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Fara Fasat

CSP from manufacturer

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Situation: manufacturer sells its products through distributers. A distributer holds a GSA contract and wants to list the manufacturer's products on its contract. To do this the GSA requires a letter of supply from the actual manufacturer. So far so good; this has been a standard requirement for resellers on a GSA contract.

However, the manufacturer is now being told that it must also fill out the Commercial Sales Practice (CSP) form and submit it, even though it will not hold the contract and will not be negotiationg with GSA over its prices. Manufacturer has had its products listed on a reseller's GSA contract before, and this is the first time it has been told to submit a CSP.

1. Does the GSA require a CSP from the non-contract holder (the manufacturer)?

2. If so, why? The manufacturer does not sell direct to end users; it only sells to distributers/resellers. The distributer is the one that will sell to end users, so only its prices should be relevant for negotiating a price with the GSA.

3. A practical question: will the CSP be treated as confidential by the GSA? How does a company protect its pricing information?

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I don't know if this is helpful or not, but this is contained in the CSP-1 document and in my opinion addresses some of your questions:

( 5 ) If you are a dealer/reseller without significant sales to the general public, you should provide manufacturers' information required by paragraphs (1) through (4) above for each item/SIN offered, if the manufacturer's sales under any resulting contract are expected to exceed $500,000. You must also obtain written authorization from the manufacturer(s) for Government access, at any time before award or before agreeing to a modification, to the manufacturer's sales records for the purpose of verifying the information submitted by the manufacturer. The information is required in order to enable the Government to make a determination that the offered price is fair and reasonable. To expedite the review and processing of offers, you should advise the manufacturer(s) of this requirement. The contracting officer may require the information be submitted on electronic media with commercially available spreadsheet(s). The information may be provided by the manufacturer directly to the Government. If the manufacturer's item(s) is being offered by multiple dealers/resellers, only one copy of the requested information should be submitted to the Government. In addition, you must submit the following information along with a listing of contact information regarding each of the manufacturers whose products and/or services are included in the offer (include the manufacturer's name, address, the manufacturer's contact point, telephone number, and FAX number) for each model offered by SIN:

(a) Manufacturer's Name

(B ) Manufacturer's Part Number

(c ) Dealer's/Reseller's Part Number

(d) Product Description

(e) Manufacturer's List Price

(f) Dealer's/Reseller's percentage discount from List Price or net prices

Although the above states that this is required if sales are expected to exceed $500K, we require it any time the dealer/reseller has no sales for the new product line, no matter what the expected sales are. In addition to using the CSP-1 to determine fair and reasonable pricing, it is used to establish an MFC/BOA for those products until the contractor can establish their own sales, at which time it can be renegotiated.

There is no requirement to sell to end users by the manufacturer. Dealers/resellers are commercial customers and therefore, they would be one of, if not the only, commercial customer categories that the manufacturer discloses on the CSP-1. GSA will compare the discounts/prices given to the dealers/resellers to the prices that the dealer/reseller is offering to the Government to ensure those prices are fair and reasonable (example (exaggerated): dealer gets 50% discount from manufacturer price, marks it up 75%, and then offers GSA a 5% discount).

All proprietary documents are kept in the contract file within the eoffer/econtract system. If the manufacturer chooses, after contacting the CO regarding their concerns, may submit those documents directly to the Contracting Officer, bypassing the contractor for purposes of confidentiality.

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Thanks Desperado. Since that whole paragraph starts with "if", I read it as saying that if the reseller does have significant sales to the public, the rest of the paragraph would not apply. In other words. no need to get a CSP from manufacturer.

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Fara - That is the way we looked at it as well. We ran into this situation mostly when resellers were wanting to add new items to their FSS contract for which they had no sales yet themselves.

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Registration takes a while to go through here, so I'll finally chime in. What Desparado relayed below has been my experience as well. If the dealer/reseller has no public sales for the product/product line, a CSP-1 has been required for the OEM. We've typically submitted them directly to the CO and bypassed the dealer/reseller. The manufacturer should still follow CSP-1 best practices with a detailed price analysis and associated pricing narrative fully explaining how the CSP-1 was completed.

Although the above states that this is required if sales are expected to exceed $500K, we require it any time the dealer/reseller has no sales for the new product line, no matter what the expected sales are. In addition to using the CSP-1 to determine fair and reasonable pricing, it is used to establish an MFC/BOA for those products until the contractor can establish their own sales, at which time it can be renegotiated.

There is no requirement to sell to end users by the manufacturer. Dealers/resellers are commercial customers and therefore, they would be one of, if not the only, commercial customer categories that the manufacturer discloses on the CSP-1. GSA will compare the discounts/prices given to the dealers/resellers to the prices that the dealer/reseller is offering to the Government to ensure those prices are fair and reasonable (example (exaggerated): dealer gets 50% discount from manufacturer price, marks it up 75%, and then offers GSA a 5% discount).

All proprietary documents are kept in the contract file within the eoffer/econtract system. If the manufacturer chooses, after contacting the CO regarding their concerns, may submit those documents directly to the Contracting Officer, bypassing the contractor for purposes of confidentiality.

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