Surviving the GSA Schedule Contractor Assessment: What They'll Test and How to Comply

Jennifer Aubel & Vanessa Payne
http://blogs.aronsonllc.com/fedpoint/
Surviving the GSA Schedule Contractor Assessment:
What They’ll Test and How to Comply

2© 2016 | www.aronsonllc.com | www.aronsonllc.com/blogs |
Agenda
• Basic Overview of Contractor Assessments
• Evolution
• Preparation
• Other Unique GSA Compliance Areas
• Documentation
• Contractor Assessment Reports
• GSA OIG Audits v. Contractor Assessments

Basic Overview of
Contractor Assessments

Primary Objective: Finding Lost Dollars
• Identify Underpayments
– Does the contractor accurately identify GSA Schedule
sales and remit the proper amount of IFF
• Identify Overcharges
– Does the contractor offer the awarded GSA price or
lower with all negotiated discounts
– Does the contractor monitor the Basis of Award and
comply with the Price Reductions Clause
• Cancel Underperforming Contracts

Contractor Assessment Overview
• Evaluate contractor’s processes and procedures:
– Maintains an acceptable and verifiable sales tracking, sales
reporting and Industrial Funding Fee (IFF) remittal process
– Provides supplies and services within the scope of the
contract and available through the approved GSA pricelist
– Enforces pricing controls for commercial and GSA
transactions
– Modifies the contract as required

Overview (cont’d)
• Assesses the level of compliance with GSA Schedule terms
and conditions, such as:
‒ Maintaining the contract’s Basis of Award
‒ Complying with approved GSA discounts, including any
negotiated prompt payment or quantity/volume discounts
‒ Providing only Trade Agreements Act (TAA) compliant
products and services
‒ Providing qualified personnel to perform services under the
contract

Evolution of the
Contractor Assessment

So Long, Contractor Assistance Visits
• In the last year, GSA has introduced major changes to its
periodic compliance review process
• The Contractor Assistance Visit (CAV), which focused on
helping the contractor, was replaced by the Contractor
Assessment, which is less educational and more about finding
lost dollars
• There are significant differences in the frequency and focus of
Contractor Assessments vs. the CAV

Assessment Frequency
• NEW! Contractors reporting GSA sales of $150K or more in the
last four quarters may be subject to limited-scope Contractor
Assessments as frequently as annually
• NEW! All contractors are subject to a comprehensive
Contractor Assessment in the fourth year of each five-year
contract period, prior to the option renewal

Assessment Focus
• Limited scope “Annual Assessments”
– Contracts with higher utilization (over $150,000 in annual
sales) will receive more frequent attention
– Contracts with lower sales may receive less attention
• All contractors will receive a full compliance review during the
End-of-Term Assessment
• Contractors who fail to meet the minimum annual sales
requirement of $25,000 will receive a different notification
altogether – a cancellation letter

Other Changes
• NEW! Contractor must sign “Visit Consent Document”

Other Changes
NEW! Virtual Assessments:
• Officially, Virtual Assessments are conducted annually for
contractors reporting less than $150,000 in contract sales over the
last four reporting quarters
• Unofficially, many IOAs will try to conduct Virtual Assessments
whenever possible
• Conducted via web conference, email and/or telephone
• Contractors must submit extensive documentation to the IOA
electronically to review before Virtual Assessment

Preparing for

Annual Assessments
What will be tested:
1. Sales Reporting System
2. Pricing on GSA Schedule Orders
3. Prompt Payment Discounts

Sales Reporting System
Evaluates contractor’s ability to maintain acceptable and verifiable
systems that:
1. Track sales against the GSA Schedule
2. Identify when the sale is reportable to GSA
3. Calculate the correct amount of Industrial Funding Fee (IFF) to
be remitted
4. Ensure timely submission of quarterly 72A sales report and IFF
remittance

What is a GSA Sale?
• Your GSA Contract number is stated on the Purchase Order / Task
Order
• Ordering information and terms same as GSA contract
• Customer is authorized to use the Schedule
– GSA Order ADM 4800.2H - Eligibility to use GSA Sources of
Supply and Service (www.gsa.gov/portal/content/104212)
• The product or service is on your GSA Schedule
• The pricing is at or below the Schedule price
• FAR 51 Deviation

