GENERAL SERVICES ADMINISTRATION ACQUISITION MANUAL (GSAM)

## Part 538— Federal Supply Schedule Contracting

### Subpart 538.2— Establishing and Administering Federal Supply Schedules #### 538.270 Evaluation of multiple award schedule (MAS) offers. #### 538.270-1 Evaluation of offers without access to transactional data. (a) Applicability. Utilize this evaluation methodology for negotiating MAS offers when the commercial sales practices format is included in the solicitation (see 515.408). (b) When offerors have commercial catalogs, negotiate concessions from established catalogs, including price and non-price terms and conditions. (c) 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 there may be legitimate reasons why the best price is not achieved. (d) Establish negotiation objectives based on a review of relevant data and determine price reasonableness. (e) When establishing negotiation objectives and determining price reasonableness, compare the terms and conditions of the MAS solicitation with the terms and conditions of agreements with the offeror’s commercial customers. When determining the Government’s price negotiation objectives, consider the following factors: (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. (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 discounts offered to the most favored commercial customer(s). For example, an offeror may incur more expense selling to the Government than to the customer who receives the offeror’s best price, or the customer (e.g., dealer, distributor, original equipment manufacturer, other reseller) who receives the best price may perform certain value-added functions for the offeror that the Government does not perform. In such cases, some reduction in the discount given to the Government may be appropriate. If the best price is not offered to the Government, you should ask the offeror to identify and explain the reason for any differences. Do not require offerors to provide detailed cost breakdowns.
(f) You may award a contract containing pricing which is less favorable than the best price the offeror extends to any commercial customer for similar purchases if you make a determination that both of the following conditions exist: (1) The prices offered to the Government are fair and reasonable, even though comparable discounts were not negotiated. (2) Award is otherwise in the best interest of the Government. (g) State clearly in the award document the price/discount relationship between the Government and the identified commercial customer (or category of customers) upon which the award is based.

#### 538.270-2 Evaluation of offers with access to transactional data.

(a) Applicability. Utilize this evaluation methodology for negotiating MAS offers when the commercial sales practices format is not included in the solicitation (see 515.408).

(b) Contracting Officers shall utilize the techniques in FAR 15.404 when evaluating pricing for MAS offers.

(c) Order of preference. When evaluating MAS offers and establishing negotiation objectives, Contracting Officers shall–

(1) Use the following data that is already readily available in accordance with FAR 15.404-1(b)(2)(ii):

(i) Prices paid information on contracts for the same or similar items.

(ii) Contract-level prices on other MAS contracts or other government-wide contracts for the same or similar items.

(iii) Commercial data sources that consolidate and normalize prices offered by commercial vendors to the general public to compare prices for the same or similar items.

(2) If the Contracting Officer cannot determine the prices offered to be fair and reasonable based on the data described in 538.270-2(c)(1), perform market research to compare prices for the same or similar items in accordance with FAR 15.404-1(b)(2)(vi).

(3) If the Contracting Officer cannot determine the prices offered to be fair and reasonable based on the data described in 538.270-2(c)(1) or (2), perform an analysis of data other than certified cost or pricing data (as defined at FAR 2.101) provided by the offeror in accordance with FAR 15.404-1(b)(2)(vii).

#### 538.271 MAS contract awards. (a) MAS awards will be for commercial items as defined in FAR 2.101. (b) Before awarding any MAS contract, determine that the offered prices are fair and reasonable (see FAR Subpart 15.4 and 538.270). Document the negotiation and your determination using FAR 15.406-3 as guidance.

#### 538.272 MAS price reductions. (a) Applicability. This section applies when the contract contains the basic clause 552.238-74 Industrial Funding Fee and Sales Reporting. (b) The basic clause and Alternate I of 552.238-75, Price Reductions, requires the contractor to maintain during the contract period the negotiated price/discount relationship (and/or term and condition relationship) between the eligible ordering activities and the offeror’s customer or category of customers on which the contract award was predicated (see 538.271(c) ). If a change occurs in the contractor’s commercial pricing or discount arrangement applicable to the identified commercial customer (or category of customers) that results in a less advantageous relationship between the eligible ordering activities and this customer or category of customers, the change constitutes a “price reduction.”
(c) Ensure that the contractor understands the requirements of section 552.238-75 and agrees to report all price reductions to the Contracting Officer as provided for in the clause.

