[Federal Register Volume 59, Number 247 (Tuesday, December 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31751]
[[Page Unknown]]
[Federal Register: December 27, 1994]
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GENERAL SERVICES ADMINISTRATION
Industrial Funding of Federal Supply Schedule Program
AGENCY: General Services Administration, Federal Supply Service.
ACTION: Notice.
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This notice invites comments on proposed clauses that will
implement industrial funding of the Federal Supply Service, Federal
Supply Schedule Program. As directed by the House of Representatives'
Committee on Appropriations, the Federal Supply Service of GSA has
examined a number of alternatives for reimbursable funding of several
of its programs for which it currently receives appropriations. The
Federal Supply Schedule Program was identified as appropriate for
conversion to an industrially funded operation. It has been determined
that the most viable method of reimbursable funding of schedule program
would be through adjusting the schedule contract prices upward by 1%.
Under this concept, schedule pricelists would show the adjusted
price. Agencies would order from the contractor at the adjusted price;
the contractor would invoice GSA at the award price; GSA would bill
agencies the adjusted price and retain the difference to fund the
program. This method of funding is consistent with a National
Performance Review recommendation that GSA service operations be paid
for through customer revenues. Under this concept, agencies would
continue to submit purchase/delivery orders directly to the contractor;
however, contractor invoices would be sent to GSA for payment.
DATES: Comments should be submitted to the address shown below on or
before January 26, 1995 to be considered in the formulation of a final
notice.
ADDRESSES: Interested parties should submit written comments to
Nicholas M. Economou, Director, FSS Acquisition Management Center
(FCO), Crystal Mall Building #4, Room 716, Washington, DC 20406.
FOR FURTHER INFORMATION CONTACT:
Linda S. Hauenstein, FCO (703) 305-6566.
SUPPLEMENTARY INFORMATION:
A. Background
The Federal Supply Schedule Program is a major contracting program
used by the Federal Supply Service (FSS) to provide a variety of
commercial supplies and services to Federal Government agencies. The
program accounts for over $2.8 billion in sales annually, and provides
lucrative contracting opportunities for over 5,000 commercial
contractors, most of which are small business entities.
During the fiscal year 1994 budget process, Congress directed FSS
to review its appropriated activities for conversion to reimbursable
funding. Based upon that review, the schedules program was identified
as one of the programs suitable for reimbursable funding. The GSA
fiscal year 1995 budget, therefore, reflected a $7.8 million reduction
in operating expenses for the schedules program. The remaining
appropriated monies will be eliminated over the next two fiscal years.
The cost of providing supplies and services through this program must
therefore be included in the cost of those supplies and services. FSS
will accomplish this by adjusting each schedule contract award price
upwards by 1%. For example, a retail price for an item is $100.00. GSA
negotiates a discount of 10 percent resulting in an award price of
$90.00. The schedule pricelist will reflect an adjusted price of
$90.90. The contractor delivers the goods to the agency and invoices
GSA in the amount of $90.90 (the award price). GSA bills the agency the
adjusted schedule pricelist amount of $90.90. GSA retains the $.90
adjustment as it cost recovery allowance charge, thereby funding the
program.
Currently, schedule contractors must submit invoices to multiple
agencies' payment offices. FSS proposes to establish the GSA Kansas
City Finance office as the single payment point for all schedule
contractors' invoices. Implementation of industrial funding for the
schedules program will have minimal impact on the basic principles of
the program. Schedule offers will continue to be evaluated and
negotiated by GSA. The Government's pricing goal will continue to be
most favored customer status.
Agencies will continue to place orders directly with the schedule
contractors. Agencies will also continue to use Activity Address Codes
(AAC) and Fund codes that they are using in the current supply systems.
Agencies without AAC's can obtain them by following the simple
instructions in the GSA FEDSTRIP Operating Guide, or they can contact
the FSS System, Inventory, & Operations Management Center, (703) 305-
7083. Fund codes are assigned within each individual agency.
All contract administration matters relating to agencies' orders
remain the responsibility of the agencies placing the orders. As
envisioned, the only change in the process will be in the area of
payment. Instead of invoicing the individual agencies, contractors will
submit their invoices to GSA for payment.
GSA has planned a 3-year implementation period for converting all
schedules to a full cost recovery program; however, the implementation
plan may be expedited contingent and consistent with changes in GSA's
appropriations.
