Existing GSA Schedule holders and new offerors to the program will all benefit from being able to offer the government customer a pre-negotiated price that is, in most cases, the best price that the contractor has to offer. Prior to awarding this pre-negotiated price on a contract, the GSA Contracting Officer must vet the proposed price with the intent to obtain the best pricing that the contractor has to offer. The two ways they can do this is through Commercial Sales Practice or Transactional Data Reporting.
What are Commercial Sales Practices?
The company’s Commercial Sales Practices are a snapshot of the company’s entire business involving commercial customers (to include state and local agencies) and the discounts that they have received over a period of 12 months. This is submitted in a CSP-1 document (MAS Scope and Templates | GSA), submitted electronically in eMod/eOffer, and allows GSA to identify who the Most Favorite Customer is and what discounts they consistently receive.
Why is CSP important to my GSA contract?
The CSP is the traditional contract type as most GSA Schedule contractors are bound to these requirements. This practice has been implemented within MAS contracts for over 20 years. Once the Contracting Officer is able to determine the Most Favorite Customer (MFC), GSA will negotiate a government discount that is the same or better than the MFC’s best discounts. This will create a discount disparity between these two customers (MFC and GSA) and must be maintained throughout the life of the contract per the Price Reductions Clause.
The combination of CSP and Price Reduction requirements will keep pricing low across the GSA Schedule market but will also ensure that the Government will receive the best pricing that the contractor can offer. Furthermore, the proposed pricing is also compared to against the GSA marketplace and may reduce pricing even further.
As part of the GSA Schedule award process, our Coley Advisors ensure that our clients understand how the CSP contract type will affect commercial and government business. It is important to This contract type is stressed and emphasized during our post award compliance training so that they are trained on what to monitor and what actions they should take. Our advisors continuously conducts assessments and internal reviews with our clients, and will detail the modifications required will allow the contractor to com (GSA Schedule modifications) in order to stay in compliance.
Is the CSP Contract Type Right for my Company?
- Government Prime Subcontractors tend to do well with the CSP. Since a subcontractor’s pricing is affected by the Prime’s pricing offered to the government (given this is the only commercial customer class available), the proposed pricing from government subcontractors tends to be more competitive than other contract holders. Prime Federal subcontractors have also been able to give minimal discounts to GSA for these reasons and thus results in a government price that is near to the best commercial price.
- Contracts with smaller offerings also tend to do well. Smaller offerings on contract will require less effort with respect to monitoring, thus allowing the contractor not to worry so much about the price reduction clause. Smaller offerings will allow for quick adjustments to stay in compliance. Gathering sales data to submit to the government can also be produced quickly.
- Larger offerings? Not so much. Companies with a large selection of products and services on contract will have a tougher time with the CSP and its monitoring requirements. The more robust the catalog is, the more resources are required to maintain an adequate system for price monitoring. Moving around lots of data will also increase the rate of error.
Coley GCS’ Pros and Cons of the CSP Contract Type:
|Ensures that the Government is the contractor’s best customer who receives the best pricing, reduces government spending.||Must conduct continuous training to sales teams to ensure that every customer class receives the correct discount.|
|Increases awareness of personnel attached to sales and sales reporting actions by standardizing and maintaining all categories of customer across the board.||May be too intense to monitor every single discount and may also increase risk of error. Requires robust sales tracking system capable of monitoring all classes of customer.|
|Minimal sales reporting completed after the end of every quarter. Sales total reported for every SIN on contract.||Subject to False Claims, Qui Tam whistleblower provisions, and treble damages.|
|Made available to every SIN available under the MAS solicitation.||The DOJ advocates literal interpretation and places little responsibility on the Contracting Officer.|
|Contract Offers and Modifications will take longer to produce, and will take longer for GSA/VA to review and award.|
|The VA has intense CSP disclosure requirements and directly affects the success of the item being placed on contract.|
Do I ever need to update my Commercial Sales Practice?
Contractors are also required to update GSA with any changes to its Commercial Sales Practices that may (or may not) affect the discount relationship and/or original award terms. i.e. the contractor may not have had resellers in the original award, but now they do. GSA must review this new customer type to determine if GSA should be tracking this customer category for its best discounts instead of other customer types belonging to the contractor.
Lastly, GSA conducts periodic assessments to ensure that the contractor’s latest CSP disclosures are accurate and up to date. All commercial sales belonging to the contractor are submitted to GSA for further review. These assessments will happen periodically (regardless of contract type) and are conducted by the Industrial Operations Analyst (IOA).
Our clients who have an existing GSA Schedule contract, have access to our GSA Audit Guard Compliance Assessment. It is designed to capture and review a contractor’s sales practices to ensure that compliance with these requirements is continuously meet. It is important that contractors monitor and keep up with GSA Schedule compliance and process the modifications that are related to changes in commercial sales practices (Economic Price Adjustments, Permanent Price Reductions, etc.), ahead of the IOA’s assessment.
If any undisclosed commercial discounts and/or practices are found, then GSA may instruct the following (case specific, more than one may apply):
- Submit a PPR modification to maintain the original discount relationship.
- Submit Temporary Price Reductions to government customers for a determined amount of time.
- Provide credit back to previous government customers if overcharges are found.
- Submit sales adjustments to correct previously reported GSA sales amounts.
And in serious cases, the OIG may be involved and may also impose other types of penalties. For example, the OIG may penalize a contractor with a $5,500 to $11k fine per false claim made in its CSP disclosures.
Does this apply to GSA Federal Supply Schedules and VA Federal Supply Schedules?
GSA takes in summarized CSP data that is also identified within every product and service on contract. The VA requires the same, but will also require line by line commercial sales data that substantiate the summary information provided in all offers and contract modifications i.e. all customer classes, total amount of sales, and details the range of discounts provided in any summary provided to the VA.
Recently Coley GSA Advisors presented to members of the online FedMap Community a discussion on GSA MAS CSP and TDR Contract Types. Sign up to join the community and get free access to many networking and training events like this throughout the year. If you are already a member, you can access this training by visiting our community’s video archive.
Coley has over 20 years’ experience helping thousands of companies obtain and maintain their GSA Schedule. Our expert consultants work closely with companies to make sure the terms and conditions of their contract are in line with their long-term goals. Contact us by email at email@example.com, by phone at 210-402-6766 or schedule a time convenient for you and start your path on obtaining your GSA Schedule—a critical step on your road to success in the government market.
Julio is a Senior Consultant with Coley GCS, LLC, a Government Contracts Consulting, Coaching and Training company. Julio has over 10 years’ experience helping companies succeed with their GSA schedules.