When is a GSA Sale Reportable?
• Contractors may select one of four triggers for when a GSA sale is
reportable:
– Date of Order
– Date of Shipment / Delivery
– Date of Invoice
– Date of Payment
• Once selected, the contractor must maintain that reporting trigger for
the life of the contract

GSA 72A Sales Reporting
• Sales reporting is due by the 30th of the month after the end of the
quarter, even when there have been no sales in the quarter
• Sales must be reported by SIN (don’t forget to segregate Disaster
Recovery and Cooperative Purchasing sales)
• Do NOT include open market and other non-Schedule items, such
as travel and living, in your sales totals

Sales Reporting Best Practices
• 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

Pricing on GSA Schedule Orders
• The IOA will review the pricing on selected invoices for GSA orders
and compare it to the awarded prices for those items at the time of
award
• Any overcharges will need to be repaid promptly
• The IOA may ask you to file the corrected 72A sales report during
the assessment
• Systemic pricing errors will be reported to the PCO and can cause a
directed OIG audit
• Volume / Quantity Discounts must be specifically identified

GSA Pricing Best Practices
• Automate pricing functions, if possible
• Ensure employees use current GSA catalog to price schedule
proposals rather than calculate the price from the commercial
pricelist
• Most overcharges occur on multi-year orders with automatic
escalation. Make sure the order escalation does not take the price
over your current GSA rate.

Prompt Payment Discounts
• IOA will review GSA invoices to make sure all prompt payment
discounts are indicated
• If the prompt payment discount does not appear on the invoice, GSA
will assume that the government would have paid in time to receive
the discount and that you owe the customer money back
BEST PRACTICE: Make sure to include prompt
payment discounts in the invoicing instructions when
you set up GSA Schedule orders in your accounting
system

End-of-Term Assessments
What will be tested:
1. All Annual Assessment Items
2. Basis of Award / Price Reductions
3. Labor Category Qualifications
4. Trade Agreements Act (TAA)
5. Scope
6. Delivery
7. E-Commerce

Basis of Award Compliance
• The IOA will review transactions with your Basis of Award (BOA)
customer, or class of customer, to see if unreported price reductions
occurred
• This is the single highest financial risk compliance area of the
assessment
• If you don’t know what the BOA is on your contract, you should
figure it out IMMEDIATELY

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

Basis of Award
• Establishes a relationship between the BOA customer’s discount
and the GSA discount that must be maintained for the life of the
contract
• When this discount relationship is disturbed, then a PRICE
REDUCTION has been triggered
MSRP
BOA
Discount
BOA
Price
GSA
Discount
GSA Price
(w/o IFF)
Discount
Relationship
Basis of Award $500.00 10.0% $450.00 15.0% $425.00 5.0%

Price Reductions
GSAR 552.238-75 Price Reductions
• Price Reductions are not really about price, rather they are about the
discount
• What transactions are monitored for price reductions?
MSRP
BOA
Discount
BOA
Price
GSA
Discount
GSA Price
Discount
Relationship
Basis of Award $500.00 10.0% $450.00 15.0% $425.00 5.0%
Price Reduction $500.00 12.0% $440.00 15.0% $425.00 3.0%
New GSA Discount $500.00 12.0% $440.00 17.0% $415.00 5.0%

Monitoring the Basis of Award
• Contractors must implement and maintain a system that tracks
commercial sales, especially sales to the BOA customer.
• Selling to BOA customers at a higher discount than negotiated may
trigger the Price Reductions Clause
• Disclose any price reductions to GSA within 15 days

Exceptions to Price Reductions
• Sales to authorized users of the GSA Schedules
• Sales in excess of the Maximum Order Threshold (MOT)
• Price reductions caused by an error in bidding
• Dissimilar terms and conditions
– Pre-payment, trade-ins
– Marketing considerations, exclusivity
– Sales quotas, stocking requirements, customer support
• You must still disclose these transactions in your CSP

