What You Need to Know About the GSA Schedule Financial Review Process

If you're new to the world of government contracting and have never submitted a GSA Multiple Award Schedule (MAS) offer before, the concept of a GSA Schedule financial review may seem overwhelming to you. Many companies are required to submit to the financial review process, and just with any government process, there is a path to success. In previous Winvale blogs, we’ve touched on new Schedule offerors being required to demonstrate financial responsibility as a requisite technical sub-factor, but in this guide, we will break down the GSA Schedule financial review process into easily digestible bits.

We will be explaining what the financial review is, why it matters, what triggers it, the requirements for responding to financial review requests, and what your company needs to do when providing documents for the financial review. By the end of this article, you'll have a solid understanding of this critical aspect of GSA Schedule management.

Understanding the GSA Schedule Financial Review Process

Before we dive into the specifics, let's start with the basics. The GSA Schedule financial review is a mandatory evaluation conducted by the General Services Administration (GSA) to assess the financial stability and compliance of companies going after a GSA Schedule contract. GSA Schedules are designed to streamline the procurement process for federal agencies, making it easier for them to acquire goods and services.

However, GSA takes the responsibility of ensuring that contractors maintain their contractual obligations seriously. Because GSA Schedules are issued for periods of 5 years (your initial award and 3, 5-year option periods of up to 20 years) the financial review process is one of GSA’s ways to ensure that your entity has the stability and longevity to perform alongside the many other GSA Schedule holders, along with the factors we’ll discuss next.

Why Does the GSA Schedule Financial Review Matter?

The GSA Schedule financial review process is not just a bureaucratic hurdle. Along with determining your company’s financial stability, known in GSA terms as financial compatibility as a technical sub-factor under the solicitation guidance, it serves several important purposes:

• Ensuring Compliance: By conducting financial reviews, GSA ensures that contractors adhere to all terms and conditions outlined in their GSA Schedule contracts. This helps maintain the integrity of the MAS program.
• Safeguarding Taxpayer Dollars: The GSA's vigilance in assessing the financial health of contractors safeguards taxpayer dollars. It ensures that contracts are awarded to businesses that are financially stable and responsible.
• Promoting Fair Competition: By evaluating the financial stability of contractors, GSA creates a competitive marketplace. This prevents unqualified or financially distressed companies from gaining an unfair advantage.

What Triggers a GSA Financial Review?

Now that we understand the importance of the financial review, let's explore what can trigger it. Several scenarios might prompt the GSA to initiate a financial review:

• Scheduled Reviews: The GSA routinely conducts scheduled financial reviews for all GSA Schedule holders. This helps them ensure ongoing compliance with contractual obligations. This is true as we mentioned as part of the solicitation requirements, but a financial review can be more in depth and require additional documentation to satisfy GSA’s solicitation requirements.
• Red Flags: Unusual financial activities, such as significant drops in revenue or profit margins, can raise red flags that lead to a review. Additionally, newer companies without the ability to meet the technical sub-factor requirements of the solicitation in providing two years of financial data (which consists of both Balance Sheets and Profit and Loss Statements) as is common in the MAS Startup Springboard program. These discrepancies may be detected during routine audits or through self-disclosures when submitting your offer.
• Contract Renewal: When your GSA Schedule contract is up for renewal, the GSA may conduct a financial review to assess your continued eligibility.
• Contract Modifications: Least common, though a potential reality for some, is that a financial review may be triggered when requesting significant modifications to your GSA Schedule contract, such as adding new products or services.

Requirements for Responding to a Financial Review

Now that you know what can prompt a financial review, let's discuss how to respond effectively when the GSA initiates one. Here are the key requirements for responding to reviewers:

• Designate a Point of Contact: Appoint a knowledgeable individual such as a specialized consultant or team, or an individual within your organization to serve as the primary point of contact for the review. This person should have access to, and be well-versed in your company's finances and have an appropriate understanding of GSA compliance and the Solicitation requirements.
• Submit Requested Documents: Reviewers will request specific financial documents, including income statements, balance sheets, and cash flow statements for a certain time period, usually from the last two years. Ensure that you provide accurate and complete information. Additionally, you may be selected to provide additional information as directed by the GSA Credit and Finance team if more information is necessary to ensure your company meets the Solicitation requirements after submitting your offer. There are two additional forms that will be provided by a Financial Analyst and they are:
  • • GSA Form 527: This form is used to collect additional information about you entity, cashflows, assets and liabilities
    • An Instruction Letter, Questionnaire, and Bank Reference Sheet: This all-in-one document contains a letter from GSA that will outline any additional information being requested, provide a questionnaire for your entity to provide responses to, and a Bank Reference Form for all of the banks your entity does business with. 

NOTE Regarding Bank Reference: The bank reference sheet must returned directly to GSA from the financial institution, and is only applicable to the entity seeking the GSA Schedule and not any parent company if applicable. Below is an example of the Bank Reference Letter requisite information.

• Explain Variances: If there are any discrepancies or unusual financial trends in your documents, be prepared to provide a clear explanation. Transparency is key.
• Meet Deadlines: Adhere to all deadlines set by GSA during the review process. Failure to do so may result in unfavorable outcomes.

 Completing the Financial Review: What Your Company Needs to Know

Now that you understand the triggers and requirements, let's delve into what your company needs when providing documents for the financial review:

1. Compile Financial Documents

The first step is to gather all the necessary financial documents. This typically includes financial statements (prior two year’s Balance Sheets and Profit and Loss Statements) when submitting your offer. Further, you will need to provide any other documents requested by the GSA such as GSA Form 527 and the Letter, Questionnaire, and Bank Reference Sheet.

2. Perform a Self-Assessment

Before the GSA initiates the review, it's a good practice to conduct an internal assessment of your financial health. Identify any potential issues and address them proactively and determine based on the Solicitation requirements if your company has the financial capability to work with GSA. In most cases, companies with more than two years of financial history meet the requirements of the solicitation, and in some cases, those who do not also meet those requirements, but a self-assessment can better prepare you for overcoming any potential obstacles to award.

3. Engage Professional Help

If needed, consider enlisting the services of financial experts or consultants. They can help ensure your financial records are in order and assist you in preparing for your GSA offer or modification for a financial review.

3. Maintain Transparency

Throughout the review process, maintain open communication with the GSA. If you encounter any financial challenges or significant changes in your business, be transparent and communicate these developments promptly. This will better situate your business to remain compliant throughout the life of your GSA Schedule, and reduce the likelihood of needing future terms and conditions modifications to your contract.

Preparing for a Smooth Financial Review

The GSA Schedule financial review process, though initially intimidating, is a critical aspect of GSA Schedule management that ensures fairness, transparency, and compliance. By understanding the triggers, the importance of compliance, the requirements for responding to reviewers, and the necessary steps for providing documents, you're well-equipped to navigate this process with confidence. Remember, transparency, accuracy, and timely responses are your allies in successfully completing the financial review and maintaining your eligibility for valuable government contracts. If you would like assistance with preparing a GSA Schedule offer or modifying your GSA Schedule, Winvale may be able to help!