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 3-560 Section E, Schedule of Deductions. The preparation of a proper
schedule of deductions (or schedule of prices if appropriate) is very
important because this schedule, when completed after contract award, serves
as a basis for taking deductions to the contract price in the case of
nonperformed or unsatisfactory work in accordance with the "Consequences of
Contractor's Failure to Provide Required Services" clause.
Firm fixed price and combination firm fixed price/indefinite quantity
contracts must include a clause in Section E, in accordance with the
Contracting Manual P-68 at Part 52, requiring the contractor submit a
schedule of deductions within 15 days after the contract award. The form
for the schedule of deductions to be completed by the contractor is included
in the solicitation. (Alternatively line items may be used to breakdown
the firm fixed price portion of facility support service contracts. The
guidance given below is equally valid for the preparation of these line
items except that if line items are used instead of a schedule of
deductions, the prices are submitted as part of the bid.)
The schedule of deductions applies only to the firm fixed price part of a
combination contract. A typical form for the schedule of deductions for
inclusion in the solicitation for a refuse collection and disposal contract
is shown in Figure 3-9.
The form for the schedule of deductions can only be success fully written by
taking into consideration both the PRS and the bid schedule. Remember that
the PRS contains a listing of all the contract requirements including those
in the firm fixed price portion of an FFP/IQ contract and those contained in
the indefinite quantity part. All the contract requirements associated with
the firm fixed price (lump sum) part of the contract must be listed in the
schedule of deductions. Therefore, if 50 contract requirements are listed
in the PRS, associated with the firm fixed price portion of the contract,
there must be 50 corresponding items on the schedule of deductions. Failure
to ensure that the contract requirements in the firm fixed price part of the
contract, shown in the PRS, match with the item in the schedule of
deductions will inevitably lead to a defective and possibly useless schedule
of deductions.
In the typical PRS, shown in Figure 3-5, at page 34 of this text, Items 1
through 36 might be included in the firm fixed price portion of the
contract, and Items 37 through 58 might be included in the it-definite
quantity work portion. (See the bid schedule in Figure 3-8.) Items 1
through 36 would therefore be listed on the schedule of deductions as shown
in Figure 3-9.
As shown in Figure 3-9, the "Unit" for quantity measurement in the schedule
of deductions is shown as "Month." This is the case because the schedule of
deductions is a breakdown of the firm fixed price part of the work. When
the contractor bid on the firm fixed price part of the contract, the
Government required the contractor to make his own estimate of the number of
occurrences of each particular contract requirement based on historical data
or schedules appearing in the contract. In conformance with that
philosophy, the contractor, when completing the schedule of deductions, must
again use his own judgement of the number of occurrences of a particular
contract requirement which will take place during the contract.
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