How do CSA’s and EULA’s Work on GSA Schedules?

You have worked hard to develop a product that would help the government, but you might be having trouble either adding the product to your existing GSA Schedule or getting a new GSA Schedule. One concern we see vendors struggle with is understanding the Commercial Supplier Agreements (CSA). How can you ensure that your Commercial Supplier Agreement is government compliant?

What is a CSA?

Commercial Supplier Agreements (CSA) is a binding legal obligation between the user and your company. These terms can be Federally non-compliant and would result in the government not being able to purchase the product. CSAs are also known as End Use License Agreements (EULA), Terms of Use, Terms of Service, or Software License Agreements.

In order to simplify the process for buyers and seller, GSA reviews the CSA before the product or service is incorporated with the contract. The legal team will look for anything that is federally non-compliant or to incorporate specific clauses to protect the government.

Class Waiver and Unenforceable Clause Language

In 2015, FAR 12.302(c) released a class waiver to permit the contracting officers to use procedures that are different than standard commercial practices.  GSA’s legal team also looks for unenforceable clause language. This type of language tries to require the ordering activity to “pay any future fees, penalties, interest, legal costs or to indemnify the Contractor or any person or entity for damages, costs, fees, or any other loss or liability.” This wording is non-binding to the authorized end user and considered stricken from the CSA.

All CSA’s incorporate clauses that address the following elements:

• • Definition of contracting parties – the agreement may bind the ordering activity as an end user, but this cannot extend to employees of the ordering activity or people acting on behalf of the ordering activity.
  • Contract formation – a contract cannot be created by a user opening a product, clicking a button, or viewing a page containing a link to terms and conditions (also known as: shrink-wrap, click-wrap, and browse-wrap)
  • Vendor indemnity (vendor assumes control of proceedings) – the U.S. Department of Justice has the sole right to represent the U.S. in cases where the supplier is required to defend or indemnify the end user.
  • Automatic renewals of term-limited agreements – CSA’s cannot renew automatically without prior express consent by an authorized ordering activity representative
  • Future fees or penalties – are not allowed. This includes travel costs, surcharges, late payment penalty, liquidated damages, and audit costs. Some of these items are governed by existing federal regulations (e.g. federal travel regulations establish payment of travel costs)
  • Taxes – unless specifically agreed to in the ordering activity contract, taxes and surcharges cannot be invoiced until they are submitted to a Contracting Officer to determine applicability.
  • Payment terms or invoicing (late payment) – due date for invoices is either 10 days from receipt of proper invoice or 10 days from acceptance of the supplies/services, whichever occurs last. Late payments are governed by the Prompt Payment Act.
  • Automatic incorporation/deemed acceptance of third party terms – the ordering activity and government users are not bound by click-wrap or browse-wrap agreements.
  • State/foreign law governed contracts – CSA’s cannot subject the ordering activity to state or local laws. Additionally, they cannot require dispute resolution in a venue that conflicts with federal law.
  • Equitable remedies, injunctions, binding arbitration – binding arbitration for disputes can only be used if specifically authorized by agency guidance. Equitable or injunctive relief (e.g. attorney fees) are only allowed when explicitly provided by statute.
  • Unilateral termination of supplier agreement by supplier – a CSA cannot allow the supplier to unilaterally revoke, terminate, or suspend rights granted the ordering activity except as allowed under the contract.
  • Unilateral modification of supplier agreement by supplier – are only allowed for changes that are not material.
  • Assignment of supplier agreement or Government contract by supplier – with the exception of assigning rights to receive payment, a CSA cannot allow the agreement to be assigned, or any rights or obligations delegated, without the order activity’s prior approval.
  • Confidentiality of supplier agreement terms and conditions – the agreement and the contract price list cannot be deemed confidential information.
  • Audits (automatic liability for payment) – if the supplier requests an audit, the supplier is required to pay for that audit and will not be eligible to receive reimbursement from the ordering activity. If the audit finds discrepancies that result in a charge to the ordering activity, the charges must be invoiced in accordance with the underlying ordering activity contract. If the ordering activity disputes the charge, payment is not due until resolution of the dispute.

Before submitting your CSA to GSA for review, look over all the clauses for the above-mentioned items to ensure that it can be reviewed and approved with minimal changes. Once the CSA is reviewed and the Contracting Officer approves, your software can be purchased with ease by government agencies.

Our GSA contract experts have helped many clients with Commercial Supplier Agreements get through the legal review process and successfully be on the GSA schedule. If you have any questions about your CSA or are interested in obtaining a GSA schedule, Contact us today at hello@coleygsa.com, by phone at 210-402-6766 or schedule a call to get started on obtaining your GSA Schedule—a critical step on your road to success in the government market.