B. Paperwork Reduction Act
For purposes of the Paperwork Reduction Act, the proposed notice
would impose no new reporting or record keeping requirements.
C. The Following Proposed FSS Acquisition Letter Establishes a New
Clause and Notice for Inclusion in Basic Schedule Solicitations
Issued After Approval of this Acquisition Letter
FSS Acquisition Letter FC-94-
MEMORANDUM FOR ALL FSS PROGRAM OFFICES
From: William N. Gormley, CPPO, Assistant Commissioner for Commodity
Management (FC) (FCO)
Subject: Industrial Funding of Federal Supply Schedule Program.
1. Purpose. To provide guidance for industrial funding of the
Federal Supply Schedule program in order to recover associated
procurement and administrative costs incurred by the Federal Supply
Service (FSS) for contracting through the schedules program.
2. Background. During the fiscal 1994 budget process, Congress
directed FSS to review its appropriated activities for conversion to
reimbursable funding. Based upon that review, the schedules program was
identified as one of the programs suitable for reimbursable funding.
The GSA fiscal year 1995 budget, therefore, reflected a $7.8 million
reduction in operating expenses for the schedules program. The
remaining appropriated monies for the program will be eliminated over
the next two fiscal years. The cost of providing supplies and services
through this program must therefore be included in the cost of those
supplies and services.
The Federal Supply Schedule Program is FSS' largest supply support
program, accounting for over $2.8 billion in sales annually. The
program benefits the customer agencies, as well as the contractors who
participate in the program. Federal agencies benefit from the schedules
program because it provides an expedited means for acquiring quality
commercial products, including latest technology, at reasonable prices
based on the Government's aggregate buying power. Contractors benefit
from the program because it provides them a low cost entry into the
Federal market. By obtaining a schedule contract with GSA, contractors
avoid the administrative cost of responding to multiple solicitations
from many different agencies.
In order to better serve our customers and suppliers, FSS is
implementing a single payment office, GSA, to handle schedule invoices.
Agencies will continue to forward delivery/purchase orders directly to
the schedule contractors, who will in turn deliver requisitioned items
directly to the agencies. However, instead of invoicing the agencies,
the contractors will submit their invoices (for both supplies and
services) to the GSA Office of Finance for payment. GSA will bill the
agencies. (See attached Outline of Payment/Billing Steps.)
The new payment arrangement eliminates the agencies'
responsibilities related to processing and paying thousands of
invoices. Government payment offices will be billed twice a month by
GSA. Based on the above, agencies should enjoy substantial
administrative savings.
GSA, as the single paying office, will be able to maximize timely
payments, thus, avoiding interest charges and earning prompt payment
discounts.
Schedule contractors will benefit by not having to deal with
numerous agency accounts payable offices. Further, they will no longer
have to cope with a variety of different accounts payable procedures,
since they will only be subject to GSA's procedures. As the single
payment office, GSA's commendable record for timely payment of invoices
will result in contractors being paid much quicker than many are now
experiencing from some schedule users.
GSA will recover the costs associated with contracting, billing,
and payment of schedule purchases by adjusting the awarded price upward
by one percent. This adjusted price will be the price printed in the
schedule contract pricelist.
GSA's negotiation objectives will include consideration of the new
simplified payment terms and conditions and will seek discount
concessions recognizing the benefits to contractors of streamlined
payment procedures. Contractors will bill GSA at the negotiated
contract prices. GSA's billings to ordering activities will be at the
printed schedule pricelist amounts.
The present strategy calls for a 3-year implementation beginning in
fiscal year 1995. As current schedules expire, new basic solicitations
will include the new clauses which will provide for funding of the
program. At the completion of the 3-year implementation period, any
existing contracts that do not contain the new clauses will be modified
to incorporate these provisions. The implementation schedule may be
expedited contingent and consistent with changes in GSA's
appropriations.
3. Effective Date. This Acquisition Letter becomes effective two
weeks after its signature date.
4. Expiration Date. This Acquisition Letter expires one year from
the effective date, or upon inclusion in the Supply Operations
Handbook, FSS P 2901.2A, whichever occurs earlier.
5. Applicability. All Federal Supply Service schedule contracting
activities must implement the provisions of this acquisition letter.
