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GSA Schedule/Teaming Agreement

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Hi everyone,

I do not an awful lot about GSA Schedules, the associated Teaming Agreements, and the payment of IFF. I have a question about something. Here's my hypothetical:

Contractor 1 (C1) and Contractor 2 (C2) want to enter into a teaming arrangement. Both have GSA schedules with different types of goods. C1 will be the primary contact/prime contractor with the government. C1 plans on submitting quotes to the government using C1's schedule and C2's schedule. For items off of C1's schedule, C1 will pay the IFF.

C1 wants the ability to use C2's schedule for certain items in the quotes to the government, and then actually purchase those goods from C2 and/or directly from the manufacturer of those goods. Two scenarios may arise:

A) For items listed on C2's GSA Schedule and purchased by C1 from C2 and supplied to the government, C2 will pay the IFF and submit the necessary reports. This appears to be the standard way of going things and totally acceptable.

B. For items listed on C2's GSA Schedule and purchased by C1 directly from the manufacturer (and not C2) and supplied to the government, C1 wants to pay C2 amounts equivalent to the IFF and have C2 pay the IFF and submit the necessary reports. C1 will also pay C2 a small fee for the ability to use C2's GSA Schedule in its quotes (but not actually purchase from C2).

My initial thought is that scenario B. would not be allowed. I looked at GSAR 552.238-74. It seems to me that only the GSA Schedule holder actually making "sales" should be paying the reporting fee and submitting the reports, but I don't know what to look at beyond that. C1 is assuring C2 that it has done scenario B. with other teaming partners and that it is allowable.

Does anyone have any thoughts (cites would be appreciated) as to whether scenario B. is allowed or not?

Thanks in advance,

L

Edited to fix: emoticons that popped up in error.

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Suggest you go to GSA.gov and search on "Contractor Teaming Agreements". http://www.gsa.gov/portal/content/104448 The write-up there is pretty good. What both of your scenarios fails to take into account is that in a CTA (not prime-sub relationship), the CO is actually making an award to each of the contractors for the items on their individual schedules. There's a FAQ as well as a number to the MAS National Help desk. But your question is in the FAQ

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12. In a GSA Schedule Contractor Team Arrangement (CTA), who is responsible for reporting sales and remitting the Industrial Funding Fee (IFF)?

Each GSA Schedule contractor is responsible for reporting its GSA Schedule contract sales and remitting the appropriate IFF.

====

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Ok, first I have to say that I didn't realize putting in A and B with parentheses would result in emoticons popping up. Sorry about that!

Thanks for the link. I think that seems to substantiate my initial thought that if C2 is not actually making the "sales," then C2 shouldn't be doing the IFF reporting or payments.

Any more insight would be appreciated.

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I think this issue crosses over into letter of supplies ? I imagine C2, in their prime GSA Schedule contract has disclosed letters of supply (commitments) from its suppliers and C2?s contract is authorized by GSA on these supplier commitments. If you (C1) buy these items from C2 under a GSA order or GSA team order, C2 must buy them from their contract authorized supplier ? not anyone else. Likewise, you can not buy directly from C2?s supplier and say it is the same thing as found on C2?s contract (although it is) and therefore call it a GSA sale under C2?s contract. Ask C1 what is in their contract by way of letter of supplies.

And misreporting IFF (overstating) is a big no-no. Legal speak.

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Thank you. I think we are thinking along the same lines. Specifically: C1 cannot use C2's GSA Schedule to submit a quote on a delivery order/purchase order from the government, buy from the manufacturer directly (instead of C2), but have C2 report/pay IFF to GSA as if C2 actually made the sale.

This scenario seems wrong to me (and you as well), but I can't find anything to support that, other than focusing on the GSAR provision that I put in the original post. C1 keeps assuring C2 that C1 does this all the time with other contractors/GSA schedule holders.

I think this issue crosses over into letter of supplies ? I imagine C2, in their prime GSA Schedule contract has disclosed letters of supply (commitments) from its suppliers and C2?s contract is authorized by GSA on these supplier commitments. If you (C1) buy these items from C2 under a GSA order or GSA team order, C2 must buy them from their contract authorized supplier ? not anyone else. Likewise, you can not buy directly from C2?s supplier and say it is the same thing as found on C2?s contract (although it is) and therefore call it a GSA sale under C2?s contract. Ask C1 what is in their contract by way of letter of supplies.