#### 538.273 Contract clauses. (a) Multiple award schedules. Insert in solicitations and contracts: (1) 552.238-70, Identification of Electronic Office Equipment Providing Accessibility for the Handicapped, if you include electronic office equipment items. (2) 552.238-71, Submission and Distribution of Authorized FSS Schedule Pricelists.
(3) 552.238-72, Identification of Products that have Environmental Attributes. (4) 552.238-73, Cancellation.
(b) Multiple and single award schedules. Insert the following in solicitations and contracts: (1) 552.238-74, Industrial Funding Fee and Sales Reporting. Use Alternate I for Federal Supply Schedules with Transactional Data Reporting requirements. Clause 552.238-75 Alternate I should also be used when vendors agree to include clause 552.238-74 Alternate I in the contract.
(2) 552.238-75, Price Reductions. Use Alternate II for Federal Supply Schedules with Transactional Data Reporting requirements. This alternate clause is used when vendors agree to include clause 552.238-74 Alternate I in the contract. (3) 552.238-81, Modifications (Federal Supply Schedule). (i) Use Alternate I for Federal Supply Schedules that only accept electronic modifications. (ii) Use Alternate II for Federal Supply Schedules with Transactional Data Reporting requirements. This alternate clause is used when vendors agree to include clause 552.238-74 Alternate I in the contract.

### Subpart 538.3—Order-level Materials

### Subpart 538.70— Purchasing by Non-Federal Entities #### 538.7000 Scope of subpart. This subpart prescribes policies and procedures that implement statutory provisions authorizing non-federal organizations to use— (a) Federal Supply Schedule 70; (b) The Consolidated Schedule contracts containing information technology Special Item Numbers (SINs); (c) Federal Supply Schedule 84; and (d) Other Federal Supply Schedules as authorized in this subpart.
#### 538.7001 Definitions “Ordering activity” (also called “ordering agency” and “ordering office”) means an eligible ordering activity (see 552.238-78) authorized to place orders under Federal Supply Schedule contracts. “Preparedness” means actions that may include, but are not limited to planning, resourcing, training, exercising, and organizing to build, sustain, and improve operational disaster response capabilities. Preparedness also includes the process of identifying the personnel, training, and equipment needed for a wide range of potential incidents, and developing jurisdiction-specific plans for delivering capabilities when needed for an incident.

“Recovery” means actions including, but not limited to, the development, coordination, and execution of service- and site-restoration plans; the reconstitution of Government operations and services; individual, private-sector, nongovernmental, and public-assistance programs to provide housing and to promote restoration; long-term care and treatment of affected persons; additional measures for social, political, environmental, and economic restoration; evaluation of the incident to identify lessons learned; post-incident reporting; and development of initiatives to mitigate the effects of future incidents. “Relief” means disaster “response” and “recovery.” Please see full definitions for these terms. “Response” means immediate actions taken during a disaster, or in its immediate aftermath, in order to save lives, protect property and the environment, and meet basic human needs. Response also includes the execution of emergency plans and actions to support short-term recovery.
“Schedule 70,” as used in this subpart, means Schedule 70 information technology contracts, and Consolidated Products and Services Schedule contracts containing information technology SINs. The Consolidated Products and Services Schedule is a compilation of multiple individual Federal Supply Schedules; therefore, only the SINs that fall under Schedule 70 of the Consolidated Products and Services Schedule will apply to Cooperative Purchasing. No other Schedules, or SINs, containing information technology outside of Schedule 70 SINs, and Consolidated Products and Services Schedule contracts containing Schedule 70 SINs, will apply. “Schedule 84” means the Federal Supply Schedule for alarm and signal systems, facility management systems, firefighting and rescue equipment, law enforcement and security equipment, marine craft and related equipment, special purpose clothing, and related services (as contained in Federal Supply Classification Code Group 84 or any amended or subsequent version of that Federal supply classification group). “State and local government entities,” as used in this subpart, means the states of the United States, counties, municipalities, cities, towns, townships, tribal governments, public authorities (including public or Indian housing agencies under the United States Housing Act of 1937), school districts, colleges and other institutions of higher education, council of governments (incorporated or not), regional or interstate government entities, or any agency or instrumentality of the preceding entities (including any local educational agency or institution of higher education), and including legislative and judicial departments. The term does not include contractors of, or grantees of, State or local governments. (1) “Local educational agency” has the meaning given that term in section 8013 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7713).
(2) “Institution of higher education” has the meaning given that term in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)). (3) “Tribal government” means— (i) The governing body of any Indian tribe, band, nation, or other organized group or community located in the continental United States (excluding the State of Alaska) that is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians; and (ii) Any Alaska Native regional or village corporation established pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.).

