I ask everyone's patience with this first post on WIFCON. The situation involves an RFP for an IDIQ for a civilian federal agency. The O has included in the RFP a requirement that bidders with a GSA Schedule use their GSA Schedule rates. However, a number of bloggers have indicated that the GSA views such use of rates as essentially awarding a contract under their GSA schedule and that the IFF must be paid.  This puts the small business prime between a rock and a hard place, if there is a contractual obligation not to use GSA rates for non-GSA contracts, The RFP in question was posted on FBO, not e-Buy. Is there such a contractual obligation to not use the GSA rates, and if so, in what clause might it be found? Can the CO for the RFP require submission of GSA Schedule rates? Should the bidder remit the IFF on a non-GSA contract to avoid being penalized? Thank you for any experience you can share.

 

Does this clause, usually found in GSA FSS contracts, answer your question?   https://www.acquisition.gov/content/552.238-80-industrial-funding-fee-and-sales-reporting.

We would like to think that (a) (3) does, and that this would be a sale conducted by a separate contracting authority under Part 15.  But I have read that the GSA is interpreting any sales to other agencies using their rates as sales under the GSA contract, because the GSA is tired of other agencies skirting the fee but taking advantage of the rates they negotiated. A prominent government accounting firm has noted that when non-GSA federal agencies align their rates to the GSA schedule, "then GSA considers that a Schedule sale even if the agency does not. GSA takes the stance that the buying agency is benefiting from all of their hard work in determining that your prices are “fair and reasonable,” so GSA deserves the IFF on that sale.  GSA often says that if you reference your Schedule in your bid or just about anywhere else in a document that goes to the government customer, then you have made it a Schedule buy. So, unless you can prove to GSA that the Buying Agency did their own full pricing research, GSA will say you need to include that sale in your Schedule sales report and IFF payment. Of course, if you report something as a GSA sale and the buying agency does not, the Schedule sales amounts on FPDS vs SSQ* may differ greatly. " This is a concern even though it would seem to contradict the FAR clause you cited. Has anyone else encountered this situation?

What might be a worse situation than paying the IFF is violation of the price reduction clause.  The extent of the damage, if any, depends upon what was provided GSA prior to award of the Schedule contract. 

https://www.acquisition.gov/content/538.272-mas-price-reductions.

Can you elaborate on your answer, for my benefit? The customer would be another federal agency - not a commercial customer .

2 minutes ago, Artimpa said:

Can you elaborate on your answer, for my benefit? The customer would be another federal agency - not a commercial customer .

My error.  Never mind.  I was watching football on TV and missed the federal agency part.

Check this out, particularly the section on “What is a GSA Sale.” 

https://vsc.gsa.gov/vsc/app-content-viewer/section/69

6 minutes ago, Artimpa said:

A prominent government accounting firm

So has the prominent government accounting firm provided reference as to where GSA has prevailed in their stance such as a claim against a contractor for the IFF?  As you note (a) (3) seems to say otherwise.   Without further research on my part and noting you seem to have done further research I just wonder if it is a GSA bluff or something they have prevailed on.  I guess if there is not authoritative reference to show that they have prevailed GSA does have the hammer to simply say pay or you no longer have a GSA contract but if that is the case seems counter to a read of the contract clause and fair dealing.

12 hours ago, Artimpa said:

The O has included in the RFP a requirement that bidders with a GSA Schedule use their GSA Schedule rates.

12 hours ago, Artimpa said:

Can the CO for the RFP require submission of GSA Schedule rates?

 

I’m not sure if the contracting officer could or should include such a requirement? What’s the reason for inclusion? Is the requirement even enforceable/appropriate since it appears to be under a competitive RFP issued to commercial sources in the open market?

52 minutes ago, Jamaal Valentine said:

I’m not sure if the contracting officer could or should include such a requirement? What’s the reason for inclusion? Is the requirement even enforceable/appropriate since it appears to be under a competitive RFP issued to commercial sources in the open market?

