include,
but are not limited to freight allowance, extended warranty,
extended price guarantees, free installation and bonus goods.
Discount, as used in this solicitation, means a reduction to
catalog prices (published or unpublished). Discounts include, but
are not limited to, rebates, quantity discounts, purchase option
credits, and any other terms or conditions other than concessions)
which reduce the amount of money a customer ultimately pays for
goods or services ordered or received. Any net price lower than the
list price is considered a ``discount'' by the percentage difference
from the list price to the net price.
(b) For each Special Item Number (SIN) included in an offer, the
Offeror shall provide the information outlined in paragraph (c).
Offerors may provide a single response covering more than one SIN,
if the information disclosed is the same for all products under each
SIN. If discounts and concessions vary by model or product line,
offerors shall ensure that information is clearly annotated as to
item or items referenced.
(c) Provide information described below for each SIN:
(1) Two copies of the offeror's current published (dated or
otherwise identified) commercial descriptive catalogs and/or price
list(s) from which discounts are offered. If special catalogs or
price lists are printed for the purpose of this offer, such
descriptive catalogs or price lists shall include a statement
indicating the special catalog or price list represent a verbatim
extract from the Offeror's commercial catalog and/or price list and
identify the descriptive catalog and/or price list from which the
information has been extracted.
(2) Next to each offered item in the commercial catalog and/or
price list, the Offeror shall write the special item number (SIN)
under which the item is being offered. Unless a special catalog or
price list is submitted, all other items shall be marked
``excluded,'' lined out, and initialed by the offeror.
(3) The discount(s) offered under this solicitation. The
description of discounts offered shall include all discounts, such
as prompt payment discounts, quantity/dollar volume discounts
(indicate whether models/products can be combined within the SIN or
whether SINs can be combined to earn discounts), blanket purchase
agreement discounts, or purchase option credits. If the terms of
sale appearing in the commercial catalogs or price list on which an
offer is based are in conflict with the terms of this solicitation,
the latter shall govern.
(4) A description of concessions offered under this solicitation
which are not granted to other customers. Such concessions may
include, but are not limited to, an extended warranty, a return/
exchange goods policy, or enhanced or additional services.
(5) If the Offeror is a dealer/reseller or the Offeror will use
dealers to perform any aspect of contract awarded under this
solicitation, describe the functions, if any, that the dealer/
reseller will perform.
(End of Clause)
8. Section 552.212-71 is amended by revising the date of the
provision and revising the title of provision number 552.215-72 in the
body of the provision to read as follows:
552.212-71 Contract Terms and Conditions Applicable to GSA Acquisition
of Commercial Items.
* * * * *
CONTRACT TERMS AND CONDITIONS APPLICABLE TO GSA ACQUISITION OF
COMMERCIAL ITEMS (AUG 1997)
* * * * *
552.215-72 Price Adjustment--Failure to Provide Accurate Information
* * * * *
9. Section 552.212-73 is revised to read as follows:
552.212-73 Evaluation--Commercial Items (Multiple Award Schedule).
As prescribed in 48 CFR 512.301(a)(4), insert the following
provisions:
[[Page 44525]]
EVALUATION--COMMERCIAL ITEMS (MULTIPLE AWARD SCHEDULE) (AUG 1997)
(a) The Government may make multiple awards for the supplies or
services offered in response to this solicitation that meet the
definition of a ``commercial item'' in FAR 52.202-1. Awards may be
made to those responsible offerors that offer reasonable pricing,
conforming to the solicitation, and will be most advantageous to the
Government, taking into consideration the multiplicity and
complexity of items of various manufacturers and the differences in
performance required to accomplish or produce required end results,
production and distribution facilities, price, compliance with
delivery requirements, and other pertinent factors. By providing a
selection of comparable supplies or services, ordering activities
are afforded the opportunity to fulfill their requirements with the
item(s) that constitute the best value and that meet their needs at
the lowest overall cost.
(b) A written notice of award or acceptance of an offer, mailed
or otherwise furnished to the offeror within the time for acceptance
specified in the offer, shall result in a binding contract without
further action by either party. Before the offer's specified
expiration time, the Government may accept an offer (or part of an
offer), whether or not there are negotiations after its receipt,
unless a written notice of withdrawal is received before award.
(End of Provision)
Alternate I (AUG 1997):
When anticipating competition of identical items, add the
following paragraph after paragraph (b) of the basic provision.
(c) The Government reserves the right to award only one contract
for all or a part of a manufacturer's product line. When two or more
offerors (e.g., dealers/resellers) offer the identical product,
award may be made competitively to only one offeror on the basis of
the lowest price. (Discounts for early payment will not be
considered as an evaluation factor in determining the low offeror).
During initial open season for an option period, any offers that are
equal to or lower than the current contract price received for
identical items will be considered. Current contractors will also be
allowed to submit offers for identical items during this initial
open season. The current contractor which has the identical item on
contract will be included in the evaluation process. The Government
will evaluate all offers and may award only one contract for each
specified product or aggregate group.
