GOVERNMENT CONTRACTS GROUP ENEWS – JUNE 2, 2004
GSA Sales to State and Local Governments
GSA has now clarified the rules for selling to state and local government and educational (SLE) entities
through its "Cooperative Purchasing" (CP) program. The CP program, launched in May 2003, permits
SLE entities to purchase IT products and services through the Federal GSA Multiple Award Schedule
(MAS) program contracts. CP sales have increased dramatically from just over $5 million to over $44
million in the most recent two quarters. The rule clarifies that GSA contractors may offer their SLE
customers steep discounts without offering that same discount to other GSA customers.
PRICE REDUCTIONS CLAUSE NOT APPLICABLE TO CP SALES
Generally, when a GSA contractor offers steep discounts to non-federal government customers, the
Price Reductions clause is triggered which requires the contractor to offer the same discount to all GSA
MAS contract ordering agencies. GSA's final rule clarifies that CP sales do not trigger the Price
Reductions clause. Accordingly, contractors may now offer steep discounts to SLE customers without
suffering the business impact of reduced pricing for all GSA MAS contract ordering agencies. The
additional pricing flexibility provides a significant benefit to GSA contractors with a large SLE customer
base. This new benefit is not without cost - GSA still receives an Industrial Funding Fee (IFF) of .75%
on all CP orders.
BASIC COOPERATIVE PURCHASING RULES CONFIRMED
The final rule also confirms many of the basic "ground rules" for contractor and SLE entity participation
in the CP program:
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Restricted to IT products and services
•
Participation optional for GSA contractors at aggregate and individual order level
•
Virtually any public sector organization is "eligible": 50 states; 3,139 counties; 14,178 school
districts; and, 19,365 incorporated municipalities, cities and towns
•
Participation voluntary for SLE entities
•
GSA MAS terms and conditions generally apply
•
Additional terms and conditions may be added to the extent not inconsistent with GSA
•
Contractor must pay IFF to GSA on all CP orders
•
GSA is not a party to CP orders
•
SLE entity determines whether GSA MAS meets its competition requirements/policies
•
SLE entity solely responsible for contract administration and dispute resolution
If you have any questions, please contact any attorney in the Preston Gates government
contracts group at www.prestongates.com.
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