#### 538.7002 General. (a) 40 U.S.C. 501, (the Act) authorizes the Administrator of General Services to procure and supply personal property and nonpersonal services for the use of Executive agencies. Under 40 U.S.C. 502, the goods and services available to executive agencies are also available to mixed ownership Government corporations, establishments within the legislative or judicial branches of Government (excepting the Senate, House of Representatives, Architect of the Capitol, and any activities under the direction of the Architect of the Capitol), the District of Columbia, and Qualified Non-profit Agencies.
(b) Section 211 of the E-Government Act of 2002 amends 40 U.S.C. 502 to authorize the Administrator of General Services to provide for use of certain Federal Supply Schedules of the GSA by a State or local government, which includes any State, local, regional, or tribal government, or any instrumentality thereof (including any local educational agency or institution of higher education). (c) Pub. L. 110-248, The Local Preparedness Acquisition Act, authorizes the Administrator of General Services to provide for the use by state or local governments of Federal Supply Schedules of the General Services Administration (GSA) for alarm and signal systems, facility management systems, firefighting and rescue equipment, law enforcement and security equipment, marine craft and related equipment, special purpose clothing, and related services (as contained in Schedule 84).
(d) Pub. L. 109-364, the John Warner National Defense Authorization Act for Fiscal Year 2007 authorizing state and local governments, to use Federal Supply Schedule contracts to purchase products and services to be used to facilitate recovery from a major disaster declared by the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.) or to facilitate for recovery from terrorism or nuclear, biological, chemical, or radiological attack. Public Law 111-263, the Federal Supply Schedules Usage Act of 2010 authorizing state and local governments to use Federal Supply Schedule contracts to purchase products and services to be used to facilitate disaster preparedness or response.
(e) Public Law 111-263, the Federal Supply Schedules Usage Act of 2010, authorizes the American National Red Cross to use Federal Supply Schedule contracts to purchase goods or services to be used in furtherance of its purposes as set forth in its federal charter (36 U.S.C. 300102).
(f) Public Law 111–263, the Federal Supply Schedules Usage Act of 2010, authorizes other qualified organizations to use Federal Supply Schedule contracts to purchase products and services in furtherance of purposes determined to be appropriate to facilitate emergency preparedness and disaster relief and set forth in guidance by the Administrator of General Services, in consultation with the Administrator of the Federal Emergency Management Agency. Other qualified organizations must meet the requirements of 42 U.S.C. 5152. (g) A listing of the participating contractors and SINs for the goods and services that are available under these authorized Federal Supply Schedules, is available in GSA’s e-Library at www.gsa.gov/elibrary.
#### 538.7003 Policy. Preparing solicitations when schedules are open to eligible non-federal entities. When opening authorized Federal Supply Schedules for use by eligible non-federal entities, the contracting officer must make minor modifications to certain Federal Acquisition Regulation and GSAM provisions and clauses in order to make clear distinctions between the rights and responsibilities of the U.S. Government in its management and regulatory capacity pursuant to which it awards schedule contracts and fulfills associated Federal requirements versus the rights and responsibilities of eligible ordering activities placing orders to fulfill agency needs. Accordingly, the contracting officer is authorized to modify the following FAR provisions/clauses to delete “Government” or similar language referring to the U.S. Government and substitute “ordering activity” or similar language when preparing solicitations and contracts to be awarded under authorized Federal Supply Schedules. When such changes are made, the word “(DEVIATION)” shall be added at the end of the title of the provision or clause. These clauses include but are not limited to:

(a) 52.212-4, Contract Terms and Conditions—Commercial Items. (b) 52.216-18, Ordering. (c) 52.216-19, Order Limitations.
(d) 52.229-1, State and Local Taxes. (e) 52.229-3, Federal, State, and Local Taxes. (f) 52.232-7, Payments Under Time-and-Materials and Labor-Hour Contracts. (g) 52.232-17, Interest. (h) 52.232-19, Availability of Funds for the Next Fiscal Year. (i) 52.232-34, Payment by Electronic Funds Transfer—Other than Central Contractor Registration.
(j) 52.232-36, Payment by Third Party. (k) 52.237-3, Continuity of Services. (l) 52.246-4, Inspection of Services-Fixed Price. (m) 52.246-6, Inspection—Time-and-Material and Labor- Hour. (n) 52.247-34, F.O.B. Destination. (o) 52.247-38, F.O.B. Inland Carrier Point of Exportation.

