GSA Intends to Address Commercial Supplier Agreements

General Services Administration

Commercial Supplier Agreement Class Deviation

Frequently Asked Questions

August 10th, 2015

1.      What is GSA doing to address Commercial Supplier Agreements (e.g., standard terms of sale or lease, Terms of Service, End User License Agreements, or other similar legal instruments or agreements)?

The GSA Senior Procurement Executive (SPE) has issued a Class Deviation to include the following provisions to mitigate the legal risk of incorporating common Commercial Supplier Agreement (CSA) terms and conditions that conflict with or are incompatible with Federal law into GSA contracts:

● GSAM 552.212-4 Contract Terms and Conditions – Commercial Items. (Alternate II)) in lieu of FAR 52.212-4 when prescribed for FAR Part 12 acquisitions by FAR 12.301(b)(3) for the acquisition of commercial items which will contain CSAs.

● GSAM 552.232-39 (Unenforceability of Unauthorized Obligations) in lieu of FAR 52.232-39 when prescribed by FAR 32.706-3.

●    GSAM 552.232-78 Commercial Supplier Agreement – Unenforceable Clauses for contracts and contract vehicles when not using the policies and procedures in FAR Part 12.

The class deviation addresses 15 common CSA terms and conditions:

1.   Definition of contracting parties

2.   Contract formation

3.   Vendor indemnity (vendor assumes control of proceedings)

4.   Automatic renewals of term-limited agreements

5.   Future fees or penalties

6.   Taxes

7.   Payment terms or invoicing (late payment)

8.   Automatic incorporation/deemed acceptance of third party terms

9.   State/foreign law governed contracts

10. Equitable remedies, injunctions, binding arbitration

11. Unilateral termination of supplier agreement by supplier

12. Unilateral modification of supplier agreement by supplier

13. Assignment of supplier agreement or Government contract by supplier

14. Confidentiality of supplier agreement terms and conditions

15. Audits (automatic liability for payment)

2. Why is GSA issuing the class deviation?

The commonly recurring, conflicting or ambiguous terms and conditions found in CSAs have required the Federal Acquisition Service (FAS) contracting staff to negotiate individual agreements to address the conflicts, often at significant delays and cost to GSA, FAS and vendors.  CSAs are commonly used in the acquisition of information technology offerings— software, products, services, and solutions.  However, they have become ubiquitous in a broad variety of contexts, from travel to telecommunications to financial services to building maintenance systems.  CSA’s are also often included in purchases below the Simplified Acquisition Threshold. As a result, the deviation will be implemented across FAS contracts and contract vehicles -MAS Schedules, Government-wide Acquisition Contracts, Indefinite Delivery Indefinite Quantity vehicles that provide products or services that are sold with CSA. The deviation will also be implemented across task orders and delivery orders where products or services are accompanied by CSAs.

3.  When will GSA implement the class deviation?

FAS will issue guidance to require the incorporation of the deviation provisions into applicable new and existing FAS solicitations, contracts and contract vehicles 90 days from the release of the guidance via solicitation refreshes and bilateral modifications.

4. How will the class deviation affect GSA contracts going forward?

The FAS guidance will still require the continued review of CSAs. However, Contract Specialists and Contracting Officers will focus their efforts on less common CSA terms and conditions that conflict with, or are incompatible with, Federal law that aren’t covered by the deviation such as “as is” warranties, implied warranties, and restrictions on advertising.

5.  How long will vendors have to accept bilateral modifications?

Acquisition centers will be required to modify all applicable contracts and contract actions within 90 days from the day the FAS guidance is issued.

6. What will happen to those contracts that have not been modified within the 90 day window? 

The GSA SPE issued the class deviation to protect the agency from incorporating CSA terms and conditions that conflict with or are incompatible with Federal law into contracts.  The GSA SPE also issued the class deviation to reduce contract award cycle times by reducing the need for full CSA reviews.  In turn, the reduced need for full CSA reviews reduces the significant cost burden to the government and the vendor community.  FAS will work with each vendor to help them to understand the importance and necessity of the deviation to ensure that all applicable modifications are executed within the 90 day time frame.