Price Reductions Monitoring Best Practices
• Educate ALL stakeholders in the process
• Limit who can extend pricing to customers and automate pricing
controls when possible
• Institute checks and balances between sales and contracts with
consequences for ‘rogue’ behavior
• Consider whether a reduction can be classified as temporary before
giving GSA a permanent decrease
• Schedule regular internal reviews

Labor Category Qualifications
• Labor Category Qualifications – GSA may review a sample of
resumes to verify personnel meet the minimum education,
experience, and functional requirements of the GSA labor category
descriptions under which they were billed.
• Subcontracting – When subcontractors are mapped to the prime’s
categories, the prime must document how the mapping was verified
and be able to demonstrate that the sub met the minimum
qualifications for the position
WARNING: GSA considers the use of unqualified labor an
overcharge. You will have to repay the difference between the rate
charged and the rate for the category the employee actually
qualifies for. This can get expensive.

Labor Category Best Practices
• Require all employees to update their resumes at least annually
• Document any experience/education substitutions used when
mapping personnel to GSA labor categories
• For each task order, document mapping of order labor categories to
GSA labor categories
• Obtain current resumes for all subcontractor employees mapped to
GSA categories
• Consider mapping all direct employees to a minimum GSA labor
category and updating annually

Trade Agreements Act (TAA)
• Schedule products cannot be manufactured or substantially
transformed in countries that are not compliant with the TAA (i.e.
China, India, etc.)
• The IOA may conduct a floor check to verify country of origin (COO)
for contract items
• Services COO is the country where firm is established
• TAA has recently gotten a lot of media attention, so expect GSA to
become more aggressive in enforcing compliance

TAA Best Practices
• 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
and power supplies); do not sell separately if TAA conflicts exist
• Customs and Border Protection (CBP) is the ultimate arbiter of TAA
compliance
• Consider talking to a government contracts attorney for complex
topics like cloud software

Scope
Does the GSA Schedule order fall within the scope of the awarded
Special Item Numbers (SINs) on the contract?
BEST PRACTICE: This issue mainly arises on services contracts.
Just because an ordering agency issues a contract under a certain
Schedule or SIN doesn’t mean that the IOA will accept their scope
determination. If you are concerned about whether an RFP is out of
scope of your Schedule, talk to the ordering agency about it or
don’t bid.

Delivery and eCommerce
• Delivery – IOA will review contractor’s delivery practices, including
selecting a sample of orders to determine if the stated delivery terms
and conditions are in accordance to the contract.
• eCommerce – Historically refers to contractor’s acceptance of
government pay cards and electronic payment of the quarterly IFF.

Administrative Compliance
Modifies the contract as required including:
• Administrative updates
• Mandatory / mass modifications
• GSA Schedule pricelist updates

Other Important GSA
Compliance Areas

Compliance Concerns Specific to Products
• Environmental Attributes – if contractors have items on GSA
Advantage with environmental indicators, the IOA will sample GSA
Advantage items and ask for substantiation of environmental
indicators.
• Participating Dealers – IOA will verify that the contractor has an
effective system in place for capturing sales by participating dealers.
Quarterly sales reports from participating dealers may be reviewed.

Compliance Concerns Specific to Products
• AbilityOne – Contractors are not allowed to offer products that are
“essentially the same” to those manufactured by AbilityOne (formerly
JWOD). These items must be deleted from the contract.

Compliance Concerns Specific to Services
• Labor Statutes – GSA Schedules include labor laws such as the
Service Contract Labor Standards (SCLS), formerly SCA, and the
Davis Bacon Act (DBA) which set statutory minimum wages and
benefits for certain hourly employees on federal contracts.
Contractors providing service employees or construction-type work
under their contract should seek additional guidance on this complex
issue.

