Federal acquisitions are governed by the Federal Acquisition Regulation (FAR) – a scope of rules and requirements, establishing the way GSA agencies procure, and regulating how GSA Schedule contractors should go about providing products and services. Success on the federal market depends largely on how well you understand the FAR. Here, we explain the three important regulations that every GSA Schedule contractor should know about.

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1. Eligible Ordering Activities

The FAR clause 552.238-113 Scope of Contract defines what agencies can purchase products and services via the GSA Schedules contracting vehicle. The comprehensive list includes:

1) Executive agencies;

2) Authorized government contractors;

3) Mixed ownership Government corporations;

4) Federal Agencies, except the Senate, the House of Representatives and the Architect of the Capitol, and any activities under the direction of the Architect of the Capitol).

5) The District of Columbia;

6) Authorized tribal governments;

7) Tribes or tribally designated housing entities;

8) Authorized Qualified Nonprofit Agencies;

9) Other authorized organizations.

The most important paragraph of this clause is 552.238-113 (f). It states that a GSA Schedule contractor must accept any contract offered by the Executive Branch of the Government, regardless of which particular activity within the Executive Branch it comes from. As for other agencies and activities, it is up to a contractor, whether to accept the offer or not.

Another important term is that the government is obliged to purchase at least $2,500 under each contract.

Why 552.238-113 regulation is important?

Learning your scope of contract can provide you hints on which government organizations you can offer your products and services to. The clause also defines conditions, in which state and local governments may use GSA Schedule to purchase what they need. This means you can prepare for such conditions beforehand, and win a contract, while other vendors are still waiting for an opportunity.

2. Trade Agreements Act

This is FAR 52.225-5 Trade Agreements. Clearly one of the most important FAR clauses, this regulation determines whether certain products and services of the non-US origin can be sold to the government, through the federal marketplace. The regulation is also known by the name Trade Agreements Act (TAA), and TAA Compliance is one of the most tricky compliance affairs of the GSA Multiple Award Schedule contracting.

The TAA allows government purchases from only a specified range of countries. Specifically, these are WTO countries, Free Trade Agreement countries, least developed countries and countries of the Caribbean Basin. If a product originates from such countries, or was substantially transformed in one of them, then such a product can be purchased by federal agencies.

A “substantially transformed product” is a product that has gone through certain modifications, transformations or upgrades that make it different enough to name it a new product. The FAR 52.225-5 provides the exact definition of what “substantial transformation” means.

Another important clause in this regulation is the list of non-TAA compliant countries. These are:

Brazil
China
Russia
Iraq
Iran
Indonesia
Pakistan
Malaysia
Sri Lanka

Note that the list can be modified at any time, so you should keep an eye at the Trade Agreements regulation.

Why is the Trade Agreements Act important?

You can only sell TAA-compliant products and services to the government. This makes FAR 52.225-5 a crucial regulation that every GSA contractor should care of. Changes in the way TAA-compliance is defined can easily render some of your products non-compliant. Well, that is if you don’t do something to resolve the issue. Which is why we recommend periodical checking of your products for TAA compliance to make sure your GSA Schedule contract does not end prematurely, just because the government cannot buy some of your products any more.

3. Industrial Funding Fee and Sales Reporting

The GSAM 552.238-80 clause defines how GSA contractors must report all federal sales and pay the Industrial Funding Fee.

The IFF is a fee the GSA uses to compensate its operational costs. The Industrial Funding Fee is a fixed percentage (0.75%) of GSA sales reported by a GSA contractor. The IFF is automatically included into the final price the government pays to contractors for MAS contracts.

This FAR clause also defines the way contractors must report their sales through the federal market. Specifically, a contractor should report the dollar value of sales quarterly, and the reported sales values must already include the IFF. Importantly, the clause states the acceptable ways of reporting via the order receipt, shipment/delivery, issuance of the invoice, or payment.

GSA contractors should report sales using the Federal Acquisition Sales Reporting portal. As stated in the GSAM 552.238-80, a contractor must submit a “volume zero” report even if there was no sales activity within the reporting period.

Why is GSAM 552.238-80 important?

Failing to remit the IFF within the 30 calendar days after the reporting quarter can lead to a number of potential problems starting from debt collection (See the Debt Collection Improvement Act), and all the way down to contract termination. And calculating the IFF requires you to submit quarterly reports. That is why it is crucial to understand the principles of Transactional Data reporting.

Conclusion

Surely, the above three regulations are merely the tip of the iceberg. Learning the entire FAR will take time and effort. But there is another option: delegate the legal part to a professional GSA agent, who will take care of these compliance issues for you. Price Reporter will be glad to help you make your GSA contract compliant to FAR, and acquire such a contract if you don’t yet have one.