Presented at NCMA's World Congress 2016 Presenters: Baker Tilly's Jeff Clayton, Principal and Rob Austin, CFCM, Director While it’s commonly understood that GSA Schedules have unique requirements, many are unaware of the specific requirements faced by resellers and manufacturers selling through resellers. Gain a fundamental understanding of contracting, disclosure and compliance requirements, as well as risks and best practices for resellers and manufacturers selling through GSA Schedules. www.bakertilly.com/governmentcontractors

2. GSA Schedule
Reseller-Manufacturer
Relationships…Risky Business?
Breakout Session #: C05
Jeff Clayton and Rob Austin
Date: Monday, July 25
Time: 4:00pm–5:15pm

3. VA OIG Report on FSS Contracts
with Resellers
From a 2007 Veteran’s Administration Office of Inspector
General report on FSS contracts:
– “The manufacturers are large businesses who are using
resellers to shield themselves (the manufacturers) from FSS
pricing provisions that ensure fair and reasonable prices for
Government customers. As a result of this non-commercial
practice, FSS customers pay inflated prices and lose the pricing
protections the FSS contract was designed to provide.”
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4. Polling Question Instructions
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Text JEFFREYCLAYT124 to the five-digit
number 22333 to join session
Text your answer to 22333. Only one response per
poll.
– Standard text messaging rates apply
– No spamming
– Completely anonymous
Questions during the presentation?
Text them to 22333

5. Polling Question
Which of your speakers once
fell into the Baltimore Harbor?
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6. Where did you travel from?
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7. Would you rather learn about
resellers and manufacturers
right now, or head to happy
hour?
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8. Introduction
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Rob Austin, CFCM
Director
Jeff Clayton
Principal

9. Agenda
• Overview of Reseller – Manufacturer
Relationship
• CSP Disclosure Requirements
• Contracting and Compliance Requirements
• Best Practices
• Current Trends
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10. Reseller
• GSA Schedule contract
holder
• Sell the manufacturer’s
product (or service) to the
end user
• Can add value through
marketing and customer
relationships and industry
knowledge
Manufacturer
• Manufacturers products or
performs services
• Supplies product or services
to reseller
• Does not own the relationship
with the ultimate end user
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Overview of Reseller –
Manufacturer Relationship

11. Polling Question
How do you sell to the Government?
A. Direct
B. Through a Reseller
C. Both
D. N/A (e.g., Government, Media)
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12. CSP Disclosure Requirements
Resellers
• If a Reseller has significant sales of the products, they
submit a current, accurate and complete Commercial
Sales Practice (CSP) Format and disclosures for each
product/SIN offered.
• Only required if the manufacturer’s sales under any
resulting contract are expected to exceed $500,000.
(Note: GSA can request a CSP even if sales <$500k)
Manufacturers
• If the reseller does not have significant sales to the
general public, the reseller can request a manufacturer’s
CSP with the same information.
• Manufacturers can chose to provide its CSP either to the
reseller or directly to GSA
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13. Requirements – CSP-1 Format
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TYPE OF CUSTOMER STANDARD
DISCOUNTS
& PRICING
POLICIES
NON-STANDARD
DISCOUNTS, INLCUDING
DEGREE & FREQUENCY
FOB Point Concessions % of
Gross
Distributors
(sell only to
Dealers/Resellers)
Dealers/Resellers
(resell to end users)
VAR/System Integrators
Original Equipment
Manufacturers
State & Local
Governments
Educational &Nonprofit
Institutions
National & Corporate
Accounts
Commercial End Users
Other: (Specify)
Proposed GSA
Discounts

14. Requirements - Reseller
• Pay IFF
• Monitor Discounting Practices
• Obtain Letter of Supply
• Certify Country of Origin
• Monitor Sales for the Purposes of the Price
Reductions Clause
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15. (ICOMPANY NAME)
SIN #
Manufacturer /
Supplier
MFR
Part #
Product
Name/
Description
Retail
Price/
MSRP/
MLP
Dealer's
Actual
Cost /
Price
Dealer's
Discount
(% from
Retail
Price)
Proposed
GSA Price
(w/out
IFF)
Proposed
GSA
Discount
(% from
Retail
Price)
Proposed
GSA Price
(with IFF of
.75%)
Country
of Origin Warranty
Reseller Price List Example
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16. Requirements - Manufacturer
Manufacturer must do the following:
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• Supply sufficient quantities
• Uninterrupted supply
• Disclose future pricing changes
Agree to:
• Newly manufactured
• Commercially sold
• TAA compliant
Certify:
• Discounts offered
• Point(s) of productionDisclose:

17. Best Practices - Resellers
• Establishing Basis of Award and Price Reductions Clause
mechanisms
• Establish system for Manufacturer to alert about price
changes
• Awareness and certification of manufacturer’s COO
policies
• Structured manufacturer agreement
• Systems and processes to address compliance
requirements
• Support value added to supply chain
• Prompt payment of IFF
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18. Best Practices - Manufacturers
• Current, accurate and complete CSP
Disclosures
• Structured Reseller agreements
• Internal controls to monitor:
– Pricing
– Government sales records
– Reseller Discounts
– Country of Origin Updates
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19. Current Trends
• VA vs. GSA
– VA OIG Report 2007
• Heightened GSA Focus
– Increased enforcement activity
• Baker Tilly Experiences
– Recent GSA OIG/DOJ activity
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20. Polling Question
Which of the following cases is related to the
Reseller-Manufacturer relationship?
A. Oracle
B. Samsung
C. Carahsoft
D. Fastenal
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21. VMware, Inc. and Carahsoft
• In June 2015, the Department of Justice
announced the two companies agreed to
pay $75.5 million to resolve allegations that
they violated the False Claims Act (FCA).
– Did so by misrepresenting their Commercial
Sales Practice (CSP) disclosures and
overcharging the Government.
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22. Questions?
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23. Jeff Clayton, Principal
jeff.clayton@bakertilly.com
Jeff Clayton is a principal in the
Government Contractor Advisory Services
Practice at Baker Tilly. He has more than
seventeen years experience providing a
broad range of pricing, contract compliance
and dispute/litigation related services to
government contractors and their legal
counsel. Jeff has extensive experience
working with contractors and their counsel
during Office of Inspector General (OIG)
audits, Department of Justice (DOJ)
investigations, and in defense of qui tam
suits brought under the False Claims Act.
Rob Austin, Director
rob.austin@bakertilly.com
Rob is a director in the Government
Contractor Advisory Services Practice at
Baker Tilly. He has more than ten years
of experience providing specialized
pricing, compliance, negotiation, audit
and litigation support services to
government contractors across a variety
of industries Rob significant experience
supporting FSS contractors through the
Mandatory Disclosure program and
providing litigation support in support
Federal False Claims Act allegations.
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www.bakertilly.com/services/government-contracts
Contact Information