And misreporting IFF (overstating) is a big no-no. Legal speak.

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C1 may be trying to deal with a Revenue Recognition accounting issue ? trying to record revenue on a C2 GSA sale. As a GSA teaming contractor each schedule holder records their own revenue and IFF. No way around it. It?s a GAAP issue as well as GSA compliance issue.

To treat C2 as a subcontractor, as opposed to a teaming contractor, C1 has to buy directly off of C2?s schedule with a GSA authorization letter (from C1?s CO) that allows C1 to purchase off of C2?s schedule ? and then pass it through to them (C1?s customer). Under this arrangement, C1 could recognize the revenue and C2 should also record it as GSA sale under their contract. This is different than a GSA teaming contractor arrangement.

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Thank you. I think we are thinking along the same lines. Specifically: C1 cannot use C2's GSA Schedule to submit a quote on a delivery order/purchase order from the government, buy from the manufacturer directly (instead of C2), but have C2 report/pay IFF to GSA as if C2 actually made the sale.

This scenario seems wrong to me (and you as well), but I can't find anything to support that, other than focusing on the GSAR provision that I put in the original post. C1 keeps assuring C2 that C1 does this all the time with other contractors/GSA schedule holders.

Maybe I'm confused here, but to me C2 would be insane to enter into this agreement.

The contract for those C2 items would be between the government and C2, in accordance with the terms and conditions of C2's K. Heartburn, thinking of the risk to C2 should C1 not make delivery at all/on time, not support the product in accordance with C2's terms, etc.

I'm fairly certain the IG wouldn't like this arrangement, and is it could be used to circumvent the Price Reductions Clause.

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jilbiad -

I concur with your thoughts. I have mentioned the same things to C2. Where the hang up is that C2 is believing C1 when they say it is permissible. I cannot find support to say that it is NOT permissible (except the legal reading of the GSAR regulation I referenced, general knowledge and practices of government procurement, etc.).

Thanks,

L

Maybe I'm confused here, but to me C2 would be insane to enter into this agreement.

The contract for those C2 items would be between the government and C2, in accordance with the terms and conditions of C2's K. Heartburn, thinking of the risk to C2 should C1 not make delivery at all/on time, not support the product in accordance with C2's terms, etc.

I'm fairly certain the IG wouldn't like this arrangement, and is it could be used to circumvent the Price Reductions Clause.

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jilbiad -

I concur with your thoughts. I have mentioned the same things to C2. Where the hang up is that C2 is believing C1 when they say it is permissible. I cannot find support to say that it is NOT permissible (except the legal reading of the GSAR regulation I referenced, general knowledge and practices of government procurement, etc.).

Thanks,

L

I'm not sure why C1 is buying anything from C2. Technically under a CAT (unless I misunderstand), isn't the customer buying certain items or services from C1 under it's Schedule and certain items from C2 under it's Schedule? I'm not sure the customer would care what manufacturer C2 uses for any item C2 supplies from it's Schedule at the agreed price. For C1 to purchase commodities from C2, and then C1 (rather than C2) to supply the item to the customer is a Prime-Sub transaction. If C1 (instead of C2) provides an item that is not on C1's Schedule to the customer from a third-party manufacturer, that makes it an open market item, doesn't it? Or am I exhibiting my ignorance.

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I'm not sure why C1 is buying anything from C2. Technically under a CAT (unless I misunderstand), isn't the customer buying certain items or services from C1 under it's Schedule and certain items from C2 under it's Schedule? I'm not sure the customer would care what manufacturer C2 uses for any item C2 supplies from it's Schedule at the agreed price. For C1 to purchase commodities from C2, and then C1 (rather than C2) to supply the item to the customer is a Prime-Sub transaction. If C1 (instead of C2) provides an item that is not on C1's Schedule to the customer from a third-party manufacturer, that makes it an open market item, doesn't it? Or am I exhibiting my ignorance.

You're right. What's happening is is C1 is using C2's schedule (with its permission) to provide a product or service not on C1's schedule. C1 would designate itself the lead and handle ordering, delivery, etc., but source the product itself, rather than from C2.

