Want to succeed with GSA contracts? Avoid these 5 common compliance pitfalls:

1. Price Tracking and Reporting
   • Choose between CSP (quarterly) or TDR (monthly).
   • Maintain accurate pricing, submit timely reports, and comply with the Price Reduction Clause.
2. Trade Agreements Act (TAA) Rules
   • Ensure products are made or transformed in TAA-compliant countries (e.g., USA, Canada).
   • Avoid sourcing from non-compliant countries like China or India.
3. Minimum Sales Requirements
   • Hit $25,000 in sales within the first 2 years and annually after that.
   • Regularly track sales and submit reports to stay compliant.
4. Industrial Funding Fee (IFF) Payment
   • Pay 0.75% of total sales quarterly.
   • Report sales accurately and meet deadlines to avoid penalties.
5. Small Business Subcontracting
   • For contracts over $750K, set and meet small business participation goals.
   • Submit required subcontracting reports and document all efforts.

Key Compliance Tools:

• Automated tracking and reporting systems.
• Regular audits and expert support.

Keeping your GSA Multiple Award Schedule (MAS) Contract Compliant

1. Price Tracking and Reporting

Price tracking and reporting is one of the toughest compliance challenges for GSA Schedule contract holders. The difficulty lies in maintaining accurate pricing relationships while meeting strict reporting deadlines.

GSA contractors have two main reporting options: Commercial Sales Practices (CSP) or Transactional Data Reporting (TDR). CSP requires quarterly reports, including total sales and adherence to the Price Reduction Clause. TDR, on the other hand, involves monthly submissions of detailed transaction data, such as prices paid and quantities sold.

Failing to comply can lead to hefty penalties. For example, Oracle settled for $199.5 million over incomplete disclosure of commercial sales practices and discounts, while NetApp faced a $128 million settlement for contract fraud allegations.

To stay compliant, contractors need to:

• Keep track of and document all pricing changes to maintain the relationship between GSA pricing and Most Favored Customer rates.
• Submit reports on time, as required by the chosen framework.

Automated tools are now crucial for staying compliant. Contractors must log into the Federal Acquisition Services Sales Reporting Portal (FAS SRP) at least once every 90 days to avoid account suspension. Even if there are no sales, reporting $0.00 is mandatory to remain in good standing.

In 2024, GSA rolled out a new Economic Price Adjustment (EPA) clause. This clause emphasizes market data and contracting officer judgment to ensure fair pricing. Any pricing changes must be reported to GSA within 15 days of taking effect to maintain transparency and pricing consistency.

Non-compliance not only risks fines but could also cost you your GSA contract, limiting your access to federal markets. Accurate pricing is critical, but compliance with trade agreements is just as important – more on that next.

2. Trade Agreements Act Rules

The Trade Agreements Act (TAA) is a critical compliance standard for GSA Schedule contractors. It requires that products be either made or significantly altered in the United States or in approved TAA-compliant countries. Competitors often keep a close eye on this, so it’s essential to address compliance thoroughly.

Failing to meet TAA requirements can lead to serious consequences, including whistle-blower lawsuits and hefty fines. For example, office-supply companies reached a $27 million settlement over TAA violations. To qualify as "substantially transformed", a product must undergo major changes that result in a new and distinct item. Customs officials assess these transformations on a case-by-case basis.

To ensure compliance, contractors should take these steps:

• Verify and document the origin of all components: Obtain updated certifications from manufacturers.
• Conduct regular audits: Periodically review listed products to confirm compliance.

The stakes are high. In fiscal year 2023 alone, companies sold about $11 billion worth of products through GSA Schedule contracts. Violations can lead to contract termination, suspension from federal contracting, and even criminal charges.

Staying informed about updates to TAA-designated countries is essential. Non-compliance risks not only your contracts but also your eligibility for future federal opportunities.

While following TAA rules ensures your products meet federal standards, maintaining your GSA Schedule also means hitting minimum sales thresholds, which we’ll cover next.

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3. Minimum Sales Requirements

To keep a GSA Schedule, contractors need to make at least $25,000 in sales within the first two years and then maintain this amount annually. This serves as a key performance measure. Falling short of these numbers can lead to contract termination and indicates non-compliance with GSA standards.

Monthly TDR (Transactional Data Reporting) submissions play a crucial role in staying compliant. Contractors must report sales data every month, and performance is evaluated yearly to ensure the $25,000 minimum is met.

