GSA Q&A: How Can State and Local Government Customers Use the GSA Schedules?

November 21, 2014

Note: In the interest of space, we reference below several terms and acronyms that are common in the schedules world such as BOA, IFF and CAV, but have not included full definitions of each. If you are not familiar with those concepts or need to brush up on their definitions and all the schedules basics, please see our “GSA Schedules 101: Reality Vs. Myth,” Webinar. Now, on to the Q&A:

Question: How would a state purchase services and have those procurements be considered GSA Schedule sales? I have had three states align their rates to GSA Schedules (e.g., FABS and MOBIS), but because the states do the procurement, it is not considered a GSA sale.

Answer: There are actually two major issues entangled in this seemingly simple question: “When can state and local government customers use the GSA Schedules program?” and “When should a sale be considered a GSA sale?” The first question is fairly straightforward. There are currently four programs that give state and local government customers the authority to use the GSA Schedules program:

  • Cooperative Purchasing – Only open to Schedule 70 (IT) and Schedule 84 (LAW) contract holders.
  • Disaster Purchasing – In the event of a Presidentially-declared major disaster or act of terrorism, state and local government customers can purchase products or services from any contractor who has agreed to participate in the program on any schedule.
  • Public Health Emergencies (PHEs) – Goods and services can be purchased from all schedules, using federal grants, in direct response to Health and Human Services (HHS) declared public health emergencies.
  • 1122 Program – Equipment and vehicles required in support of counterdrug, homeland security and emergency response activities are available through 11 GSA Schedules.

GSA eLibrary designates vendors who are participating in the State and Local Cooperative Purchasing and Disaster programs with an icon located on their contract record there. More information on all these programs is found on GSA’s State and Local Government Customers page.

From a compliance perspective, sales through any of these programs are considered GSA Schedule sales just like those to federal customers, so these sales should be reported with your other Schedules Sales and included with the Industrial Funding Fee (IFF) calculation and payment.

If the question had ended there, it would be a straightforward, simple answer but the follow-up statement: “I have had three states align their rates to GSA Schedules (e.g. FABS and MOBIS), but because the states do the procurement, it is not considered a GSA sale,” opens a much larger discussion. Only you can ensure your company meets the compliance requirements of your individual schedule contract, especially those related to your Basis of Award (BOA). When a federal agency seeks to align their rates with your schedule rates, then GSA considers that a schedule sale even if the agency does not. GSA takes the stance that the buying agency is benefiting from all of their hard work in determining that your prices are “fair and reasonable,” so GSA deserves the IFF on that sale. GSA often says that if you reference your schedule in your bid or just about anywhere else in a document that goes to the government customer, then you have made it a schedule buy. So, unless you can prove to GSA that the Buying Agency did their own full pricing research, GSA will say you need to include that sale in your schedule sales report and IFF payment. Of course, if you report something as a GSA sale and the buying agency does not, the schedule sales amounts on FPDS vs SSQ* may differ greatly. This is a standard comparison made during most Contractor Assistance Visits (CAVs), so you’ll need to keep any documentation that supports your case and explains any sales amount disagreements.

The situation regarding similar circumstances with state and local government customers goes in a completely different direction. There are a few states that have programs that mirror the GSA Schedules, such as TXMAS in Texas and CMAS in California. TXMAS, in fact, makes frequent reference to the GSA Schedule program on their website. To get on the program they require a contractor to have a schedule contract and give TXMAS users essentially the same discount and Price Reduction Clause (PRC) consideration that vendors are required to give GSA Schedule users. They even have their own version of the IFF that TXMAS vendors must remit to the Texas Comptroller of Public Accounts.  But, from GSA’s perspective, despite all the clear references to the GSA MAS Program, all TXMAS sales are commercial sales. GSA considers all sales to state and local government customers not using one of the four programs mentioned earlier to be commercial sales. If TXMAS isn’t specifically excluded from your BOA, then by giving them your GSA rates, you may be violating the terms of your GSA Schedule and triggering price reductions on your GSA rates (reductions in price which, by the way, you’ll also owe to your TXMAS customers, essentially triggering a death spiral on your GSA and TXMAS rates).

For sales involving state and local government customers that do not have a vehicle but just want to align with your GSA rates, the situation regarding your BOA is the same. Just because they say they want your GSA rates or are owed them does not make them exempt from your awarded BOA. State and local government customers do not know the terms of or even care about your particular BOA. Their concern is getting the best deal they can get and maintaining your GSA Schedule compliance is not even on their radar. It is up to you to negotiate a BOA that excludes or addresses sales to state and local government customers (or state/local purchasing vehicles, if applicable) and to ensure that you comply with the terms of your BOA. The same is true for sales to prime contractors even when the end-user is the federal government. Those sales are commercial sales and trigger the PRC unless they are excluded from your BOA.

As we have discussed in the past, the approach to getting or renewing a schedule or even adding products/services to your schedule needs to be integrated into an overall sales strategy for your company. A strategy that includes and addresses the potential interconnectivity of schedule and non-schedule federal sales, state and local government sales, sales to primes, end-user commercial sales and any other class of customer you may service. Only with a complete picture of where your company is and where it intends to go in terms of government and commercial sales can you assemble the current, accurate and complete disclosure of your commercial sale practices that is required by GSA. Fully understanding your commercial sales practices and GSA’s concept of the BOA is the beginning of the path to maintaining schedule contract compliance.

And to continue with that analogy, trying to overhaul a BOA after it has already been negotiated and awarded is an onerous task, a little like trying to move hardened pavement. That complete sales strategy picture will arm you with the information you need to guide your BOA negotiations when it is much easier, before they become concrete. Please stay tuned for upcoming GSA Q&A blog posts that address important related issues such as monitoring your BOA and offering new discounts to customers outside your BOA.

Got questions? Connect with an experienced Aprio GSA Schedule advisor today. 
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* (AKA FPDS (Federal Procurement Data System – Next Generation)) is the federal website where federal agencies are supposed to report all contracts whose estimated value is $3,000 or more and every modification to those contracts, regardless of dollar value. (AKA “SSQ” (Schedule Sales Query) allows users to generate various reports based on the sales figures reported to GSA by contractors. Both are open for use by the public.