Presentation Transcript

1. GSA Schedule Compliance Pitfalls Presented by: Jennifer N. Aubel
2. Agenda Understanding your Most Favored Customer (MFC) and Basis of Award (BOA) The Price Reductions Clause Pro-Actively Administering your GSA Schedule Contract Frequently Overlooked Terms and Conditions Risks and Penalties Associated with Non-Compliance Recent GSA Inspector General Audit Actions and Findings Best Practices for Effective GSA Compliance Programs
3. Ways Failing to Comply with your GSASchedule Can Cost You Money 1. Not understanding the Basis of Award 2. Incomplete, inaccurate, and/or out-of-date Commercial Sales Practices 3. Failing to reduce your prices when required 4. Failing to increase your prices when allowed 5. Failing to extend all negotiated discounts (volume, quantity, prompt payment) 6. Violating the Trade Agreements Act (TAA) and/or Service Contract Act (SCA) Not educating the appropriate personnel on contract requirements or establishing adequate controls
4. Understanding the Most Favored Customer and Basis of Award Managing Your Pricing Disclosures
5. Major Recurring Findings in OIG Audits 1. Commercial sales practices data submitted to support proposed pricing reflected non - current, inaccurate, and/or incomplete information (83.0%). 2. Commercial customers comprised <5.0% of the contractor’s sales (43.0%). 3. Contractor charged employees to labor rates for which they did not meet the minimum requirements in the contract (27.0%).
6. Pricing Compliance Starts with Commercial Sales Practices (CSP-1) Deceptively simple-looking The single most important document in your contract! Designed for products companies; services contractors will likely need to add information The advent of the “Document 8” When to update your CSP
7. CSP-1 Specifics Any customer means ANYcustomer Don’t let form dictate content Explain why GSA isn’t entitled to deviation-based pricing
8. The Dreaded “Document 8” Used primarily in services Schedules Can add complexity to the Basis of Award What is meant by Most Favored Customer?
9. Most Favored Customer (MFC) vs.Basis of Award Customer (BOA) Most Favored Customer The customer or class of customers that receives your best pricing, regardless of the terms and conditions. Basis of Award Customer The customer or class of customers upon which the price reductions clause is predicated. These terms are frequently used interchangeably, but they are not always the same.
10. The Basis of Award (BOA) Establishes a relationship between the BOA customer’s discount and the GSA discount that must be maintained for the life of the contract When this discount relationship is disturbed, then a Price Reduction has been triggered
11. How GSA Documents the BOA Contractor’s price/discount relationship with the Government and with the MFC shall remain throughout the contract period no less favorable to the Government than at the conclusion of negotiations, that is: For the life of the contract, the Government’s discount of X% [15%] will always be at least Y% [5.0%] greater than the Z% [10%] discount to the customer upon which this award is based.
12. The Price Reductions Clause
13. Price Reductions, GSA Schedules GSAR 552.238-75 Price Reductions Price Reductions are not really about price, rather they are about the discount What transactions are monitored for price reductions?
14. Exceptions to Price Reductions Sales to eligible users of the GSA Schedules (ADM 4800.2G) Contracts with a guaranteed value in excess of the Maximum Order Threshold (MOT) Price reductions caused by an error in bidding Dissimilar terms and conditions Pre-payment, trade-ins Marketing considerations, exclusivity Sales quotas, stocking requirements, customer support You must still disclose these transactions in your CSP
15. Keeping Your Contract Current Administration and Maintenance
16. Administering your Contract When do you need to initiate a modification? Price Reductions Clause is triggered Changes to your Commercial Sales Practices Changes to your Commercial Pricelist Administrative changes to the contract Change of ownership of the company or name change
17. Administering your Contract Types of Contract Modifications: Contractor-Initiated Modifications Pricing changes (increases and decreases) Adding or deleting products and services Administrative or legal changes GSA-Initiated Modifications Changes to terms and conditions in Solicitation Usually mandatory Notification sent to Contract Administrator
18. Sales Reporting and IFF Remittance 72A Sales Reporting and IFF Remittance Select method for reporting sales (cash vs. accrual) Generate a report that accurately captures GSA sales by SIN while excluding Open Market items and Other Direct Costs (ODCs) Verify GSA sales data against active GSA orders and corresponding IFF amount Completion of sales reporting and IFF remittance by the 30th of the month, even if you don’t have any contract sales
19. Frequently Overlooked Terms and Conditions The Fine Print
20. Frequently Overlooked Terms and Conditions Prompt Payment Discounts Volume Discounts Small Business Subcontracting Plan Trade Agreements Act (TAA) monitoring Service Contract Act Requirements Minimum Sales Requirement
21. Frequently Overlooked Terms and Conditions Employment Eligibility Verification (E-Verify) Contractor Code of Business Ethics and Conduct Reporting Executive Compensation and First-Tier Subcontract Awards VETS-100, Affirmative Action and EEO Reporting
22. Risks and Penalties Associated with Non-Compliance Obey or you may Pay
23. Risks and Penalties for Non-Compliance Termination for Cause Payment of restitutions to GSA customers Renegotiation of GSA Discount / Basis of Award Significant fines and penalties Suspension or Debarment Civil Prosecution Criminal Prosecution Civil False Claims Act= $11K per invoice plus treble damages Prison The regret of knowing it was preventable!
