Webinar: The Ten Commandments of GSA Schedule Compliance

The Ten Commandments of GSA
Schedule Compliance
Jennifer Aubel and Jacelyn Ferriell April 19, 2017
http://blogs.aronsonllc.com/fedpoint/

2© 2017 | www.aronsonllc.com | www.aronsonllc.com/blogs |
Compliance is Important
Risks and Penalties
Reduced Profitability
Reputational Costs
Pricing Renegotiation Fines and Penalties
Restitution Payments
Prosecution
False Claims Act SuitsSuspension or Debarment
Termination for Cause

Thou Shalt Close No Sale Before Thinking About GSA
The First Commandment

• Having a GSA Schedule contract impacts ALL of your sales – federal
and commercial
• The Sales Department is probably your single largest source of risk
• Commercial sales can trigger price reductions or a change to the
Basis of Award

• GSA will assume all federal sales are Schedule sales unless you
can prove otherwise
• Upcoming Transactional Sales Reporting to make order prices to
GSA customers a basis for reducing contract ceiling rates

Compliance Best Practices
• Educate, educate, educate
• Institute rigorous sales policies and procedures and enforce them
• Automate processes when possible
• Document pricing proposals
• Perform periodic internal sales reviews

Thou Shalt Not Misrepresent Non-Schedule Items
The Second Commandment

• Including ‘Open Market’ items can be problematic on GSA contract
orders
• Open market items with a total value below the micro-purchase
threshold (MPT) are generally allowed on GSA orders
• When open market items exceed MPT, though, the ordering agency
must make a fair and reasonable pricing determination

• No open market items may be included on GSA eBuy proposals
• Open market items must be clearly labeled as such on pricing
proposal
• Including too many open market items may leave you vulnerable to
bid protest

• Segregate and clearly mark any open market items on GSA pricing
proposals
• Utilize Contractor Teaming Arrangements (CTAs) to minimize open
market items
• Do not include open market items or non-Schedule ODCs (such as
travel) in your GSA sales

Thou Shalt Not Take Labor Category Names In Vain
The Third Commandment

• Failure to provide qualified personnel on GSA task orders has been
a major recurring OIG audit finding
• Matching personnel to a GSA labor category and then the GSA
category to a task order category is complicated
• Labor category descriptions are analogous to a product’s
specification

• GSA is now asking for resumes at the end-of-term contractor
assessment
• GSA considers to use of unqualified personnel to be an overcharge
• You will have to repay the difference between the rate charged and
the rate for the category the employee qualifies for

• Require all employees to update their resumes at least annually
• Document any experience or education substitutions used when
mapping people to GSA labor categories
• Document mapping of any solicitation labor categories to GSA labor
categories
• Obtain current resumes for subcontractor employees if mapped to
GSA categories

Remember The Basis of Award, and Keep it Holy
The Fourth Commandment

Most Favored Customer
Customer or class of customers
that receives your best pricing,
regardless of terms and
conditions.
Basis of Award Customer
Customer or class of customers
upon which the Price Reductions
Clause is predicated.
These terms are frequently used interchangeably,
but they are not always the same.

• The Basis of Award (BOA) establishes a relationship between the
BOA customer’s discount and the GSA discount that must be
maintained for the life of the contract
• If you don’t know what the BOA is on your contract, figure it out
IMMEDIATELY

• Contractors must implement and maintain a system that tracks
commercial sales, especially those to the BOA customer
• Selling to BOA customers at a higher discount than negotiated may
trigger the Price Reductions Clause

• Limit who can extend pricing to Basis of Award customer(s) and
automate pricing controls, if possible
• Institute checks and balances between sales and contracts with
consequences for ‘rogue’ behavior
• Segregate sales to Basis of Award customer(s) in accounting system
for easy price monitoring

Honor Your Negotiated Discounts
The Fifth Commandment

• GSA attempts to negotiate three types of discounts at contract
award:
1. Basic Discount
2. Volume and Quantity Discounts
3. Prompt Payment Discount
• When GSA negotiates discounts outside your standard commercial
practices, they are easy to forget

• GSA will check to make sure negotiated discounts are extended on
contract orders at the annual contractor assessment
• If the prompt payment discount does not appear on your invoice,
GSA assumes the government would have paid in time to get
discount and you owe money back

• Don’t negotiate discount terms that differ from your standard
commercial practices
• Automate pricing system to include any volume or quantity discounts
• Include prompt payment discounts in invoicing instructions when
setting up GSA orders in accounting system
• Conduct occasional spot checks

Thou Shalt Not Kill Your Discount Relationship
The Sixth Commandment

• When the Basis of Award discount relationship is disturbed, then a
PRICE REDUCTION has been triggered
• You must disclose any price reductions to GSA within 15 days
• Be sure to read and understand GSAR 552.238-75, Price
Reductions

• Price reductions are not really about price, rather the discount – this
is a common area of confusion and errors
• Certain transactions are exempt from triggering price reductions

• Educate ALL stakeholders on price reductions and the related
financial risks
• Consider whether a reduction can be classified as temporary before
giving GSA a permanent decrease
• Schedule regular internal reviews
• Disclose any exceptions in your Commercial Sales Practices (CSP)

Thou Shalt Not Cheat on Your Sales Reporting
The Seventh Commandment

The Seventh Commandment
• The Schedules Program is funded via the Industrial Funding Fee
(IFF), not Congress
• GSA is highly incentivized to maximize reported Schedule sales
• Having an adequate and verifiable sales reporting system is critical
• Sales must be reported by Special Item Number (SIN)

