UNDERSTANDING THE GSA MAXIMUM ORDER
We often get questions from our clients concerning the Maximum Order (MO) on their GSA contract assuming they can’t accept orders over the MO. Although this seems like a reasonable assumption, all things GSA are not what they seem.
Each GSA schedule contract has a Maximum Order (MO) amount set on the contract which is pre-established by GSA. Several years ago, GSA changed what was previously the Maximum Order Limitation (MOL) to what is now the Maximum Order (MO).
Under the older MAS contracts, the MOL was the dollar value below which orders could be placed. For example, if the contract had an MOL of $500,000.00, agencies could only place orders up to the $500,000.00 limit.The current MO does not limit the size of an order. Regardless of the MO of a given contract or Special Item Number (SIN), any size order can be placed against a schedule contract.
What the MO does provide is a dollar amount whereby vendors are not required to accept orders. However, Under Clause 52.216-19 Order Limitations, (d), it states “ the Contractor shall honor any order exceeding the maximum order limitation unless that order (or orders) is returned to the ordering office within 5 days after issuance, with written notice stating the Contractor’s intent not to ship the item (or items) called for and the reason.”
There is another even more important aspect of the MO as it relates to the Price Reductions Clause. Under the 552.238-75 Price Reductions Clause, (d), it states “There shall be no price reduction for sales – (1) To commercial customers under firm, fixed-price definite quantity contracts with specified delivery in excess of the maximum order threshold specified in this contract.”
From a sales standpoint the MO does not limit the size of any order that can be placed against the schedule. Vendors have the option of accepting or rejecting orders over the MO. From the standpoint of contract administration, understanding your MO can be a critical aspect of monitoring price reductions under your GSA schedule contract.