11 hours ago, formerfed said:

Check this out, particularly the section on “What is a GSA Sale.” 

https://vsc.gsa.gov/vsc/app-content-viewer/section/69

We are not sure of the reason, apart from obviously, getting the best rates. Practically speaking, I am not sure if it matters so much if it is enforceable since, if a contractor submits less than their GSA best rate, they might not be competitive. The RFP is on FBO and not e-Buy. This contractor is just trying to figure out what the right thing to do is, and do it. 

1 hour ago, Artimpa said:

This contractor is just trying to figure out what the right thing to do is, and do it. 

Maybe explain your concern to the CO who has an open market solicitation on the street.  I could see where the CO could change their approach and rather requesting schedule rates but rather indicate that as a part of price evaluation schedule rates would be used as a comparison to determine fair and reasonable pricing and request a contractor to reference their schedule contract.   Something like " This is an open market procurement, any references related to GSA FSS pricing is for the sole purpose of evaluating an offerors pricing as fair and reasonable and otherwise has no relationship or intent that this procurement is under GSA FSS as in the opinion of agency GSA FSS is not an appropriate vehicle for this procurement."

2 hours ago, Jamaal Valentine said:

I’m not sure if the contracting officer could or should include such a requirement? What’s the reason for inclusion? Is the requirement even enforceable/appropriate since it appears to be under a competitive RFP issued to commercial sources in the open market?

Could yeah probably, should seems to the operative question.   After all why not just do the procurement through schedules?

15 hours ago, Artimpa said:

Should the bidder remit the IFF on a non-GSA contract to avoid being penalized?

Back to this I did a little more research and I find the general statement in many places but no case law that says it is so.   I found this - https://www.fss.va.gov/fss/faqs/fssSalesReports.asp#q006

 

And it says this (emphasis added).  Made me wonder if my proposed wording is a "work around: of the SIN description caveat but I still wonder about where a authoritative reference is that supports the statement in total.

"A sale should be reported if the

• …task or delivery order includes a direct reference to your VA Schedule contract number, then the entire order should be reported as an FSS sale (this includes sales made under prime vendor, direct-to-patient, and consignment programs).
• …product or service falls within the description of the SINs on your contract and the customer is an eligible ordering activity, the order is considered a Schedule sale. 

 

@Artimpa Not specifically on point but the best I can do with my limited resources.   Makes me think, as usual, that for a particular contract it depends on the facts of when IFF may or may not apply when the contract is not (or implied as so) specifically made through GSA FSS.

I hope all the discussion has helped to some degree.

https://www.cbca.gov/files/decisions/2009/KULLBERG_03-06-09_449__NAVIGANT_SATOTRAVEL_508.pdf 

 

 

2 hours ago, Artimpa said:

We are not sure of the reason, apart from obviously, getting the best rates.

How did you determine those are the best rates?

On 1/4/2022 at 1:04 PM, Jamaal Valentine said:

How did you determine those are the best rates?

It is interesting to note that the “GSA rates” should include the the amount of the IFF that would otherwise be paid to GSA. So how are those the “best rates”?  It seems they would be inflated by the amount of the IFF, even though they won’t be paid to the GSA.

And there are circumstances where the GSA customer can seek discounts.

The other agency isn’t thinking this idea through, if they think that pricing based upon the GSA rates are “the best rates” available.

9 hours ago, joel hoffman said:

The other agency isn’t thinking this idea through, if they think that pricing based upon the GSA rates are “the best rates” available.

 

9 hours ago, joel hoffman said:

And there are circumstances where the GSA customer can seek discounts.

By my read it is a "shall"  ....

8.405-4 Price reductions.

Ordering activities may request a price reduction at any time before placing an order, establishing a BPA, or in conjunction with the annual BPA review. However, the ordering activity shall seek a price reduction when the order or BPA exceeds the simplified acquisition threshold. Schedule contractors are not required to pass on to all schedule users a price reduction extended only to an individual ordering activity for a specific order or BPA.

 

All of this input is greatly appreciated.  We are asking the CO on this RFP to state in writing that this is not regarded as a sale under our GSA Schedule- no reference to the Schedule Contract Number will appear in the IDIQ if awarded - the only similarity is that some of the services requested are the same as the GSA Schedule. I agree that the agency may not have thought this through.  Puts a contractor in a tough spot. Thank you all!

