GovernmentExecutive.com

COMMENTS

• It would considerably benefit the dialogue of these issues if we could jettison the myth that Schedule vendors are “required” to extend the Government their lowest prices under the MAS program. The Commercial Sales Practices disclosure document specifically requests that offerors for Schedule contracts state whether they are offering the Government their lowest prices. This question is followed by two boxes with the labels “Yes” or “No.” The fact that answering the question “No” is an option specifically authorized by the disclosure form clearly demonstrates that there is no “requirement” that vendors offer their lowest prices. This should not be particularly surprising revelation because the award of a schedule contract does not result in any actual sales. To obtain sales vendors must compete for task or delivery orders and as a part of those competitions they can and often are called upon to provide discounts below their approved MAS price. Indeed FAR 8.405-1(d) provides specific guidance on seeking further price reductions for orders exceeding the maximum order threshold specified in the Schedule contract (i.e., high dollar sales). Consequently the MAS program reflects the basic economic reality that prices decrease as the dollar value of transactions increase. (Note: the minimum order value on many Schedules is as low as $100!) So here is the reality: the vendor’s price at the Schedule contract level must be “reasonable” with “reasonableness” determined primarily by assessing what the vendor charges comparable customers placing orders below the maximum order threshold. It must not and should not be the lowest price the vendor charges other customers, however, where such lower prices are granted in response to high dollar orders, guaranteed sales volumes or other valuable market considerations. Jim Phillips Posted January 9, 2009 11:49 AM