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GSA or an IG may look at this as a deceptive practice at best or maybe fraud. The government agency places orders with C1 and C2. They have a CTA describing both parties responsibilities and what each will do in performance the entire job.. Instead C1 provides everything, C2 does nothing, and C2 leads GSA to believe it did it's share of the work by paying the IFF.

Assume the government finds something wrong with the work or product that should have come from C2. The government thinks they have a contract with C2 and the recourse to fix things ultimately is the responsibility of C2. What do you think the government will do when it finds out C1 actually provided the service or product?

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You're right. What's happening is is C1 is using C2's schedule (with its permission) to provide a product or service not on C1's schedule. C1 would designate itself the lead and handle ordering, delivery, etc., but source the product itself, rather than from C2.

But if the orders were done right, C1 can't invoicce for the things on C2's schedule - C2 must do that. So how is C1 getting paid? In order to invoice, C2 must have the backup documentation to support the invoice or else you've opened up another whole can of worms

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But if the orders were done right, C1 can't invoicce for the things on C2's schedule - C2 must do that. So how is C1 getting paid? In order to invoice, C2 must have the backup documentation to support the invoice or else you've opened up another whole can of worms

It's fairly common in teaming arrangements for one company to be designated the "lead," and handle all invoicing and payment.

To play devil's advocate, why can't one company decide to outsource GSA orders to another company? Where is the contractual requirement for disclosure of such?

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It's fairly common in teaming arrangements for one company to be designated the "lead," and handle all invoicing and payment.

To play devil's advocate, why can't one company decide to outsource GSA orders to another company? Where is the contractual requirement for disclosure of such?

Requirement would be based on the information required to support the price proposal. Proposal has to state whether the teaming arrangement is a prime-sub relationship or a CTA. I'm not a CO but do work at GSA and my COs tell me that under a CTA with 2 companies, they are actually making 2 awards with the award documents reflecting the items off of that vendor's schedule. Maybe that's just the way they've been directed to implement CTAs here based on Acquisition Letters, PINs or GSAM guidance.

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Requirement would be based on the information required to support the price proposal. Proposal has to state whether the teaming arrangement is a prime-sub relationship or a CTA. I'm not a CO but do work at GSA and my COs tell me that under a CTA with 2 companies, they are actually making 2 awards with the award documents reflecting the items off of that vendor's schedule. Maybe that's just the way they've been directed to implement CTAs here based on Acquisition Letters, PINs or GSAM guidance.

No, you're correct in that in a CTA both (all) companies have privity of contract with the government. One company, however, can be designated the lead and handle all invoicing and receipt of payment, among other things, on behalf of the other team members. Each team member must still report its respective sale on its own contract and pay the IFF accordingly. The lead is an administrative convenience for the government.

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Hi everyone,

I do not an awful lot about GSA Schedules, the associated Teaming Agreements, and the payment of IFF. I have a question about something. Here's my hypothetical:

Contractor 1 (C1) and Contractor 2 (C2) want to enter into a teaming arrangement. Both have GSA schedules with different types of goods. C1 will be the primary contact/prime contractor with the government. C1 plans on submitting quotes to the government using C1's schedule and C2's schedule. For items off of C1's schedule, C1 will pay the IFF.

C1 wants the ability to use C2's schedule for certain items in the quotes to the government, and then actually purchase those goods from C2 and/or directly from the manufacturer of those goods. Two scenarios may arise:

A) For items listed on C2's GSA Schedule and purchased by C1 from C2 and supplied to the government, C2 will pay the IFF and submit the necessary reports. This appears to be the standard way of going things and totally acceptable.

B. For items listed on C2's GSA Schedule and purchased by C1 directly from the manufacturer (and not C2) and supplied to the government, C1 wants to pay C2 amounts equivalent to the IFF and have C2 pay the IFF and submit the necessary reports. C1 will also pay C2 a small fee for the ability to use C2's GSA Schedule in its quotes (but not actually purchase from C2).

My initial thought is that scenario B. would not be allowed. I looked at GSAR 552.238-74. It seems to me that only the GSA Schedule holder actually making "sales" should be paying the reporting fee and submitting the reports, but I don't know what to look at beyond that. C1 is assuring C2 that it has done scenario B. with other teaming partners and that it is allowable.

Does anyone have any thoughts (cites would be appreciated) as to whether scenario B. is allowed or not?

Thanks in advance,

L

Edited to fix: emoticons that popped up in error.

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