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New opportunities for GSA schedule contractors.

Under an interim rule printed in the Federal Register on February 1, the General Services Administration granted state and local government the right to use Federal Supply Schedules to purchase products and services to aid in recovery from major disasters and from terrorism, nuclear, biological, chemical or radiological attacks. The rule is intended to implement Section 833 of the John Warner National Defense Authorization Act for fiscal year 2007.

Importantly for government contractors, the interim rule allows sales in advance of disasters or attacks because of the likelihood that after the disaster or attack, the state or local government's systems may be disrupted. This allows government contractors to market and sell goods and services to state and local governments at any time, provided the goods or services could be used in a disaster or attack recovery. It is up to the state or local government to ensure that the goods or services purchased in advance are actually used for disaster or attack recovery.

Although technically state and local governments may begin purchasing recovery goods and services from Schedules immediately, existing Schedule contracts must be modified, as agreed to by the Schedule contractor and GSA, to allow for disaster recovery purchasing. After an existing contract is modified or a new contract awarded, a Schedule contractor will retain the right to decline orders from state or local governments. Schedule contractors may decline an order, for any reason within a five-day period after receipt of the order; however, credit card orders must be declined within 24 hours.

In general, the rules for sales from Federal Supply Schedules to state and local governments are similar to sales to the federal government. State and local governments are encouraged to follow the ordering procedures set forth in FAR Subpart 8.4 when placing orders against the Schedules. Contracts between state and local governments and schedule contractors will be governed by the terms and conditions of the schedule contract. However, state and local entities are permitted to include terms and conditions required by their statute, ordinance, regulation or order, provided the terms and conditions do not conflict with the terms and conditions of the Schedule contract. As with sales to the federal government, Schedule contractors are required to pay industrial funding fees for sales to state and local governments. Payments by State and local governments are subject to the Federal Prompt Payment Act, unless a state prompt payment law applies to the purchase.

The interim rule defines state and local governments as: "The States of the United States, counties, municipalities, cities, towns, townships, tribal governments, public authorities (including public or Indian housing agencies under the United States Housing Act of 1937), school districts, colleges, and other institutions of higher education, council of governments (incorporated or not), regional or interstate government entities, or any agency or instrumentality of the preceding entities (including any local educational agency or institution of higher education), and including legislative and judicial departments." The term "State and local governments" does not include contractors or grantees of state or local government.

Any performance problems encountered when purchasing goods and services from a. Schedule contractor are the problem of the State or local government. The federal government is not liable for the contractor's performance, or nonperformance.

State and local government entities may, however, notify the GSA of performance problems and this information may be used by GSA to evaluate the contractor's overall performance under the GSA Schedule contract. Disputes may be litigated in any state or federal court with jurisdiction. Resolution of such disputes shall be governed by the principles of federal procurement law and the uniform commercial code, as applicable and appropriate.

The interim rule opens up significant opportunities for sales to state and local governments. Previously, state and local governments were only permitted to make purchases from the IT schedule, Schedule 70. The secretary of Homeland Security, who is responsible for identifying Schedules to facilitate recovery, has determined that all of the products and services available under the GSA Schedules could potentially be used for recovery from a disaster or a terrorist attack.

Comments to the interim rule are due April 2. Additional information about the interim may be found at under the disaster recovery purchasing link.

Philip M. Dearborn is a partner in the Washington law firm PilieroMazza PLLC.
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Author:Dearborn, Philip M.
Publication:Set-Aside Alert
Date:Feb 23, 2007
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