10 hours ago, joel hoffman said:

It is interesting to note that the “GSA rates” should include the the amount of the IFF that would otherwise be paid to GSA. So how are those the “best rates”?  It seems they would be inflated by the amount of the IFF, even though they won’t be paid to the GSA.

A lot of misunderstanding exists across the government of IFF and “best rates.”  In reality the IFF is nominal at 0.75% of the order amount.  Compare that against the administrative time and expense for doing an open market procurement.

GSA negotiates prices generally by comparison of discounts from price lists.  They usually seek discounts equal to or better than the offerors most favored customer.  Exceptions include situations where the most favored customer buys substantially more over a year such as Amazon or provides some value added services.  However the GSA discount price the government pays covers some very small orders as well as larger ones.  If an agency has a large and immediate requirement, GSA expects that agency to seek more favorable prices. 

On 1/3/2022 at 6:39 PM, Artimpa said:

I ask everyone's patience with this first post on WIFCON. The situation involves an RFP for an IDIQ for a civilian federal agency. The O has included in the RFP a requirement that bidders with a GSA Schedule use their GSA Schedule rates. However, a number of bloggers have indicated that the GSA views such use of rates as essentially awarding a contract under their GSA schedule and that the IFF must be paid.  This puts the small business prime between a rock and a hard place, if there is a contractual obligation not to use GSA rates for non-GSA contracts, The RFP in question was posted on FBO, not e-Buy. Is there such a contractual obligation to not use the GSA rates, and if so, in what clause might it be found? Can the CO for the RFP require submission of GSA Schedule rates? Should the bidder remit the IFF on a non-GSA contract to avoid being penalized? Thank you for any experience you can share.

@ArtimpaI believe the applicable contract clause is GSAM/R 552.238-80, Industrial Funding Fee and Sales Reporting (JUL 2020). It reads in part as follows:

Quote

 

(a) Reporting of Federal Supply Schedule Sales. The Contractor shall report all contract sales under this contract as follows: (1) The Contractor shall accurately report the dollar value, in U.S. dollars and rounded to the nearest whole dollar, of all sales under this contract by calendar quarter (January 1-March 31, April 1- June 30, July 1-September 30, and October 1-December 31). The dollar value of a sale is the price paid by the Schedule user for products and services on a Schedule task or delivery order...

(3) Reportable sales under the contract are those resulting from sales of contract items to authorized users unless the purchase was conducted pursuant to a separate contracting authority such as a Governmentwide Acquisition Contract (GWAC); a separately awarded FAR Part 12, FAR Part 13, FAR Part 14, or FAR Part 15 procurement; or a non-FAR contract. Sales made to state and local governments under Cooperative Purchasing authority shall be counted as reportable sales for IFF purposes.

Emphasis added. 

CCulham has already pointed out that clause.

Now, where does the clause say anything about paying the IFF when you sell to someone off schedule at the same rates as in your schedule contract? Where does it say you even have to report such sales to GSA?

Let us know when you find it.

Does anyone know of another clause that requires payment of the IFF against non-schedule sales?

23 hours ago, formerfed said:

A lot of misunderstanding exists across the government of IFF and “best rates.”  In reality the IFF is nominal at 0.75% of the order amount.  Compare that against the administrative time and expense for doing an open market procurement.

GSA negotiates prices generally by comparison of discounts from price lists.  They usually seek discounts equal to or better than the offerors most favored customer.  Exceptions include situations where the most favored customer buys substantially more over a year such as Amazon or provides some value added services.  However the GSA discount price the government pays covers some very small orders as well as larger ones.  If an agency has a large and immediate requirement, GSA expects that agency to seek more favorable prices. 

My point is that the required “GSA prices” include an amount for the IFF payment to GSA even though not applicable to another agency’s contract and, unless the agency ID/IQ matches the GSA Schedule provisions for discounting and most favorable customer pricing, etc. the GSA schedules are likely a better deal…

Edit: However, that’s neither here nor there. The OP’s question or concern, as a potential contractor has been addressed. Artimpa didn’t elaborate on the pricing terms and conditions in the current RFP.

In theory, Artimpa’s “GSA prices” will include amounts for IFF anyway.