Price Reduction and Possible Violation of Basic GSA Contract

Dictaphone Corporation protested the placement of an order by Wright-Patterson Air Force Base for dictation and transcription equipment with a competitor. The competing firm offered prices that were 25 percent lower than the prices listed by the firm under the terms of the General Services Administration (GSA) Federal Supply Schedule contract. The procurement was protested on the basis that the low offeror's price reduction violated the basic GSA contract. The protest was denied because the awardee's contract with GSA contained a price reduction clause that allowed the contractor to offer a price reduction without prior or subsequent GSA approval or acceptance.