24. How GSA Monitors Compliance
25. GSA’s Office of the Inspector General (OIG)Sobering Statistics GSA’s OIG Hotline (800) 424-5210 fraudnet@gsaig.gov http://www.gsaig.gov/index.cfm/hotline/-hotline-form/
26. GSA’s Office of the Inspector General (OIG)Sobering Statistics Comparing the last half of GFY11 to the first half of GFY12, the GSA OIG had a: 67.8% increase in settlement recoveries ($) 56.0% increase in suspensions/debarments 31.7% increase in referrals for prosecution/ litigation
27. Significant GSA OIG Settlements 12/26/12 Grainger, $70M (faulty CSP disclosures) 07/09/12 ADC Telecommunications, $1.0M (TAA) 03/29/12 CXtec, $2.0M (Trade Agreements Act) 10/06/11 Oracle, $199.5M+interest (inaccurate and incomplete CSP) 03/08/11 Black Box, $2.85M (failure to extend volume discounts, improper freight charges) 01/31/11 Oracle/Sun, $46M (defective CSP disclosures) 10/10/06 Oracle/PeopleSoft, $98.5M (defective pricing disclosures) 12/02/05 Science Engineering Associates, $9.5M (using unqualified employees)
28. Civil False Claims Act (FCA) 31 U.S.C. §§ 3729–3733 What is a False Claim? FCA make it a crime for any person or organization to knowingly make a false record or file a false claim with the government for payment What penalties are involved? Up to three times the value of the False Claim, plus from $5,500 to $11,000 in fines, per claim (i.e. invoice). Justice Department has recovered more than $13.3B in FCA violations since January 2009 In 2012, the Justice Department brought an all-time high of 647 relator (whistleblower) cases under the False Claims Act
29. Small Businesses Have Risk, Too OIG reports do not reflect Industrial Operations Analyst (IOA) referrals to the Schedule Contracting Officer for remediation Concerns about compliance risks associated with GSA Schedule contracts can impact merger and acquisition activities Qui Tam, or whistleblower, provisions of the False Claims Act incentivize disgruntled employees or competitors to report compliance violations
30. Best Practices for Effective GSA Compliance Programs Educate your Stakeholders
31. Contract Management Basics Maintain system for accurately identifying, tracking and reporting GSA contract sales Report GSA contract sales and remit Industrial Funding Fee (IFF) on time Monitor commercial sales for compliance with Basis of Award discount relationship Maintain GSA price list on GSA Advantage! Update SAM on an annual basis
32. Elements of Successful Compliance Programs
33. Elements of Successful Compliance Programs
34. How to Mitigate Compliance Risk
35. Elements of Successful Compliance Programs
36. Aronson’s Government-Focused Blogwww.aronsonblogs.com/gcsg
37. About Aronson LLC Multi-disciplined professionals focused on Government and Technology Services Team of professionals dedicated to GSA Schedules provides a one-stop solution for GSA Schedule contracting Lead you through the process of identifying, obtaining and maintaining a GSA Schedule contract that is best suited to achieve yourspecific goals Premier GSA Schedule Services advisor Proven track record helping companies achieve their government contracting goals Ranked #4 in INSIDE Public Accounting’s 2012 “Best of the Best”
38. Contact Information Jennifer Aubel Managing Consultant Aronson LLC 805 King Farm Boulevard, Suite 300 Rockville, MD 20850 jaubel@aronsonllc.com Direct: (301) 231-6253 Connect with me on LinkedIn!