Top 12 Compliance Risks that Can Affect Your GSA Schedule
GSA Schedule | 8 Min Read
Keeping up to date with federal contracting news can be overwhelming for contract holders nowadays. Whether or not your company has personally been affected by cuts or contract terminations, there is an understandable sense of unease. While GSA’s Multiple Award Schedule (MAS) program is not going anywhere, GSA does plan to “rightsize” the MAS program, one of the largest impacts of which will be cancelling non-compliant Schedules, or allowing them to expire.
This means that it is now especially important for GSA Schedule contractors 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.
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 for some Schedule holders, but all Schedule holders will undergo a more comprehensive End of Term assessment near the fourth year of your five-year contract period.
The End of Term Assessment is especially important, as serious compliance risks uncovered during this assessment may jeopardize the chances of GSA exercising the upcoming option period and extending your Schedule into its next five year period.
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 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, also referred to as Commercial Sales Practices (CSP).
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).
Contractors under TDR report their GSA sales monthly, but contractors who elect TDR do not need to disclose their Commercial Sales Practices. You should be keeping track of your GSA sales and ensuring your invoices properly mark GSA sales so that you are ready for Contractor Assessments and in case of a future audit.
It is important to note that GSA plans to make TDR mandatory for all contractors who hold at least one product SIN or the Cloud SIN (518210C) as part of Solicitation Refresh 27, so affected contractors should begin to familiarize themselves with TDR requirements now so that they are ready once they transition.
3. Trade Agreements Act (TAA) Compliance
End items sold through GSA contracts must meet the standards of the Trade Agreements Act, or TAA. Items from certain countries, including, but not limited to, China, Russia, and India are banned if the final product was wholly manufactured or “substantially transformed” there.
To comply with the TAA, you must make sure your final product was wholly manufactured or “substantially transformed” in the U.S. or one of the designated compliant countries.
Be sure that you have current and accurate information on the Country of Origin for the products you purchase from your suppliers, 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, in particular the education and experience requirements.
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 preponderance of work North American Industry Classification System (NAICS) Code. Contractors whose business size changes must submit a modification to re-represent their business size under certain criteria are met as specified in Federal Acquisition Regulation (FAR) clause 52.219-28. If you are an “other than small” business, you will likely need to submit a small business subcontracting plan and submit regular subcontracting reports as required by the type of plan chosen.
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 need 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 need to add it to your Schedule. If this product or service does not fit within any of the Special Item Numbers (SINs) that you currently have on your contract, you are required to submit a modification to add the relevant SIN to your contract.
7. Discount Relationship
Non-TDR contractors must ensure that they are maintaining the discount relationship between their Basis of Award (BOA) Customer, usually the Most Favored Customer (MFC), 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 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.
Any changes to Commercial Sales Practices must be disclosed to GSA and would require a Terms and Conditions contract modification.
8. The Minimum Sales Requirement
One of the most important areas of compliance is making sure you are meeting the minimum sales requirement. You are required to sell at least $100,000 within your first 60 months of having a GSA Schedule contract, known as the base period. After that, you need to meet $125,000 in each of the subsequent 60-month option periods.
If you do not meet this sales amount, your contract will not likely be renewed into the next option period. GSA is cracking down on Schedule holders who have not achieved this sales figure, as maintaining GSA Schedules costs them time, money, and effort, meaning it is not worth it from their perspective to keep contracts that aren’t performing. 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.
10. Mass Mod Acceptance
GSA expects contractors to be on top of accepting Mass Modifications in the Mass Mod Portal. These Mass Mods are generally incorporate changes from the most recent refresh to the MAS Solicitation. GSA provides a 90 days time period for contractors to accept Mass Mods, but it’s best practice to sign as soon as you are able rather than leaving it sitting and potentially forgetting about it. Be aware that you should not just sign the Mass Mod but also understand what it is saying, otherwise, you may find yourself out of compliance with changed requirements. Winvale’s newsletter will help keep you up to date with summaries of the changes that each Solicitation refresh and associated Mass Mod contain.
11. FAS Catalog Platform Transition
GSA has begun the process of transitioning Schedule holders from the SIP program and EDI into the FAS Catalog Platform (FCP). They are staggering the transition process by contractor, and you will receive notice about a month before your transition date. GSA has laid out deadlines for when contractors must complete verifications of their seller profiles and initiate the baseline process. If you don’t comply with these requirements, GSA may enact penalties, up to and including contract termination.
12. Keeping Information Up to Date
There are several places where contractor information is kept that GSA Schedule holders need to keep up to date:
- Your SAM registration must be kept active, which requires contractors to resubmit it at least annually.
- Your GSA eLibrary and Advantage presence must reflect the current offerings, pricing, and administrative information for your Schedule.
- You must respond to orders in GSA’s PO Portal, or EDI as applicable
Other Contract Compliance Requirements
While these are some of the most common risks for GSA Schedule contractors, there are still others such as the prohibition on the use of Chinese telecommunications and surveillance equipment by contractors under Section 889 of the Federal Acquisition Regulation (FAR). Remember that GSA Terms and Conditions are unique to your GSA Schedule, so you will ultimately need to pay attention to the Terms and Conditions in your own contract, including any discounts, delivery requirements, and qualifications, to maintain compliance.
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, and one of the best ways to do so is to reach out to Winvale, as we will keep you updated on the federal contracting landscape.