Here are some practices contractors often rely on to meet these requirements:

• Track Sales Regularly: Use order management tools to monitor progress toward the sales goal.
• Keep Detailed Records: Maintain clear and accurate transaction records for all GSA sales.
• Submit Reports on Time: Ensure all required data is submitted before deadlines to avoid compliance issues.

Failure to meet the sales requirement can result in immediate contract termination and damage to your reputation. The GSA closely monitors sales performance and may start the cancellation process if a contractor is found to be non-compliant.

For those facing challenges, GSA compliance consultants can help by setting up effective tracking systems and crafting strategies to boost sales while staying within the rules.

Hitting the sales target is just one piece of the puzzle – don’t forget that proper tracking and reporting of the Industrial Funding Fee (IFF) is equally important for keeping your GSA Schedule active.

4. IFF Payment and Reporting

The Industrial Funding Fee (IFF) is a mandatory requirement for GSA Schedule contractors. Missing deadlines or making errors with IFF submissions can put your contract and future federal business at risk. Currently, the fee is 0.75% of total sales, which supports the operations of the GSA’s Federal Acquisition Service. Contractors must report and pay this fee every quarter, ensuring accuracy and timeliness.

What You Need to Know About IFF Submissions

IFF submissions involve two key steps:

• Sales Reporting: All sales must be recorded in the Federal Acquisition Service (FAS) Sales Reporting System. Precision is critical – errors, even minor ones, can lead to compliance issues.
• Payment Processing: The IFF payment is based on the reported sales, calculated at the current rate of 0.75% for most Schedule contracts. Some specialized programs may have different rates.

Quarterly IFF Schedule

Here’s a quick reference for IFF reporting and payment deadlines:

Common Compliance Issues

Some of the most frequent mistakes contractors make include:

• Reporting incomplete or inaccurate sales data
• Missing quarterly submission deadlines
• Miscalculating the IFF payment amount

Tips for Staying Compliant

To avoid these pitfalls, consider the following practices:

• Use automated tools to track sales and set reminders for deadlines.
• Keep thorough records of all transactions.
• Schedule regular audits of your reporting processes to catch errors early.

Non-compliance with IFF requirements can lead to serious consequences, including losing your contract and being barred from future government opportunities. If you’re finding it challenging to manage compliance, consulting with GSA Schedule experts can help streamline your reporting and ensure everything is submitted correctly and on time.

5. Small Business Subcontracting

Managing subcontracting compliance is a major hurdle for GSA contractors, especially for contracts over $750,000 (or $1.5 million for construction projects). Large businesses are required to develop subcontracting plans that set specific goals for working with small businesses, including those owned by disadvantaged groups, women, service-disabled veterans, and HUBZone-certified companies.

Types of Subcontracting Plans

Contractors have two options for subcontracting plans: Commercial Plans and Individual Plans. Each has different coverage and reporting requirements:

Common Compliance Challenges

Federal regulations now enforce stricter rules on subcontracting compliance, stressing the importance of making ‘good faith efforts’ to meet small business participation goals. Failing to comply can result in serious consequences, including contract termination or being barred from future federal contracts.

Tips for Staying Compliant

Here are some practical steps to ensure your subcontracting plan stays on track:

• Assign a dedicated Plan Administrator and use tracking systems to keep tabs on subcontracting activities.
• Regularly review your progress toward meeting goals – not just during reporting periods.
• Maintain detailed records of your efforts to identify and work with small business subcontractors.

Reporting Requirements

Accurate and timely reporting of subcontracting activities is essential for compliance. This is as important as other obligations, like sales reporting and adhering to TAA regulations.

In FY 2019, the federal government awarded $162.9 billion in contracts to small businesses. This underscores the value of strong subcontracting programs that actively include small businesses in federal procurement. By addressing compliance challenges head-on, contractors can secure their place in the federal marketplace and continue tapping into lucrative opportunities.

Conclusion

Tackling compliance challenges head-on is crucial for long-term success. From price tracking to subcontracting, managing these areas effectively demands strong systems and in-depth knowledge.

Government contractors must conduct themselves with the highest degree of integrity and honesty

This underscores the need for strict adherence to compliance standards across all operations.

Contractors can simplify their compliance processes by concentrating on three key areas:

With enforcement becoming tighter, staying compliant is essential to avoid penalties and secure future opportunities. Small businesses, in particular, may find these requirements overwhelming. This is where GSA compliance experts can step in to simplify processes, conduct audits, and ensure accurate reporting ^[1][2].

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