GSA's MAS program: Look before you leap

It seems that lately everyone in the information technology community is looking to secure a General Services Administration multiple-award schedule contract. Like a small tidal wave, the rolls of the MAS program have swelled to include 1,435 IT vendors— up 534 from just last year. According to GSA, this number could increase by another 200 before the end of the fiscal year.

This rise in the tide of schedule contracting is due, at least in part, to an aggressive marketing campaign by GSA. It also is due to pressure exerted upon potential schedule vendors by GSA's customers— namely, the user agencies. It is not uncommon for federal agencies to push an IT vendor to get "on schedule." In addition, the burden of obtaining a schedule contract has been reduced by the existence of a number of consultants who, for a fee, will guide an offeror through the GSA proposal process.

But potential schedule vendors should be warned: Participation in the MAS program is not for everyone. A vendor's ability to draft and submit an acceptable proposal is only one factor to be considered in assessing the pros and cons of participation.

The ability— and determination— to adhere to the requirements of the MAS program are far more important factors. In a sense, pursuing and obtaining a schedule contract is a little like jumping off a cliff into the sea. Hitting the water is the easy part; the real problems arise after that.

The new IT solicitation issued by GSA March 23 illustrates this warning well. Notwithstanding GSA's purported attempt to craft an easy-to-understand document that incorporates only commercial terms and conditions, the solicitation maintains or incorporates several noncommercial requirements that could easily snare an unwary vendor.

Perhaps the best example of this is the Price Reduction Clause, which was incorporated into the new IT solicitation pursuant to GSA regulation. The Price Reduction Clause generally is thought to compel a vendor to treat its schedule customers as its most favored customers. This description, however, oversimplifies what the clause requires. Unlike a typical commercial Most Favored Customer clause, the GSA Price Reduction Clause obligates a vendor that increases the discount it grants to a nonschedule customer during contract performance to grant a proportionally increased discount to its schedule customers— regardless of whether the new discount granted to its nonschedule customer is still less than the discount it grants its schedule customers.

Thus, a schedule vendor that is looking to "sweeten the pot" for a potential new customer will not be able to do so unless it is willing to provide extra sweetener to all its schedule customers as well. While the actual operation of the Price Reduction Clause is far more complex than this brief discussion suggests, one can see how the existence of the clause can hinder a vendor's ability to deal flexibly with its nonschedule customers.

Sales flexibility, however, is not the only victim of the Price Reduction Clause. Recordkeeping flexibility is another. The new GSA solicitation, like the old, mandates that a vendor maintain records relating to the Price Reduction Clause for at least three years after final payment under the contract. Because the government looks to nonschedule sales as well as schedule sales to determine whether a vendor has violated the Price Reduction Clause, the sea of paperwork can be huge.

While any business must maintain effective recordkeeping procedures, such procedures in the context of the MAS program are especially important because a vendor that accepts a schedule contract opens its doors to no less than five types of government audits. One of these audit rights affords GSA access to a vendor's "books, documents, papers and records" related to Price Reduction Clause compliance. Another affords the General Accounting Office access to records involving "transactions related to" the schedule contract. Both are broad grants of authority, to say the least.

The Price Reduction Clause, the solicitation's strict recordkeeping requirements and the government's extensive audit rights are just three of the rocks hiding under the surface of the new IT solicitation. A vendor seeking to participate in the MAS program must be willing to accept these conditions as well as the existence of stiff penalties for noncompliance. Failure to abide by the terms and conditions of a schedule contract can result in, among other things, contract termination, civil and criminal prosecution, and/or suspension and debarment from federal— and sometimes state and local— government contracting.

Unfortunately, many schedule vendors question the wisdom of participating in the MAS program only after finding themselves the subject of a federal inspector general audit. This is like questioning in midfall the wisdom of jumping off a cliff— too little, too late.

While participation in the MAS program offers potentially great rewards for many IT vendors, it also harbors great risks for the unwary. The water may look great from above, but any diver would be well-served to examine the rocks under the surface before jumping head-first.

-- Aronie is a member of the government contracts group of Fried, Frank, Harris, Shriver & Jacobson, Washington, D.C. He wishes to acknowledge the contributions of John Chierichella to this article.