In a draft memo, the Pentagon would place a 5% cap on most fees charged by value-added resellers (VARS) starting with a specific special item number (SIN) for IT products. This cap would only apply to IT products sold through the General Services Administration’s schedule contract. The draft memo is one of two expected from the administration to address what it believes are higher than normal costs when buying IT products and services through resellers.
Responding to the legality of capping profits on VARs, PilieroMazza GovCon Partner Cy Alba said: “If the government is buying through a firm fixed-price contract, then they are not supposed to be asking for cost or price information.” He added: “If it’s awarded through the GSA schedule and it’s below the maximum order threshold, then prices are determined to be fair and reasonable by GSA.”
Alba also said: “If it’s a commercial item, or really anything that has adequate price competition, the market is supposed to make that determination that the price is fair and reasonable. If the government thinks the markup is too high, then they don’t have to buy the product or service from the vendor.”
Excerpt taken from the article “Draft Memo Details DOD Plans to Cap Most Reseller Fees” by Jason Miller for Federal News Network. Visit this link for the full article.
About Cy Alba
Cy is a partner in PilieroMazza’s Government Contracts Group. He counsels clients in a broad range of government contracting matters before government agencies and federal courts that include overall regulatory compliance with numerous regulatory schemes, including FAR and DFARS requirements. Cy also represents companies of all sizes with compliant corporate structuring, mergers and acquisitions, and small business rules and regulations. He handles the prosecution and defense of small business size and status protests and appeals, as well as bid protests and claims and appeals before administrative agencies and federal courts. Read more here.