• Document SINs, open market items, and ODCs from the proposal
forward
• Flag GSA orders in your accounting system so you can easily run
reports on sales
• Place reporting dates on your accounting calendar
• Use electronic payment to avoid late penalties
• File reconciliation and reporting confirmations
• Don’t forget Participating Dealers and CTAs

Thou Shalt Not Steal From Your Customers
The Eighth Commandment

• Overcharging agencies on GSA orders is a serious contract violation
• GSA reviews invoices for overcharges at annual contractor
assessments
• Any overcharges must be repaid promptly
• Systemic pricing errors are reported to the Contracting Officer and
can even result in referral to Office of Inspector General

• Overcharges on products most often occur because of failure to
update internal pricing tools or calculating GSA price directly from
commercial pricelist
• Overcharges on services most often occur when task order
escalation rate is higher than GSA Schedule escalation rate
• Failure to extend discounts and use of underqualified labor are also
overcharges

• Automate pricing functions, if possible
• Track escalation on GSA task orders to ensure rates don’t exceed
current GSA price
• Have GSA contract administrator validate pricing on GSA proposals
• Do not increase GSA rates with a new commercial pricelist until an
Economic Price Adjustment modification is awarded

Thou Shalt Not Bear False Witness About
Commercial Sales Practices
The Ninth Commandment

• In FY13, the GSA OIG found 77% of audited contracts had CSP
disclosures that weren’t current, accurate and complete
• Making adequate disclosures on the CSP can be very challenging
• Services companies are often at a disadvantage when they use
market pricing rather than a commercial pricelist

• GSA’s eMod system and OPEN renewal process make it easy to
state that there have been no changes to the CSP, even when there
are
• Only tracking BOA customer(s) may leave you vulnerable under
GSAR 552.215-72, Price Adjustment – Failure to Provide Accurate
Information
37

• Make comprehensive disclosures of your practices – both standard
and non-standard – it offers you more protection with future
commercial sales
• Clearly explain what transactions are included in the disclosure and
if any aren’t
• Vague practices such as ‘discounts for competitive reasons’ rarely
stand up to scrutiny; you need to say how much and how often

Thou Shalt Not Covet Products Made in China
The Tenth Commandment

• The Trade Agreements Act (TAA) is one of the hottest compliance
areas now
• Schedule products cannot be manufactured or substantially
transformed in countries that are not compliant with the TAA (i.e.
China, India, etc.)
• For services, the Country of Origin (COO) is where the firm is
established

• Compliance with the TAA can be quite complicated
• Customs and Border Protection (CBP) is the ultimate arbiter of TAA
compliance
• Violations can give rise to qui tam lawsuits under the False Claims
Act
• GSAAdvantage! allows competitors to easily check your awarded
products for compliance

• Resellers and integrators should require manufacturers to recertify
the COO of their products at least annually
• Spare parts and accessories often cause problems (ex. Batteries or
power supplies); do not sell separately if conflicts exist
• Consider talking to a government contracts attorney about complex
topics like cloud software

Questions?

About Aronson LLC
Aronson LLC provides a comprehensive platform of assurance, tax,
and consulting solutions to today’s most active industry sectors and
successful individuals. For more than 50 years, we have purposefully
expanded our service offerings and deepened our industry specialties
to better serve the needs of our clients, people, and community. From
startup to exit, we help our clients maximize opportunity, minimize risk,
and unlock their full potential.

Jennifer Aubel is a principal consultant in Aronson LLC’s Government Contract
Services Group. She is responsible for leading clients successfully through the
GSA lifecycle -- from obtaining a new GSA Schedule contract through
administering ongoing contracts. She works closely with clients to custom-tailor
GSA Schedule solutions that meet current and future organizational needs by
developing scope and pricing strategies, maintaining contract compliance,
providing audit support, and improving the profitability and versatility of the
GSA Schedule contract. Additionally, Jennifer frequently speaks on GSA
Schedule topics at both Aronson and industry-sponsored events.
Jennifer has more than 20 years’ experience in the federal contracting market,
working for both contractors and as a consultant to GSA Schedule contract
holders. Prior to working with Aronson, she managed a multi-million dollar GSA
program. She also managed a team that developed and delivered specialized
training on the GSA Schedules program to small businesses across the
country. Jennifer graduated summa cum laude from the University of Maryland
University College with a bachelor’s degree in Legal Studies.
Principal Consultant, Government Contract Services Group
301.231.6253
jaubel@aronsonllc.com
Jennifer Aubel

As a senior consultant in Aronson’s Government Contract
Services Group, Jacelyn Ferriell (née Bald) guides GSA
Schedule efforts for companies across a wide variety of
industries. She assists her clients with GSA Schedule proposal
preparation, contract management and provides guidance for
utilizing the contract.
Jacelyn earned her bachelor’s degree in media and
communication studies from the University of Maryland
Baltimore County and is currently pursuing a juris doctorate
from the University of Baltimore School of Law.
Senior Consultant, Government Contract Services Group
240.364.2715
jferriell@aronsonllc.com
Jacelyn Ferriell

301.231.6253
Contact Jennifer Aubel / Aronson LLC
jaubel@aronsonllc.com
https://www.linkedin.com/in/jnaubel
https://twitter.com/jnaubel

240.364.2715
Contact Jacelyn Ferriell / Aronson LLC
jferriell@aronsonllc.com
https://www.linkedin.com/in/jacelyn-ferriell-
bald-82888841/
https://twitter.com/Aronsonllc

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