GSA Schedule Reseller-Manufacturer Relationships…Risky Business?
Breakout Session #: C05
Jeff Clayton and Rob Austin
Date: Monday, July 25
Time: 4:00pm–5:15pm
VA OIG Report on FSS Contracts with Resellers From a 2007 Veteran’s Administration Office of Inspector General report on FSS contracts:
– “The manufacturers are large businesses who are using resellers to shield themselves (the manufacturers) from FSS pricing provisions that ensure fair and reasonable prices for Government customers. As a result of this non-commercial practice, FSS customers pay inflated prices and lose the pricing protections the FSS contract was designed to provide.”
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Polling Question Instructions
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Text JEFFREYCLAYT124 to the five-digit number 22333 to join session Text your answer to 22333. Only one response per poll.
– Standard text messaging rates apply – No spamming – Completely anonymous
Questions during the presentation? Text them to 22333
Polling Question
Which of your speakers once fell into the Baltimore Harbor?
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Where did you travel from?
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Would you rather learn about resellers and manufacturers right now, or head to happy
hour?
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Introduction
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Rob Austin, CFCM Director
Jeff Clayton Principal
Agenda
• Overview of Reseller – Manufacturer Relationship
• CSP Disclosure Requirements • Contracting and Compliance Requirements • Best Practices • Current Trends
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Reseller
• GSA Schedule contract holder
• Sell the manufacturer’s product (or service) to the end user
• Can add value through marketing and customer relationships and industry knowledge
Manufacturer • Manufacturers products or
performs services • Supplies product or services
to reseller • Does not own the relationship
with the ultimate end user
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Overview of Reseller – Manufacturer Relationship
Polling Question
How do you sell to the Government?
A. Direct B. Through a Reseller C. Both D. N/A (e.g., Government, Media)
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CSP Disclosure Requirements Resellers • If a Reseller has significant sales of the products, they
submit a current, accurate and complete Commercial Sales Practice (CSP) Format and disclosures for each product/SIN offered.
• Only required if the manufacturer’s sales under any resulting contract are expected to exceed $500,000. (Note: GSA can request a CSP even if sales <$500k)
Manufacturers • If the reseller does not have significant sales to the
general public, the reseller can request a manufacturer’s CSP with the same information.
• Manufacturers can chose to provide its CSP either to the reseller or directly to GSA
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Requirements – CSP-1 Format
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TYPE OF CUSTOMER STANDARD DISCOUNTS & PRICING POLICIES
NON-STANDARD DISCOUNTS, INLCUDING DEGREE & FREQUENCY
FOB Point Concessions % of Gross
Distributors (sell only to
Dealers/Resellers)
Dealers/Resellers (resell to end users)
VAR/System Integrators
Original Equipment
Manufacturers
State & Local Governments
Educational &Nonprofit
Institutions
National & Corporate Accounts
Commercial End Users
Other: (Specify)
Proposed GSA Discounts
Requirements - Reseller
• Pay IFF • Monitor Discounting Practices • Obtain Letter of Supply • Certify Country of Origin • Monitor Sales for the Purposes of the Price
Reductions Clause
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(ICOMPANY NAME)
SIN # Manufacturer /
Supplier MFR
Part #
Product Name/
Description
Retail Price/ MSRP/ MLP
Dealer's Actual Cost / Price
Dealer's Discount (% from Retail Price)
Proposed GSA Price
(w/out IFF)
Proposed GSA
Discount (% from Retail Price)
Proposed GSA Price (with IFF of
.75%) Country of Origin Warranty
Reseller Price List Example
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Requirements - Manufacturer Manufacturer must do the following:
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• Supply sufficient quantities • Uninterrupted supply • Disclose future pricing changes
Agree to:
• Newly manufactured • Commercially sold • TAA compliant
Certify:
• Discounts offered • Point(s) of production Disclose:
Best Practices - Resellers • Establishing Basis of Award and Price Reductions Clause
mechanisms • Establish system for Manufacturer to alert about price
changes • Awareness and certification of manufacturer’s COO
policies • Structured manufacturer agreement • Systems and processes to address compliance
requirements • Support value added to supply chain • Prompt payment of IFF
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Best Practices - Manufacturers
• Current, accurate and complete CSP Disclosures
• Structured Reseller agreements • Internal controls to monitor:
– Pricing – Government sales records – Reseller Discounts – Country of Origin Updates
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Current Trends
• VA vs. GSA – VA OIG Report 2007
• Heightened GSA Focus – Increased enforcement activity
• Baker Tilly Experiences – Recent GSA OIG/DOJ activity
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Polling Question
Which of the following cases is related to the Reseller-Manufacturer relationship?
A. Oracle B. Samsung C. Carahsoft D. Fastenal
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VMware, Inc. and Carahsoft
• In June 2015, the Department of Justice announced the two companies agreed to pay $75.5 million to resolve allegations that they violated the False Claims Act (FCA). – Did so by misrepresenting their Commercial
Sales Practice (CSP) disclosures and overcharging the Government.
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Questions?
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Jeff Clayton, Principal [email protected]
Jeff Clayton is a principal in the Government Contractor Advisory Services Practice at Baker Tilly. He has more than seventeen years experience providing a broad range of pricing, contract compliance and dispute/litigation related services to government contractors and their legal counsel. Jeff has extensive experience working with contractors and their counsel during Office of Inspector General (OIG) audits, Department of Justice (DOJ) investigations, and in defense of qui tam suits brought under the False Claims Act.
Rob Austin, Director [email protected]
Rob is a director in the Government Contractor Advisory Services Practice at Baker Tilly. He has more than ten years of experience providing specialized pricing, compliance, negotiation, audit and litigation support services to government contractors across a variety of industries Rob significant experience supporting FSS contractors through the Mandatory Disclosure program and providing litigation support in support Federal False Claims Act allegations.
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www.bakertilly.com/services/government-contracts
Contact Information
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