All basic schedule solicitations issued on or after the effective date
of this letter must contain the new clause and notice shown in the
attachment. Schedule solicitations that have been issued, but not
opened/closed, must be amended to include the new schedule payment and
billing procedures. Appropriate solicitation extensions should be
provided to allow offerors sufficient time to consider the new
provisions. In addition, multiple award solicitations which have
closed, but have no awards against them yet, should be amended to
incorporate the new provisions. Offerors should be requested to
acknowledge, in writing, their acceptance of the new provisions within
the terms of their offer, prior to the award of a contract. If an
offeror is unwilling to accept the new single payment arrangements, he/
she will be allowed to withdraw his/her offer.
6. Reference to Regulations. HB, Supply Operations ch. 38, (FSS P
2901.2A.)
7. Instructions/procedures.
a. Promoting the advantages of a ``one-stop'' payment office will
be the responsibility of all persons involved with schedule
contracting. Benefits are realized by customer agencies, schedule
contractors, GSA, and the taxpayers. Every effort should be made to
inform contractors and agencies of the advantages of designating GSA as
the single payment point. Equally important is the need to encourage
both agencies and contractors to maximize their use of Electronic Data
Interchange (EDI) to transmit purchase/delivery orders and invoices.
Contractors may also receive Electronic Fund Transfer (EFT) payments,
whether they submit paper or electronic invoices.
b. In order to facilitate the payment and billing process by
Finance, agencies will be required to include the Activity Address Code
(AAC) to be billed, and a two digit Fund Code to be charged on each
purchase/delivery order submitted to contractors. These codes will
expedite GSA's process for billing the agencies for reimbursement of
monies paid by GSA to the contractors. Inclusion of the AAC and Fund
code on all purchase/delivery orders is required before invoicing GSA.
c. (1) The Catalogs and/or Pricelists clauses will be revised to
instruct schedule contractors to adjust the awarded schedule prices
upward by 1%. Purchase/delivery orders will show this adjusted price.
Contractors, on the other hand will invoice GSA at the awarded
(unadjusted) prices.) For example:
A retail price for a schedule item is......................... $100.00
GSA negotiated a discount of.................................. 10%
The GSA awarded contract price is............................. $90.00
The adjusted price published in the schedule pricelist is..... $90.90
The purchase/delivery order shows $90.90......................
The contractor invoices GSA at the awarded contract price of.. $90.90
GSA pays the contractor....................................... $90.00
GSA bills and collects from the agency........................ $90.90
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(2) Contractors will also be instructed to include a statement
substantially as follows on the cover page, or in order instructions on
the pricelist: ``Agencies are reminded to include the Activity Address
Code (AAC) to be billed and the Fund code to be charged on each
purchase/delivery order. These codes are needed to expedite payment of
invoices and billings by GSA to agencies.'' Contractors may also
include a sample order form for informational purposes to assist
agencies in including all pertinent information.
d. In addition to the AAC and Fund code and other standard
information included on the purchase/delivery order, agencies should
provide the following with each order:
1. Two agency contact points (including commercial phone number):
one from the ordering office, and, one from the office to receive the
billing from GSA.
2. Cite GSA as the office to be invoiced for payment.
e. During the initial phase of this changeover to a single payment
office, contracting officers may receive inquiries from agencies and
schedule contractors regarding the billing AAC and Fund code. The six-
digit AAC is a code assigned to an agency in order to establish an
account with GSA. The AAC identifies the agency to GSA. Agencies may
obtain AAC numbers by writing to: GSA/FSS, Inventory and Requisition
Management Division (FCSI), Washington, DC 20406, or calling (703) 305-
6978. Fund codes are not assigned by GSA but by each individual agency.
f. In addition to submitting purchase/delivery orders directly to
the contractor via hard copy or EDI, agencies may also obtain schedule
items by placing requisitions through MUFFIN (Multi-Use File for Inter-
Agency News), or normal FEDSTRIP/MILSTRIP ordering procedures.
g. Agencies shall forward an original and one copy of paper
purchase/delivery orders to schedule contractors. Any oral order placed
against a schedule contract must be confirmed with either an electronic
(EDI) or hard copy purchase/delivery order.
h. The Office of Finance, Kansas City, will be the payment office
for all schedule invoices. For paper invoices containing prompt payment
discount terms, the address is: General Services Administration, PO Box
419399, Kansas City, MO 64141-6399. All other paper invoices should be
sent to General Services Administration, PO Box 419029, Kansas City, MO
64141-6029. Initial invoices for each purchase/delivery order must be
accompanied with a copy of the customer paper or EDI order. Contractor
EDI submissions of order data and invoices must be in accordance with
Federal implementation conventions for EDI.
i. As is the current practice, ordering activities will resolve any
discrepancies concerning purchase/delivery orders and/or items
delivered against such orders directly with the schedule contractors.
