Where did my pricelist go: the broad fallout of GSA’s TAA compliance issues?
The chances are that you’ve heard about the sweeping audit that GSA is conducting of products on schedules 56, 66, 73, and 84. If you have products on GSAAdvantage!, Whether or not your posting violates the TAA Trade Agreement Act, you must respond to the governments inquiries about country of origin by 5/13/16 or else your pricelist will be removed. And once it’s removed, it can be extremely frustrating to get it reposted.
By Friday, you are required to certify the origin of every product that you sell to the government. For any item found to be manufactured in the United States or a TAA Designated Country, you must provide a copy of the Certificate of Origin OR certification from manufacturer on official letterhead verifying the products they supply are compliant with Trade Agreements Act. If you discover that you have TAA non-compliant items on your price list, you will have to submit a modification to have them deleted, and upload a new catalog by 5/16/16.
You might be tempted to ignore GSA’s warning, saying, “All of my products are made in America. I should know, I’m the manufacturer.” Do not do this. Anyone who has not certified that everything they offer is TAA compliant will have their price list removed from GSAAdvantage! Any future instance of a product misrepresenting its country of origin, with an unverified origin, or from a country that is not TAA compliant will result in your pricelist being delisted and your GSA schedule contract being subject to cancellation.
That’s a heavy punishment, but for the federal government, it is a serious issue. The federal government has bound itself with a variety of laws beginning with the Buy American Act (BAA) of 1933. Basically, it says that the federal government may not purchase goods from non-US companies if there is a US company that can provide it…unless. That unless allowed for the 1983 Trade Agreement Act (TAA), which specifies the exceptions to the BAA. The trade Agreement Act states that:
If you are selling a product that was manufactured* outside of the US, it must be from a TAA “designated country”. TAA “Designated Countries” include:
- Those with a free trade agreement with the United States such as Canada, Mexico, Australia, and Singapore
- Countries that participate in the World Trade Organization Government Procurement Agreement (WTO GPA), including Japan and many countries in Europe
- Least developed countries such as Afghanistan, Laos, and Ethiopia
- Caribbean Basin countries such as Aruba, Costa Rica, and Haiti
China, Russia, Brazil, and India are not on that list.
If you have a product that was made in China, for example, you are violating the TAA. Now historically, Violating the TAA would have been a case of misrepresentation, triggering the False Claims Act. The FCA penalizes the company that misrepresents their product (saying it is TAA compliant when it is not, which causes the federal government to violate their own laws and trade agreements). The penalty is treble (3x) damages plus up to $11,000 per incident. In 2005, Office Depot settled for a 4.75 million dollar fine and OfficeMax settled for a $9.72 Million fine. These penalties were all for selling products to the federal government that were purported to have been TAA compliant, but were not.
And this is the question: How did non-compliant items get onto a GSA schedule in the first place? According to the settlement agreements, no fault was ascribed. That is, the government didn’t insist that the business “knew” they were in the wrong, the company didn’t declare that they were innocent. And that’s because, as our supply chain becomes increasingly globalized, the question of “country of origin” becomes more difficult to ascertain.
There are many ways for a non-compliant item to appear on a GSA schedule: perhaps during the initial award process, a catalog with thousands of products may have accidentally slipped in something that was made in china. Or a supplier or manufacturer may have given incorrect information to a distributer. Maybe an item that was once manufactured in a TAA compliant country may have had its country of origin changed without the distributer knowing. Or there may be some mix-up in how a business interprets the law. Whatever the case is, it’s still highly illegal. GSA makes this statement:
“Regardless if your firm is a manufacturer, distributor, reseller, etc., the responsibility for compliance with TAA and [Country Of Origin] representations rests solely with the GSA Schedule contract holder. GSA Schedule contract holders have a fiduciary duty to determine compliance with the TAA and to ensure that all COO representations in GSA Advantage are accurate regardless of any information provided by your suppliers or manufacturers if you are a distributor or reseller.”
So rather than waiting for a whistle blower or a complaint CAV to reveal these issues, GSA is being proactive. There should be no TAA-violating items for sale on GSAAdvantage in the first place, and they are taking steps to make sure that is the case.
If there is a TAA non-compliant item on your price list, the entire list will be taken down, and your GSA schedule contract may be cancelled.
If you need help or more information, reach out. Iwohner@ezgsa.com or 301-913-5000 x 5015.