Contract Management and Discounting Policies

Implementing an internal GSA management system within your company is the only foolproof way to protect against adverse audit consequences. An effective management system is not difficult to establish. Simply follow basic management principles--designate clear lines of authority and accountability, and measure performance against a specific standard.

The three basic compliance requirements in order of importance are as follows:

  • Price Reduction Clause compliance stands above any other compliance requirements because of the risk of monetary damages (claw backs for violation of discounting practices disclosed to GSA). This is the one that affects profits and the one your CEO cares about the most.
  • You must calculate the Industrial Funding Fees owed to GSA correctly and pay the fees on time.
  • You must comply with a number of procedural requirements including submittal of three required reports on time.

The three Cs of effective GSA contract management and administration are Compliance, Communication, and Common Sense. Know what the contract says. Do what it says and don't play discounting games. Make accurate discounting disclosures in your original proposal or correct them and re- price if they were inaccurate. Monitor the Basis of Award group for any price reductions. Pay the Industrial Funding Fee on time; don't cut corners. Communicate any possible compliance violation issues in writing to the GSA contracting officer immediately upon detection. Propose swift and practical corrective actions and request guidance and approval of your actions from the contracting officer.


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