The federal government is known for the mountains of red tape it can take to do business with. Fortunately for GSA Schedule contractors, several barriers have been removed over the years. However, there are still many compliance risks you need to be aware of.
GSA Schedule contractors have to be familiar with the terms and conditions they agreed to with their contract and maintain contract compliance in order to avoid the risk of penalties, which can range from cancellation of sales to cancellation of their contract.
As GSA consultants, we know meeting compliance standards is the most important step to keeping your GSA Schedule contract in good standing and setting yourself up for success. To accomplish this, let’s learn about compliance risks for GSA Schedule contractors.
1. Contractor Assessments
As a GSA Schedule contractor, you will be contacted by your Industrial Operations Analyst (IOA) about Contractor Assessments. These assessments can occur annually with a more comprehensive assessment near the end of your contract period, but the timing is up to the discretion of your IOA.
These assessments are not audits, but the IOA will examine some of your financial documents to see if the terms and conditions of your contract are being upheld. You should be prepared to discuss some of the topics we cover below with your IOA during the assessment. GSA has recently published a reference guide to help you with the process.
2. Sales Reporting
GSA Schedule contractors must be aware of their sales reporting method and maintain it for contract compliance. There are two main types of sales reporting for GSA Schedules: Transactional Data Reporting (TDR) and non-TDR.
For non-TDR contractors, sales are reported quarterly by the end of the month following the end of a financial quarter (so, for example, April 30 for the quarter spanning from January 1 to March 31).
TDR is done monthly, but contractors who elect TDR do not have to report their Commercial Sales Practices. You should be keeping track of your GSA sales and taking care to ensure invoices properly mark GSA sales so that they are ready for Contractor Assessments and in case of a future audit.
3. Trade Agreement Act (TAA) Compliance
End items sold through GSA contracts must meet the standards of the Trade Agreement Act. Items from certain countries, including China, Russia, and India are banned if the final product was made in these countries.
To comply with the TAA, you must make sure your final product was “substantially transformed” in the U.S. or one of the designated compliant countries.
Be sure that information on the Country of Origin for the products you purchase from your suppliers is on their Letter of Supply, as this can help you avoid future headaches.
4. Labor Category Qualifications
Contractors offering services through their GSA Schedule must ensure the minimum qualifications laid out in their contract for the labor category are met.
For example, if a contract specifies that a bachelor’s degree and 3 years of experience is required for a specific labor category, the employee, whether of the contractor or subcontractor, must have a bachelor’s degree and 3 years of experience. Keep in mind that you can specify if you would like education to be substitutable for experience and vice versa.
5. Small Business Subcontracting
GSA Schedule contractors must accurately represent their business size to GSA, which is determined according to their primary NAICS code. Contractors whose business size changes must submit a modification to re-represent their business size. If you are an “other than small” business, you will likely need to submit a small business subcontracting plan.
You will need to make a good faith effort to reach the subcontracting goals in your subcontracting plans. If you do not meet these goals, you risk rejection or cancellation of your contract.
6. Scope Compliance
Contractors can only provide products and services through their GSA Schedule that have been approved by GSA. Other products and services would have to be sold as open market items unless they are being sold at the task order level under an Order Level Material Special Item Number (SIN OLM).
If you would like to sell a product or service through GSA, you will have to add it to your Schedule. If this product or service does not fit within any of the SINs that you currently have on your contract, you will have to submit a modification to add that SIN to your contract.
With the MAS Consolidation, this process will be easier than ever due to the consolidated Schedules.
7. Discount Relationship
Non-Transactional Data Reporting (TDR) contractors must ensure that they are maintaining the discount relationship between their Most Favored Customer (MFC) or Basis of Award (BOA) Customer and GSA pricing. Non-TDR contractors must do this for contract compliance because GSA wants the best price it can get, and the discount relationship is what the contract award pricing was based on.
GSA expects this relationship to be maintained. If commercial sales prices are to be lowered, GSA prices must be lowered at least proportionally if the contractor wants to avoid violation of the terms and conditions of the contract according to the Pride Reductions Clause.
Contractors can normally only sell to GSA eligible entities at GSA approved pricing or below. If a contractor sells to a BOA at lower than their regular rate, that could affect the contractor’s relationship with GSA.
Any changes to Commercial Sales Practices must be disclosed to GSA and would need a Terms and Conditions contract modification.
8. The Minimum Sales Requirement
You should make sure you are regularly achieving the minimum sales requirement. You are required to sell at least $25,000 within your first 24 months of having a GSA Schedule contract. After that, you need to meet $25,000 in sales every year.
If you do not meet this sales amount, your contract can be cancelled or suspended. To help achieve this requirement, you should make sure your company knows how to find government customers and is putting energy into marketing your products and services to government agencies.
9. Keeping Up with Human Resources Forms and Requirements
Another aspect of contract compliance is making sure you are filing and keeping track of Human Resources related forms and requirements.
These forms and requirements include VETS 100, EEO – 1, Affirmative Action Program, Disability Employment, E-Verify, Service Contract Act, and Davis-Bacon Act depending on the specifics of your contract. Remember that GSA Terms and Conditions are unique to your GSA Schedule, so you will ultimately have to pay attention to the Terms and Conditions in your own contract, including any discounts, delivery requirements, and qualifications, to maintain compliance.
Other Contract Compliance Requirements
While these are some of the most common risks for GSA Schedule contractors, there are still others such as the recent prohibition on the use of Chinese telecommunications and surveillance equipment by contractors under Section 889 of the Federal Acquisition Regulation (FAR).
Since the government landscape is always shifting, new risks and requirements can appear throughout the life of your contract. It is best to stay informed of any changes that could affect your contract compliance.
If you want to learn more about other regulations to be aware of as a contractor, check out our blog, “3 Regulations Every GSA Schedule Contractor Should Know.” If you have any other questions about compliance or if you would like assistance maintaining your GSA Schedule contract, reach out to Winvale.
