444518 Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations

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.

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
Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations 444519

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
444520 Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations

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 ClingerCohen Act of 1996). In addition,

industry commentors suggested that it is

not a commercial practice to allow postaward 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 postaward 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 postaward audits of information submitted

in support of price negotiations prior to

award or contract modification.

Expressly limiting the contractual postaward 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
Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations 444521

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, indefinitequantity, 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 preaward/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
444522 Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations

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 llllll SIN(S)

llll

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. $llll. State begining and ending of

the 12 month period. Beginning llll

Ending llllll. 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 llll $ llll; SIN

llll $ llll; SIN llll $ llll

(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 ll

NO ll. (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.

Column 1

Customer

Column 2

discount Column 3 quantity/volume Column 4 FOB term Column 5concessions

(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? llYES

llNO. ll. 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
Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations 444523

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.
444524 Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations

(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:
Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations 444525

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