Companies interested in pursuing a GSA Multiple Award Schedule (MAS) contract should review and understand the many requirements needed to submit an offer. The proposal process can be broken down into three main sections: administrative, technical, and pricing. Within the administrative section, GSA assesses a company’s organizational structure, compliancy with SAM.gov registration, and financial statements, among other attributes. While the administrative section may seem like an easier section to complete, prospective offerors should not take this section lightly, as companies’ proposals can be rejected for insufficient or negative financial information.
Throughout this blog, we will discuss the information GSA is looking for to meet the solicitation’s financial requirements and how to demonstrate financial responsibility for emerging companies.
General Financial Requirements in a GSA MAS Offer
The financial requirement for proposal submission helps GSA evaluate your company’s stability and your access to funds to operate and fulfill orders or projects throughout the contract’s lifespan.
To be compliant with the solicitation’s requirement, an offeror must provide their company’s annual financial statements from the previous two years. For example, a business submitting a GSA Schedule offer in 2024 would need to include their 2022 and 2023 fiscal year finances. If you have been around for less than 2 years, you may qualify for the Startup Springboard Program which we’ll cover below.
At minimum, the solicitation requires a company’s balance sheet and income statement. These statements can be audited if available, reviewed, or directly from an accounting system.
Balance Sheet
Your company’s balance sheet will need to detail assets, liabilities, and equity. Assets can be broken down into categories, including current assets, such as cash, and fixed assets, which reference more long-term products like business equipment. Liabilities include debt activities, such as credit card purchases and loans.
Income Statement
An income statement, also referred to as a profit and loss statement, must identify your company’s profits and losses during a fiscal year. In Winvale’s experience, offerors should submit an income statement with expanded line items identifying general expenses, revenue or sales, and other basic and essential financial information relevant to your business. While you do not need to list each individual expense or revenue experienced during the year, you should provide enough detail for the Contracting Officer (CO) to understand your business operations and portray an accurate picture of your profits and losses throughout that period.
COs may request additional financial information after your offer has been submitted to further assess GSA financial responsibility requirements. Although year-to-date financial statements are not required to submit with your GSA Schedule offer, some offerors may submit year-to-date documents in addition to the solicitation’s requirement to show further proof of financial stability or improvement in finances, if necessary.
How Do Other Types of Offerors Show GSA Financial Responsibility?
Startup Springboard
If your company is recently founded and has less than two years of corporate experience, then you can qualify for GSA’s Startup Springboard program. Through this program, you are subject to different financial requirements than a more experienced company and do not need to submit a balance sheet or income statement with your GSA Schedule offer if they do not exist yet.
For example, GSA outlines documentation that those qualifying for the Startup Springboard program can provide to show financial responsibility in a GSA MAS offer, including:
- Bank references
- Certificate of Competency from the Small Business Administration (SBA)
- Corporate guarantee (available for subsidiary companies)
- Documents showing assets versus liabilities
- Evidence of a line of credit with a bank or the Small Business Administration
- Evidence of an irrevocable letter of credit
- Financial data that demonstrates financial capability
- Interim or comprehensive financial statements
- Signed AngelList investors
- Signed venture capital agreements
The above examples are not limited to Startup Springboard offerors and can be used to supplement an experienced company’s financial statements that show significant losses, debt, or any other unfavorable details.
Joint Venture (JV) Offerors
If you have formed a Joint Venture (JV) with another business and are submitting a GSA Schedule offer under that JV, your proposal will be evaluated based on each partner’s financial history to demonstrate GSA financial responsibility. Each JV partner will need to submit their respective financial statements aligning with the general requirements identified earlier. Additionally, the JV entity’s financial statements will be considered, if available.
What Happens if Your Financials Aren’t That Great?
At times, companies’ financial statements for one or both fiscal years may reflect a negative net income or negative equity. GSA understands that companies can operate with net losses and is a common “issue” experienced by potential contractors in the GSA MAS offer process. The solicitation requests an offeror to write a narrative describing why a loss occurred to include with their submission package. This helps GSA gain additional perspective on your company’s financial situation.
If you are unsure of how to address your company’s financial losses, potential reasons to include may be that the company invested in new technology, increased employee benefits, experienced a hiring phase, and other similar explanations related to company growth. We recommend offerors address strategies in place to improve any financial losses endured throughout the narrative to enhance your response. This narrative does not have a page restriction, so it is beneficial to include a detailed and thorough justification.
Although, if your financials show significant debt, income losses, and negative equity, you may need to supplement the required financial documents (balance sheet and income statement) with additional proof of GSA financial responsibility from the list detailed in the previous section.
A useful tool to gauge your company’s financial health is to calculate your debt ratio or other economic ratios; the standards vary by industry so make sure you are referencing the correct data.
It is important to recognize potential red flags in your financials prior to submitting your GSA Schedule offer. This can help avoid an immediate rejection and prepare yourself for any additional information the Contracting Officer (CO) may request to further analyze your entity’s financial history. According to Federal Acquisition Regulation (FAR) 9.104-1, a responsible prospective contractor “must have adequate financial resources to perform the contract, or the ability to attain them.” Thus, GSA financial responsibility is a factor to consider highly as you prepare your GSA MAS offer.
What Will Your Company’s Financial Statements Communicate to GSA?
An offeror’s financial statements are a key requirement in the GSA MAS offer review process. As you navigate the GSA Schedule acquisition process, it is important to analyze your income statements and balance sheets early and recognize potential issues to avoid a rejection of your offer. As discussed, there are potential solutions to supplement your financial statements that may not appear great upon review. Through external support, like bank letters and a corporate guarantee document for subsidiary companies, you can provide a more comprehensive insight into your company’s operations and capabilities to GSA.
However, financial assessments do not stop after a GSA Schedule contract is awarded. GSA conducts financial reviews for all contractors throughout contract performance to ensure continued compliance with solicitation regulations. If you have questions about the acquisition process, our experienced team of Schedule acquisition consultants are trained to recognize obstacles in clients’ financial statements and are available to help guide you through GSA financial responsibility requirements prior to offer submission and post-award.
