Commercial Supplier Agreements (CSAs) have long been a thorn in the General Services Administration’s (GSA) side. Despite the fact that these agreements are commonplace in commercial transactions for everything from software to travel, government buyers had to negotiate each one individually to address terms that were inconsistent with federal law. This time-consuming process can take six or more months to complete, depending on the complexity of the CSA.
In order to mitigate this issue, the GSA published a final rule in late February 2018 to address common CSA terms and conditions that create ambiguity with federal law. The rule aims to:
- Decrease the amount of time spent negotiating contradictory terms and conditions
- Facilitate and improve the review cycle
- Reduce the administrative burden for contractors
- Establish a consistent applicability and understanding of acceptable terms and conditions
The GSAR final rule will apply across GSA schedule contracts, Government-wide Acquisition Contracts (GWACS), and Indefinite Delivery Indefinite Quantity (IDIQ) vehicles that offer products or services that require commercial supplier agreements. The rule addresses “unenforceable terms” through a deviation to GSAR 552.212-4. Some of those 15 terms include:
- Vendor indemnity
- Automatic renewals
- Future fees or penalties
- Automatic incorporation/deemed acceptance of third-party terms
- Choice of law
- Equitable remedies, injunctions, binding arbitration
- Confidentiality of supplier agreement terms and conditions
- Audits (automatic liability for payment)
The final rule incorporated several notable changes from the draft version. First, GSA added language to make it clear that these provisions take precedence over any CSA. GSA also revised the order of precedence so that the terms of the solicitation do not supersede the CSA. Finally, the rule removes the requirement to provide the full text of terms referenced in the CSA, instead of allowing it to be to be incorporated by reference.
Will this final rule improve the process in the future? Currently, there has been no change in the process as Contracting Officers will still review all CSAs. However, they are expected to focus their efforts on reviewing terms that are not covered in the final rule. Except for the unenforceable terms covered by the final rule, other new terms are negotiable and can be addressed with your Contracting Officer.
As with any new initiative or change in process, there are challenges. It takes time to acclimate and determine if additional changes will be needed. The purpose of this rule is to establish a reference point for what are unenforceable terms in CSAs. However, it also suggests that CSAs with no conflicting terms should no longer require review, as the revised clause will take precedence.
Please feel free to reach out to us if you’d like our team to discuss how the changes incorporated in the recent final rule may impact your company, by calling 301.231.6200.