Thursday, December 27, 2012

Multiple Award Schedules - Pricing Expectations

The GSA Multiple Award Schedule (MAS) program provides companies the opportunity to sell their products to Government customers. It has been a very successful program for both the Government and companies seeking to sell goods and services. It streamlines the entire procurement process, saving significant resources from the proposal prep and negotiation phases of contracting. Contractors, for their part, must agree to provide the Government the prices afforded their most favored customers, no exceptions.

The Department of Justice just announced a $70 million settlement after GSA auditors found that a company failed to disclose "most favored" prices during the negotiation of an MAS contract and as a result, the Government paid more than it should have for the products it purchased. Like many settlements, the contractor did not admit to guilt but, bottom line, it had to pay the Government the $70 million.

The $70 million settlement resolved issues discovered during a GSA post-award audit. The audit disclosed that the MAS contractor failed to meet its contractual obligations to provide the GSA with current, complete, and accurate information about its commercial sales practices, including discounts afforded to non-Governmental customers. As a result, Government customers who purchased items under the MAS contract paid higher prices than they should have.

Companies pursuing MAS contracts are expected to disclose all sales information to the Government. Omitting sales information because it is considered outdated or not pertinent, opens the door for the Government to later charge defective pricing. It is better to provide the information to the Government during negotiations and then explain it's non-relevance than to withhold it and risk subsequent allegations.

You can read DoJ's press release on this settlement here.

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