GSA has promulgated a new clause for Federal Supply Schedule contractors. The clause deals with sales reporting and the payment of Industrial Funding Fee. It is virtually identical to the proposed version we wrote about in a recent client alert. Schedule contractors are being required to agree to this new clause as a condition for future participation in the program. Under the new clause:

The most important part of the new clause, however, is the description of what is a "reportable sale" for the purpose of computing and paying IFF. The new clause contains a presumption that sales of contract items to authorized users are reportable, and subject to IFF. The burden is now on the contractor to show that the purchase was made under some other contracting authority.

Explanatory text accompanying the new clause announces what GSA expects: "Since vendors always have the ability to make sales outside the Schedule, they need to establish with their customers at the time of order placement whether a sale is being conducted under or outside the Schedule." Schedule contractors will need to put in place a system to capture and preserve this data at the time a sale is made to any authorized user. This is likely to mean a considerable data gathering and retention burden on contractors and their customers.

IT schedule contractors are particularly vulnerable, because their state and local governments can now access the schedule contracting through the co-operative purchasing program. (The new clause specifically mentions these entities). IT contractors will have to capture and preserve this data for this class of customer as well.

Please let us know if you have any questions about the new or proposed rules, or wonder how they will affect your business.

 Joseph J. Petrillo 202-887-0405 jp@petrillopowell.com

Karen D. Powell 202-887-4827 kdp@petrillopowell.com

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