Federal Compliance Reporting
Don’t forget that many general federal contracting requirements are
also included on GSA Schedules:
• Employment Eligibility Verification (e-Verify)
• Equal Employment Opportunity / Affirmative Action
• Veterans Hiring Reporting (VETS-4212)
• Code of Ethics and Business Conduct
• Service Contract Reporting (SCR)
• Executive Compensation and First-Tier Subcontracts
• Small Business Subcontract Reporting (eSRS)

Documentation for
Contractor Assessment

Documentation Basics
• Although the IOA will typically start with a generic data request, be
prepared to provide additional documentation upon request
• If the requested data set is exceptionally large, ask if sampling or
reduced evaluation period is acceptable
• Virtual Assessments often ask for a large amount of materials up-
front

Frequently Requested Documentation
• Sales reports in an Excel spreadsheet detailing all of contractor’s
sales during the specified timeframe
― Sales report should encompasses all transactions – including
GSA sales, federal non-GSA sales, and commercial customers
• Copies of quotes, purchase orders, invoices from selected GSA,
federal non-GSA, and commercial orders during the specified
timeframe
• 72A reporting records with substantiation

Frequently Requested Documentation
• Contract award documents, as well as modifications issued during
the review period
• All commercial and GSA Pricelists effective in review period
• GSA compliance policies and procedures, as available
• Contractor Teaming Arrangements (if any)
• Blanket Purchase Agreements (BPAs) placed under the MAS
contract (if any)
• Participating Dealer Agreements (if any)
• Resumes for task order personnel

Contract Documentation
Do you know where your GSA contract documents are?
• Original Offer with all Clarifications
• Contract Award (SF 1449) with continuation pages
• Final Proposal Revision (FPR) Letter
• Commercial Sales Practices (CSP-1)
• Vendor and GSA-Initiated Modifications
• GSA Pricelists
• Reporting Documentation

Contractor Assessment Report

Contractor Assessment Report
• Graded report cards are no longer generated
• Instead, the Assessment Report is designed to provide narrative
feedback on performance against contract terms and conditions.
• Assessment Report is made available simultaneously to the
Contractor and the Contracting Officer
• Assessment Report is an internal informational tool and is not
distributed externally

Annual Assessment Report

End-of-Term Assessment Report

GSA Inspector General (OIG) Audits v.

GSA OIG Audit v. Contractor Assessment
GSA OIG Audit Contractor Assessment
Subpoena power No subpoena power
Lengthy data collection and
analysis
Short assessment and quick turnaround
Focus on specific issues (e.g.
pricing)
Review of many compliance areas
Complete review of transactions Process review and spot checks
Pre-award or post award Annual, end-of-term, and special cases
Identify contractual issues Educate and review the mechanisms the
contractor has in place to comply with selected
terms and conditions of the contract

GSA OIG Audit Authority
GSAAudit Authority Clause:
EXAMINATION OF RECORDS BY GSA (GSAR 552.215-71) – The
Contractor agrees that the Administrator of General Services or any
duly authorized representative shall have access to and the right to
examine any books, documents, papers and records of the
Contractor involving transactions related to this contract for over
billings, billing errors, compliance with the Price Reduction clause
and compliance with the Industrial Funding Fee and Sales Reporting
clause of this contract. This authority shall expire 3 years after final
payment. The basic contract and each option shall be treated as
separate contracts for purposes of applying this clause

Types of GSA OIG Audit
• Pre-award Audit
– Verifies contractor’s pricing disclosures are current, accurate and
complete and that controls are sufficient to ensure compliance
– May occur prior to initial contract award or at option extension
• Post-award Audit
– Verifies all pricing transactions, as well as terms and conditions,
to ensure contractor is in compliance.
– Reviews for compliance in several key areas:
• Price Reductions Clause (PRC) compliance
• 72A Sales Reporting and Industrial Funding Fee (IFF)
remittance
• Labor mapping compliance, contract scope, etc.