The GSA contracting officer may need to intervene in order to settle
unresolved issues between an ordering activity, a contractor and/or the
Office of Finance. Any setoffs for collection of monies owed the
Government must be handled in accordance with FAR Subpart 32.6.
j. The contractor represents by submission of an invoice that the
supplies have been delivered or services performed satisfactorily. GSA
reserves the right to require proof of shipment or evidence of
delivery/performance prior to payment.
k. Pursuant to the clause, Examination of Records by GSA (552.215-
70) and FAR, Subpart 4.7, contractors are required to retain files,
records, and information relevant to this contract, including records
to support shipments and deliveries for up to 3 years after final
payment, or as specified in Subpart 4.705 through 4.705-3, whichever of
these periods expire first.
l. GSA, Office of Finance will implement a post payment
statistically reliable system to validate agency receipt of goods or
services.
m. The following clause and cover page notice must be included in
all new basic Federal Supply Schedule solicitations:
1. Contract Payment Information (I-FSS-XXX)
2. Single Payment Office (CP-FSS-XXX)
Attachments
New Solicitation clause/notice
Outline of Payment/Billing Steps
New Solicitation Clause
I-FSS-XXX (XXX 1994)
Contract Payment Information
a. The General Services Administration (GSA) will be the
centralized billing/payment office for all purchases/invoices issued
against the schedule contracts. Paper invoices (with related purchase/
delivery order copies) conforming to the requirements of the Prompt
Payment Clause (52.232-25) and the Invoice Requirements Clause
(552.232-72) should be submitted to either of the following mailing
addresses:
1. For paper invoices (with related purchase/delivery order copies)
containing prompt payment discounts: General Services Administration,
Office of Finance, P.O. Box 419399, Kansas City, MO 64141-6399.
2. For all other paper invoices (with related purchase/delivery
order copies): General Services Administration, Office of Finance, P.O.
Box 419029, Kansas City, MO 64141-6029.
b. Inclusion of the Activity Address Code (AAC) and Fund code on
all purchase/delivery orders is required before invoicing GSA. EDI
transactions must be submitted in accordance with Federal
implementation conventions.
c. Contractors shall submit invoices and copies of the agencies'
purchase/delivery orders either by Electronic Data Interchange (EDI),
or mail for non-/EDI transactions. Submission of invoices by EDI is
preferred because it is the most economic and efficient method for the
contractor and the Government.
d. Agencies will submit purchase/delivery orders to contractors in
an original and one copy. A copy of the customer agency EDI or paper
purchase/delivery order must accompany each initial invoice submitted
to GSA for payment. In the case of ongoing service arrangements like
rental or leasing, this means the contractor must include a copy of the
purchase/delivery order for such arrangements with the initial EDI or
paper invoice submitted for payment. It will not be necessary to submit
subsequent copies of the same order unless requested by GSA for a
particular case.
e. Proper invoices will be paid within the prompt payment discount
terms included in the contract or 30 day payment cycle.
f. Electronic submissions must conform to the American National
Standards Institute (ANSI) X12 standard and the Federal implementation
conventions. Request for these conventions and questions regarding
registration in the Government Electronic Commerce system should be
addressed to 1-800-EDI-3414. Registration is done via your value added
network and includes acceptance of the Government Trading Partner
Agreement (TPA).
g. Initial invoices (both paper and EDI) cannot be processed for
payment without submission of a copy of the corresponding agency
purchase/delivery order. Any data the ordering activity requests for
inclusion on the invoice must be included on the invoice sent to GSA.
Include applicable Special Item Numbers (SIN's) and/or part numbers if
not referenced in the customer's order. Pursuant to the Prompt Payment
Act, improper invoices will be returned to the contractor.
h. Ordering activities may purchase open market items on the same
purchase/delivery order form used to order items from the schedule
contract if the acquisition is made at the lowest overall cost. The
invoiced amount may include allowable nonschedule items. (However, the
invoiced amount for any nonschedule item will also be subject to a 1
percent charge to the ordering agency.)
i. All questions concerning invoices shall be addressed to the GSA
Office of Finance (816) 926-7356. Questions concerning purchase/
delivery orders shall be directed to the agency placing the order.