#### 538.7004 Solicitation provisions and contract clauses. (a) The contracting officer shall insert the clause at 552.238-77, Definition (Federal Supply Schedules)–Non-Federal Entity, in solicitations and contracts for all Federal Supply Schedules. (b) The contracting officer shall insert the clause at 552.238-78, Scope of Contract (Eligible Ordering Activities), in solicitations and contracts for all Federal Supply Schedules. (c) The contracting officer shall insert the clause at 552.238-79, Use of Federal Supply Schedule Contracts by Non-Federal Entities, in solicitations and contracts for all Federal Supply Schedules. (d) See 552.101-70 for authorized FAR deviations. ### Subpart 538.71—[Reserved]

### Subpart 538.72— Order-level Materials #### 538.7200 Definitions. As used in this subpart: “Order-level materials” means supplies and/or services acquired in direct support of an individual task or delivery order placed against an authorized (see GSAR 538.7201(b)) Federal Supply Schedule (FSS) contract or FSS Blanket Purchase Agreement (BPA)), when the supplies and/or services are not known at the time of Schedule contract or FSS BPA award. The prices of order-level materials are not established in the FSS contract or FSS BPA. However, order-level materials are purchased under the authority of the FSS program, pursuant to 41 U.S.C. 152(3), and are not open market items, which are discussed in FAR 8.402(f).

#### 538.7201 Applicability. (a) The GSA Senior Procurement Executive authorizes the use of order-level materials on Federal Supply Schedules. (b) The list of Federal Supply Schedules authorized to allow for order-level materials is available at https://www.gsa.gov/olm.

(c) HCAs may request additions or deletions to the list in paragraph (b) by submitting a GSA Form 1649 for SPE approval. Justifications to add this authority to a Federal Supply Schedule must address the need for the authority, including why it is impractical to price the items at the contract level, and a description of the market research conducted (see FAR 10.002(e)).

#### 538.7202 Awarding Order-Level Materials in FSS contracts.

(a) Federal Supply Schedules authorizing order-level materials must include a separate Special Item Number (SIN) with the following scope:

(1) Order-level materials are supplies or services acquired in direct support of a contractor’s offerings and which are unknown before a task or delivery order is placed against the FSS contract or FSS BPA); including, direct materials, subcontracts for supplies and incidental services for which there is not a labor category specified in the FSS contract, other direct costs, and indirect costs. Order-level materials are subject to a negotiated price ceiling that the contractor exceeds at its own risk.

(2) Items awarded under ancillary supplies or other direct cost (ODC) SINs are not order-level materials.

(b) The order-level materials SIN cannot be the only awarded SIN on a FSS contract or FSS BPA.

(c) Price analysis for order-level materials is not conducted when awarding the Federal Supply Schedule FSS contract or FSS BPA; therefore, sections 538.270 and 538.271 do not apply to order-level materials.

#### 538.7203 Administering Order-Level Materials in FSS contracts.

(a) Federal Supply Schedule Contracting Officers should consider requesting the assistance of members of the acquisition team responsible for contract administration functions (e.g., Administrative Contracting Officers, Industrial Operations Analysts) when evaluating the use of order-level materials at the FSS contract-level.Task or delivery orders including order-level materials placed against FSS contracts should be monitored to ensure special ordering procedures are being followed at GSAR 552.238-82(d).

(b) Except as stated in 552.238-82 (d)(10)(11), all terms and conditions that otherwise apply to the FSS contract also apply to order-level materials. For example, order-level materials must comply with the Trade Agreements Act clauses, the Environmental Attributes clause, and the Industrial Funding Fee and Sales Reporting clauses.

#### 538.7204 Contract clauses. (a) Use FAR clause 52.212-4 Alternate I in all Federal Supply Schedules authorized for the acquisition of order-level materials (see 538.7201(b)). Use the following language for the clause fill-in– (1) Insert “Each order must list separately subcontracts for services excluded from the FSS Hourly Rates” in paragraph (e)(1)(iii)(D). (2) Insert “Each order must list separately the elements of other direct costs for that order” in paragraph (i)(1)(ii)(D)(1). (3) Insert “Each order must list separately the fixed amount for the indirect costs and payment schedule; if no indirect costs are approved,” insert “None” in (i)(1)(ii)(D)(2). (b) Use 552.238-82, Special Ordering Procedures for the Acquisition of Order-Level Materials, in all Federal Supply Schedules authorized for the acquisition of order-level materials (see 538.7201).