With its mission to discuss and recommend changes to the MAS program, including price reductions provisions, most favored customer status, and practices in commercial pricing, the Multiple Award Schedule (“MAS”) Advisory Panel has voted on several recommendations to present to the Administrator of GSA. The Panel has been meeting since April last year, and currently is preparing its final recommendations. This Blog obtained a copy of the recommendations already adopted by the Panel.
a. The Relic That Soon Will Be the Price Reduction Clause
Not unexpectedly given the unpopularity of the Price Reduction Clause (“PRC”), the Panel has recommended eliminating it. The PRC obligates a contractor to grant the Government the same prices offered to customers in the contractor’s Basis of Award (“BOA”) if BOA customers receive price reductions during contract performance. The Panel will recommend to the Administrator that:
- For Services Schedules, have all agencies compete orders above the simplified acquisition threshold of $100,000
- For Products Schedules, proceed in phases and, at the Schedule and order levels, implement recommendations concerning competition and price transparency
The Panel voted down a recommendation to replace the PRC with an alternative that accomplishes “the same results or similar objectives.”
b. A Fair and Reasonable View of What Is Fair and Reasonable
The Government is required to obtain “fair and reasonable” prices from MAS vendors. Vendors and GSA contracting officers, however, frequently disagree over what is and what is not “fair and reasonable.” In an effort to resolve as much of this disagreement as possible, the Panel has recommended that GSA disclose to the contractor the contracting officers’ basis for determining fair and reasonable at the time of negotiation.
The Panel also recommends that the Administrator pursue fair and reasonable pricing by implementing “clear and consistent guidance.” For products Schedule contracts in particular, the recommendation is to consider reasonableness of the commercial marketplace including “thresholds of purchasing experience” and share the captured pricing at the order level with all contracting officers for market research purposes.
c. SIN No More
Historically, GSA’s use of Special Item Numbers (“SIN,”) for labor categories has caused much confusion within and outside the Government. Oftentimes, the descriptions are not fully reflective of the services the vendor provides, resulting in improperly assigned and inaccurate SINs. These are the sorts of mistakes that either overcharge the Government or get contractors into trouble for allegedly misleading the Government. The Panel would rectify this by having GSA “periodically evaluate [them] to determine if the descriptions are consistent with the customer needs and current market offerings.”
The Panel appears to have gotten the message that the key to improving the MAS Program is to enhance market-based principles within the Program, including the hallmarks of competition and transparency. If the Panel presents these recommendations to the GSA Administrator and they are implemented, contractors – and, thus, the Government – can expect to benefit.