10. Section 552.215-71 is revised to read as follows:
552.215-71 Examination of records by GSA (Multiple Award Schedule).
As prescribed in 48 CFR 515.106-70, insert the following clause:
EXAMINATION OF RECORDS BY GSA (MULTIPLE AWARD SCHEDULE) (AUG 1997)
The Contractor agrees that the Administrator of General Services
or any duly authorized representative shall have access to and the
right to examine any books, documents, papers and records of the
Contractor involving transactions related to this contract for
overbillings, billing errors, compliance with the Price Reduction
clause and compliance with the Industrial Funding Fee clause of this
contract. This authority shall expire 3 years after final payment.
The basic contract and each option shall be treated as separate
contracts for purposes of applying this clause.
(End of Clause)
11. Section 552.215-72 is revised to read as follows:
552.215-72 Price adjustment--Failure to provide accurate information.
As prescribed in 48 CFR 515.804-6(d), insert the following clause:
PRICE ADJUSTMENT--FAILURE TO PROVIDE ACCURATE INFORMATION: (AUG 1997)
(a) The Government, at its election, may reduce the price of
this contract or contract modification if the Contracting Officer
determines after award of this contract or contract modification
that the price negotiated was increased by a significant amount
because the Contractor failed to:
(1) provide information required by this solicitation/contract
or otherwise requested by the Government; or
(2) submit information that was current, accurate, and complete;
or
(3) disclose changes in the Contractor's commercial
pricelist(s), discounts or discounting policies which occurred after
the original submission and prior to the completion of negotiations.
(b) The Government will consider information submitted to be
current, accurate and complete if the data is current, accurate and
complete as of 14 calendar days prior to the date it is submitted.
(c) If any reduction in the contract price under this clause
reduces the price for items for which payment was made prior to the
date of the modification reflecting the price reduction, the
Contractor shall be liable to and shall pay the United States--
(1) The amount of the overpayment; and
(2) Simple interest on the amount of such overpayment to be
computed from the date(s) of overpayment to the Contractor to the
date the Government is repaid by the Contractor at the applicable
underpayment rate effective each quarter prescribed by the Secretary
of the Treasury under 26 U.S.C. 6621(a)(2).
(d) Failure to agree on the amount of the decrease shall be
resolved as a dispute.
(e) In addition to the remedy in paragraph (a) of this clause,
the Government may terminate this contract for default. The rights
and remedies of the Government specified herein are not exclusive,
and are in addition to any other rights and remedies provided by law
or under this contract.
(End of Clause)
12. Section 552.243-72 is amended by revising the date of the
clause, by revising paragraphs (a), (b)(1) introductory text, (b)(1)
(i), (ii) and (viii), (b)(3), and by deleting paragraph (b)(4) and
Alternate I to read as follows:
552.243-72 Modifications (Multiple Award Schedule).
* * * * *
MODIFICATIONS (MULTIPLE AWARD SCHEDULE) (AUG 1997)
(a) General. The Contractor may request a contract modification
by submitting a request to the Contracting Officer for approval,
except as noted in paragraph (d) of this clause. At a minimum, every
request shall describe the proposed change(s) and provide the
rationale for the requested change(s).
(b) * * *
(1) Additional items/additional SIN's. When requesting
additions, the following information must be submitted:
(i) Information requested in paragraphs (1) and (2) of the
Commercial Sales Practice Format to add SIN's.
(ii) Discount information for the new item(s) or new SIN(s).
Specifically, submit the information requested in paragraphs 3
through 5 as applicable of the Commercial Sales Practice Format. If
this information is the same as the initial award, a statement to
that effect may be submitted instead.
* * * * *
(viii) Any information requested by 52.212-3(f), Offerors
Representations and Certifications--Commercial Items, that may be
necessary to assure compliance with 552.225-9, Trade Agreements Act.
* * * * *
(3) Price Reduction. The Contractor shall indicate whether the
price reduction falls under the item (i), (ii), or (iii) of
subparagraph (c)(1) of the Price Reduction clause at 552.238-76. If
the Price reduction falls under item (i), the Contractor shall
submit a copy of the dated commercial price list. If the price
reduction falls under item (ii) or (iii), the Contractor shall
submit a copy of the applicable price list(s), bulletins or letters
or customer agreements which outline the effective date, duration,
terms and conditions of the price reduction.
* * * * *
PART 570--ACQUISITION OF LEASEHOLD INTERESTS IN REAL PROPERTY
13. Section 570.308-2 is amended by revising paragraph (e) to read
as follows:
570.308-2 Cost or pricing data.
* * * * *
(e) If the proposed lessor refuses to provide data when required,
the contracting officer shall follow the procedures in FAR 15.804-6(e).
Dated: August 15, 1997.
Ida M. Ustad,
Deputy Associate Administrator for Acquisition Policy.
[FR Doc. 97-22144 Filed 8-20-97; 8:45 am]
BILLING CODE 6820-61-P