Major Recurring Findings in GSA OIG Audits
1. Commercial Sales Practices (CSP) were not current, accurate or
complete – 77%
2. Customer agencies were overcharged for professional services –
50%
3. Systems used to accumulate and report Schedule sales were
inadequate – 37%

Final Thoughts

Top 5 Ways Non-Compliance Can Cost You Money
1. Not understanding the Basis of Award
2. Failing to reduce your prices when required
3. Failing to increase your prices when allowed
4. Failing to extend negotiated discounts (volume, quantity, prompt
payment)
5. Violating the Trade Agreements Act (TAA) or Service Contract Act
(SCA)
Not educating the appropriate personnel on contract requirements

• Termination for Cause
• Payment of restitutions to GSA
customers
• Renegotiation of GSA
Discount / Basis of Award
• Significant fines and penalties
• Suspension or Debarment
• Civil Prosecution
• Criminal Prosecution
• Civil False Claims Act= $11K
per invoice plus treble
damages
• Prison
Risks and Penalties for Non-Compliance
The regret of knowing it was preventable!

About Aronson LLC
• Thinking ahead for clients for more than 50 years
• 225+ professionals located in Rockville, MD
• 80+ professionals dedicated to supporting government contractors
• Aronson helps clients rethink the way they approach their business through
innovative, industry-specific services and advice:
– Audit, Assurance and Tax
– Deltek Systems and Outsourcing
– Financial and Contract Compliance
– GSA Schedules
• www.aronsonllc.com/blogs/fedpoint/ – News and trends and insight for today’s
savvy government contractor

Awards / Accolades / Affiliations
The Gazette of Politics & Business Exceptional 53 Business Award
In 2012, Aronson received the PB53 award for the third year in a row. The program
acknowledges the top businesses and organizations in Maryland based on criteria that
includes the company’s annual revenue, employee growth, noteworthy product or service
innovations, community service efforts and more.
Accounting Today Top Firm
In 2013, Aronson was once again named to Accounting Today’s list of the top 100 firms in
the country. Accounting Today is a leading provider of online business news for the tax and
accounting community.
Washington Business Journal Top 25
Aronson is ranked #12 on the Washington Business Journal’s Top 25 Accounting Firms in
the DC Metropolitan area.
INSIDE Public Accounting Top 100
Once again, Aronson has earned a spot in the top 100 of this prestigious list, released by
INSIDE Public Accounting. This is the longest running, most comprehensive and accurate
independent analysis focusing on management and operations of America’s large local,
regional and national firms.
Washington Business Journal Best Places to Work
Aronson has been recognized five times as one of the Metro area’s “Best Places to Work.”
The award recognizes a company’s achievements in creating a positive work environment
that attracts and retains employees through a combination of employee satisfaction, working
conditions and company culture.
Montgomery County Chamber Corporate Social Responsibility Award
In 2010, Aronson was honored to receive the MCCC’s Corporate Social Responsibility Award
based on the depth and breadth of the company’s energetic commitment to support young people,
in the areas of education, housing and health.

Vanessa Payne is a managing consultant in Aronson LLC's Government
Contract Solutions Group. With more than 15 years of full life-cycle
government contracts and consulting experience, her expertise
includes GSA contract management, subcontract administration,
contractor task order proposals, and "Big Four" management
consulting in the areas of process improvement, business process
reengineering, cost accounting, survey development and analysis,
workflow mapping, and facilitation services. She currently specializes
in GSA Schedule contract preparation, renewals, and providing
ongoing contract management, administration, and compliance
support with a special interest in organizational procedure and policy
review, improvement, and standardization.
Vanessa has been a guest speaker on GSA Schedule and social media
topics for Aronson and other industry organizations, and she is a co-
founder and frequent contributor to Aronson's Fed Point blog. She
received her master's degree in organizational development and
strategic human resources as well as a graduate certificate in skilled
facilitation from Johns Hopkins University, and she completed her
bachelor's degree in communications at the University of
Pennsylvania.
Managing Consultant, Government Contract Services Group
240.364.2663
vpayne@aronsonllc.com
Vanessa E. Payne

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 and is
an active member of the National Contract Management Association.
Jennifer has over 15 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 comprised of six GSA
Schedule contracts with more than 10,000 contract line items. 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

240.364.2663
Contact Vanessa Payne / Aronson LLC
vpayne@aronsonllc.com
https://www.linkedin.com/in/vanessaepayne
https://twitter.com/Aronsonllc

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

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