Questions regarding GSA billings shall be directed to the GSA Office of
Finance at (816) 926-7037.
j. In order to facilitate processing of invoices, contractors are
requested to include on the invoice the name and phone number of a
person to contract should questions arise regarding the invoice.
k. The contractor's submission of an invoice constitutes a
representation that the supplies have been delivered to a post office,
common carrier, or point of first receipt by the Government; and the
contractor agrees to replace, repair, or correct supplies not received
at destination, damaged in transit, or not conforming to the purchase/
delivery order. In the case of services, submission of the invoice
means that required services have been satisfactorily performed. GSA
and the ordering activities reserve the right to require proof of
shipment or evidence of delivery/performance prior to payment. GSA,
Office of Finance will implement a post payment satistically reliable
system to validate agency receipt of goods or services.
l. Ordering activities will continue to resolve delivery and other
performance problems concerning their schedule orders directly with the
contractors. When resolution of disputes remains unresolved, ordering
activities may charge back billings to GSA. GSA will offset claims from
future payments to suppliers after notification. Disputes will continue
to be resolved by the applicable GSA Contracting officer.
m. Pursuant to the clause, Examination of Records by GSA (552.215-
70) and FAR, Subpart 4.7, contractors are required to retain files,
records, and information relevant to this contract, including records
to support/confirm shipments, deliveries, invoices, and to verify
agencies' purchase/delivery orders, for up to 3 years after final
payment, or as specified in Subpart 4.705 through 4.705-3, whichever
periods expire first.
Cover Page Notice
Single Payment Office
The General Services Administration, Federal Supply Service is
pleased to announce the establishment of a single payment office for
receipt and payment of schedule invoices. Invoices submitted for
payment for all orders issued under this Federal Supply Schedule will
no longer be paid by the individual ordering activities. Instead, GSA
will be the single payment office for all invoices submitted against
contracts under this schedule. This new single payment procedure
relieves contractors of the burden of invoicing numerous billing
offices, resulting in a reduction in administrative costs for
contractors. See Clause I-FSS- , Contract Payment Information.
(End of Notice)
Industrial Funding of Schedules Program Payment/Billing Steps
The following is a brief outline of the steps for paying and
billing by the GSA Kansas City Finance Office:
1. Invoices with copies of purchase/delivery orders will be
accepted by GSA either through Electronic Data Interchange (EDI) or
paper.
2. Proper invoices, with accompanying purchase/delivery orders will
be entered into the Finance Information Network (FINET) data base.
3. GSA will pay proper invoices (check or electronic fund transfer
(EFT), at negotiated contract terms in accordance with the Prompt
Payment Act.
4. GSA will bill customer agencies for reimbursement. The amount
billed will be the contractor's published schedule price shown on the
customer purchase/delivery order. The price published in the schedule
pricelist is based on adjusting the negotiated award price upward by 1
percent (of the awarded price.) This adjustment is accomplished by
multiplying the schedule contract price by 1.01. (See attached
example).
5. Some data captured by GSA will be available to contractors and
ordering activities via a bulletin board. such data will include paying
and billing data plus a scanned image of any paper invoice and order in
the system. It will also facilitate communication with the GSA Finance
employees via electronic mail box or telephone for any other assistance
needed. Access to the system will require identification of the user by
vendor Tax Identification Number (TIN), or ordering activity paying
office Activity Address Code (AAC), and a unique password.
6. Ordering offices will continue to resolve delivery problems
directly with the contractors. When resolution of disputes is not
forthcoming, customers may charge back billings to GSA. GSA will offset
claims from future payments to suppliers after notification. Dispute
will continue to be resolved by the applicable GSA contracting
officers.
Example
The agency's purchase/delivery order reflected the adjusted
schedule price. The contractor's invoice reflects the negotiated award
price.
Retail pricelist.............................................. $100.00
GSA negotiated discount....................................... 10%
GSA contract award price...................................... 90.00
Adjusted schedule price (as shown in the authorized schedule
pricelist)................................................... *90.90
Agency purchase order price................................... 90.90
Contractor invoices GSA at the contract award price........... 90.00
GSA pays contractor........................................... 90.00
GSA bills and collects from agency............................ 90.90
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*GSA contract award price--$90.00x1.01 = adjusted schedule price of
$90.90.
Dated: December 21, 1994.
Nicholas M. Economou,
Director, FSS Acquisition Management Center.
[FR Doc. 94-31751 Filed 12-23-94; 8:45 am]
BILLING CODE 6820-24-M
