CPAs and Advisors with Your Growth in Mind

Government Contractors

GSA Cutting Non-Compliant Vendors from Contract Schedules

With an ever-tightening budget, the General Services Administration (“GSA”) is continuously looking for cost-saving measures. Its latest means of cutting costs involves removing non-compliant vendors from the GSA schedule contracts. The most recent GSA schedule contract to be reviewed was the Information Technology (IT) Schedule, Schedule 70.

In 2012, GSA announced that it would begin reviewing its procedures for granting contracts or renewing contracts for schedule holders, as well as begin moving to a demand-based model, where schedules that are oversaturated with vendors would be closed to new companies, or outdated special item numbers (SIN) would be removed. The hope is that this will help the companies that are already on schedule to maintain their schedule, and will remove what the GSA calls “dead ends” from its schedules – essentially products or services that the government is no longer buying.

Part of a vendor’s requirement to keep its GSA schedule is to report a minimum of $25,000 in sales on its GSA contract over the course of a calendar year. Vendors must show $25,000 in sales over the first two years that it has its GSA schedule, but then the $25,000 requirement becomes an annual compliance requirement. GSA conducted a careful review of Schedule 70, one of the largest GSA schedule contracts, and approximately 1,000 vendors were notified that their contract was being canceled; there are still over 5,000 vendors on Schedule 70. GSA anticipates saving $3.2 million a year in administrative costs by cutting these contracts.

There are over 19,000 contractors with GSA schedules, and the number of companies seeking a schedule contract has doubled over the last several years. GSA has been diligent in canceling contracts that have not had any sales over a five-year period, but now they have stepped up their efforts to cancel contracts that don’t meet the annual $25,000 sales requirement. In 2013, GSA schedules accounted for about $34.8 billion in sales to the government. With that kind of volume, it shouldn’t be that difficult for a vendor that is actively marketing its GSA contract and seeking GSA contract awards to meet the annual dollar requirement.

If you feel that your contract is at risk of being canceled or you are struggling to meet the minimum requirement for your schedule, there is help available. GSA offers multiple education and training resources on its website, and will work with vendors on marketing techniques. Cherry Bekaert GovCon consultants are also available to discuss your schedule contract, and can assist you in searching for solicitations and with proposal development.

Topics: , , ,