The American Bar Association Section of Public Contract Law is recommending the elimination of the price reduction clause (PRC) in multiple award schedule contracts as well as current sales practices (CSP) stating they are confusing to comply with and are unnecessary since increased competition is now required.

The PRC provides for ongoing monitoring of discounts offered to Multiple Award Schedule (MAS) contractors’ “basis of award” customers while CSP allows for evaluation of discounts offered by MAS contractors in the commercial marketplace. The ABA states the PRC is a “complicated” clause requiring contractors to monitor their pricing practices in effect at time of award where even the most conscientious MAS contractors can run afoul of the requirements while with the CSP there is considerable confusion regarding time period, transactions and discounts subject to disclosure rules and there is frequent deviation from written policies that may result in even lower discounts.

The ABA group asserts significant changes in the MAS program over the last several years have made the PRC unnecessary since now prices may be determined to be fair and reasonable solely on order competition practices. Significant changes making a more competitive process includes (1) new MAS ordering procedures increasing competition at the task and delivery order level (e.g. see the current 2009 defense authorization act changes reported above) (2) current process of publication of products and pricing by schedule contractors where buyers can select contractors who they want to order from (3) proliferation of MAS program over the years that have substantially increased the number of contractors competing and (4) increased competing vehicles such as governmentwide acquisitions through the MAS program.

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