As the landscape changes in the Industry, it is no secret that the Government is looking to reduce costs and streamline the Contract Award processes and procedures by way of cutting back on the massive backlog of offers. Indeed, Contractors are routinely waiting 12 months or more to receive notification of the final determination of their offer.  In this environment, there has been a radical change of approach in how GSA approaches bidders since the Demand-Based Model (DBM) took effect in 2012.

LOW SALES

Most strikingly, there has been a ramped-up enforcement of GSA canceling contracts that are unproductive and underperforming. In the past, it was something of a rarity for GSA to cancel contracts, even if the sales were lower than the Contract Sales Criteria. In 2012, however, GSA created a team whose sole purpose is to seek out—and eliminate—underperforming contracts. The benchmark for an underperforming GSA Schedule contract has not changed, but the enforcement has.  That is to say, if you do not sell $25,000 worth of goods or services in the first 24 months of a MAS contract, and/or do not sell $25,000 during each of the following 12-month periods, your contract can be canceled under GSAR Clause 552.238-73.

Simply put, the Government does not want burn the time and money needed to administer contracts that are not meeting the contract’s terms and conditions, hence the renewed vigor with which cancellations are occurring. If you find yourself in danger of failing to meet your contract’s Minimum Sales Criteria, you may wish to take a closer look at how you are currently Marketing to the government and determine how you can review your strategy to be more effective. See some of Coley’s services that helps clients win more government business.

AUDIT/COMPLIANCE

There has also been a renewed effort on the part of GSA to conduct regular Customer Assistance Visits by “Industrial Operations Analysts to ensure that the vendor is adhering to the GSA contract requirements, terms, and conditions. For all intents and purposes, however these “Visits” are compliance audits and should be treated as such. As we saw in the section above, there is a renewed effort to eliminate underperforming contractors (“trimming the fat,” as some in the Industry are putting it), and this has resulted in increased rigor in enforcing compliance as well as performance. The frequency of these visits/audits varies based on factors including historical problems with similar vendors and past compliance issues, and is no longer restricted to once in the first and last 12-18 months of the contract, as in previous years.  A poor score on a CAV “report card” can place you in a position where contract renewal can be hindered or the contract canceled outright.  It can also put your future contract renewal (option exercise) in jeopardy.  Figure out ways to maintain your GSA Schedule compliant and be prepared.

EXTRAORDINARY INITIATIVES

The introduction of the Demand Based Mode caused 8,000 contracts to be eliminated outright. The contracts were chosen because they were deemed “obsolete” and dealt with products such as typewriters, trophies, and other items considered non-essential or antiquated. While such a drastic curtailment of contracts is unlikely, you should still be prepared for dramatic possibilities as the GSA forges ahead in its streamlining efforts. Thankfully, indications are that this transformation is well underway with the change in leadership seen in recent years, with the most dramatic events behind us.

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