Breakout Session 809 Ms. Deborah Lague, Contract Officer, Office of Acquisition Management, General Services Administrat

2. GSA Schedule ComplianceWhat your company may be doing wrong and not even know it! Breakout Session 809 Ms. Deborah Lague, Contract Officer, Office of Acquisition Management, General Services Administration & Dr. Tomi W. Bryan President & General Counsel, FedLinx, Inc. Wednesday, April 25th, 2007 1:30 – 2:30 p.m.

3. The 10,000 Foot View • This seminar applies Senge’s Systems Thinking (1994) to internal GSA Schedule programs. • A systems approach can help companies realign internal processes and procedures with best practices to avoid having dirty little secrets exposed at audit time. • Three of the most common GSA Schedule contractor system failures – accurate payment of the Industrial Funding Fee (IFF), triggering the price reductions clause and Trade Agreements Act (TAA) compliance -- are the end responsibilities of much larger systems.

4. The 10 Foot View • Review Systems Thinking • Review system for Payment of the Industrial Funding Fee (IFF) • Identify components of the system • Review system for Triggering the Price Reductions Clause • Identify components of the system • Review system for Trade Agreements Act Compliance • Identify components of the system

5. Senge’s System Thinking • Senge (1994) explained that the current business environment needs systems thinking now more than ever because complexity is overpowering us: “Perhaps for the first time in history, humankind has the capacity to create far more information than anyone can absorb, to foster far greater interdependency than anyone can manage, and to accelerate change far faster than anyone’s ability to keep pace. Certainly the scale of complexity is without precedent.

6. Senge’s System Thinking All around us are examples of ‘systemic breakdowns’--problems such as global warming, ozone depletion, the international drug trade, and the U.S. trade and budget deficits--problems that have no simple local cause. Similarly, organizations break down, despite individual brilliance and innovative products, because they are unable to pull their diverse functions and talents into a productive whole.” (Senge, 1994, p. 69).

7. Senge’s System Thinking • The premise of systems thinking, the science of understanding how systems operate, is that organizational designs of the past are no longer capable of carrying organizations into the future. According to Senge (1994) systems thinking is a discipline for “seeing the ‘structures’ that underlie complex situations, and for discerning high from low leverage change” (Senge, 1994, p. 69).

8. “At the heart of the art of systems story telling is one question: How did we (through our internal thinking, our processes, our practices, and our procedures) contribute to or create the circumstances (good and bad) we face now?” Senge’s System Thinking Source: Kemeny, J., Goodman, M., & Karash, R. (1994). Starting with storytelling. In P. M., Senge, A. Kleiner, C. Roberts, R. Ross & B. Smith (Eds.), The fifth discipline fieldbook (pp. 97-108). New York: Currency Doubleday.

9. Senge’s System Thinking • The systems thinking process has the “distinct advantage of helping corporate leaders and managers recognize that decisions must be made in the context of the entire organization and not in a piecemeal fashion” (Senge, 1994, p. 69).

10. THE SYSTEM FOR IFF • The beginning: a GSA Sale • The end for your company: payment of the IFF • The end for the Federal Government: an audit • Question we should ask post-audit after being told we did not track IFF accurately: • How did we (through our internal thinking, our processes, our practices, and our procedures) contribute to or create the circumstances (good and bad) we face now?”

11. The beginning: What is a GSA sale? • According to The Steps to Success, any one or more of the following may indicate that a sale is a MAS sale: • The GSA Contract Number is stated on the purchase order or task order • The ordering information and terms are the same as your GSA contract • The customer made contact with you company through GSA Advantage! or e-Buy

12. The beginning: What is a GSA sale? • The product or service is on your GSA contract • The customer pays with the government purchase card • The pricing is at or below the schedule price • The order is over the micro-purchase level ($3,000) and there is no indication of any other procurement vehicle being used (p. 24)

13. The end: accurate payment of IFF • Creating the system • A process for distinguishing a GSA sale from a non-GSA sale • A process for calculating IFF on GSA sales • A process for accumulating each order’s IFF for the quarterly payment

14. The end: accurate payment of IFF • Creating the system • A process for reporting the IFF for payment • A process for documenting payment • Departments involved?

15. The end for the Federal Government: the audit • Track and maintain GSA orders • Track and maintain IFF calculations per order and per quarter • Maintain records of 72A quarterly reports

16. THE SYSTEM FOR PRC • The beginning: a sale to the BOA customer • The end for your company: acceptance of the order from the BOA • The end for the Federal Government: an audit • Question we should ask post-audit after being told we triggered the PRC: • How did we (through our internal thinking, our processes, our practices, and our procedures) contribute to or create the circumstances (good and bad) we face now?”

17. The beginning: A sale to the BOAcustomer • What is the BOA customer? • This is the customer that forms the baseline for operation of the PRC • Also known as the tracking customer or the most favored customer • Not a proposal but a sale

18. The end: maintaining the relationship between MAS Price and BOA customer price • Creating the system • A process for tracking current pricing • A process for tracking sales to BOA customer • A process for calculating pricing relationship between MAS price and pricing to BOA customer • A process for documenting pricing determinations • Departments involved?

19. The end for the Federal Government: the audit • Track and maintain commercial pricing and MAS pricing • Track and maintain BOA customer orders • Track and maintain documentation certifying pricing relationship maintained

20. THE SYSTEM FOR TAA COMPLIANCE • The beginning: adding a product to the GSA Schedule • The end for your company: approval by GSA for product • The end for the Federal Government: an audit • Question we should ask post-audit after being told we have non-TAA compliant products on schedule: • How did we (through our internal thinking, our processes, our practices, and our procedures) contribute to or create the circumstances (good and bad) we face now?”

21. The beginning: adding a product • Your company wants to add a product to the GSA Schedule: • Your company is the manufacturer of the product and combines parts/components from other manufacturers to make an end product • Your company is a reseller of product

22. The end: approval by GSA to add the product • Creating the system • Manufacturer: A process for knowing where components come from • Manufacturer: A process for substantial transformation • Reseller: A process for letters of supply • Departments involved?

23. The end for the Federal Government: the audit • Track and maintain country of origin information • Track and maintain substantial transformation information • Maintain records of compliance

24. QUESTIONS? Ms. Deborah Lague deborah.lague@gsa.gov Or Dr. Tomi W. Bryan tbryan@fedlinx.com