Trade Agreements Act
Practical Advice on GSA Schedule Contracting
By: Carolyn Alston, General Counsel, Washington Management Group
Implementation of the Trade Agreements Act (TAA) has been a hot topic among GSA schedule contractors in recent years. A number of contractors have settled highly publicized False Claims Act actions. The settlements were based upon allegations that the companies misrepresented the country of origin (COO) of products delivered under the contract. All indications are that TAA compliance will continue to be a priority at GSA. This Carolyn's Corner article provides information to help Schedule contractors understand their TAA obligations.
What does the Act require?Products delivered under the contract must be
- Wholly the growth, product, or manufacture of the U.S. or a designated country; or
- Substantially transformed into a new and different article of commerce in the US or a designated country.
When does TAA apply?
Every GSA schedule contract contains clauses implementing TAA.
TAA applies to acquisitions that exceed $203,000 ($7,804,000 for construction contracts). This threshold is subject to revision by the U.S. Trade Representative approximately every 2 years. GSA applies the TAA threshold based on the total value of the entire GSA schedule, not the value of an individual company's contract.
Are there special requirements for GSA schedule holders?
Some GSA solicitations require that an offeror submit a description of the system that it uses to assure TAA compliance and describe how it monitors the system. If an offeror is a reseller it must obtain written assurance from suppliers that all products shipped will be TAA compliant.
How does the government decide if an item is TAA compliant
The Contracting Officer relies on the Contractor's self certification. Determining a product's country of origin can be complex when an item is made of many components, with manufacturing and assembly processes occurring in various countries. Industry and Federal agencies rely on decisions of U.S. Customs and Border Protection (Customs) in determining if, a product has been substantially transformed. To determine whether a particular product has been substantially transformed Customs looks at "the totality of the circumstances". Some factors that Customs considers include:
- The complexity of manufacturing or assembly processes
- Whether manufacturing processes result in a dramatic change in the character or functionality of the product
- Whether manufacturing processes result in a product with a different name, character, or use than that of the item from which it was transformed
Can a contractor get help in determining whether an item has been substantially transformed?
Customs maintains a searchable database of its decisions. http://rulings.cbp.gov/. Contractors may also request an opinion from third party experts. WMG consultants can assist clients in determining a product's country of origin. A contractor can also request that Customs make a determination about particular products. Only Customs can make an official TAA determination.
Where can I find a list of Designated Countries?
The Federal Acquisition Regulations contain a list of designated countries at section 25.003. Some notable countries not on the list include China, India and Malaysia
Does TAA apply to a contract for Services?
TAA applies in contracts for services. The impact of the Act is, however, significantly less than in contracts for products. A recent GAO decision confirmed that for services, country of origin is determined based on where a company is legally established, not on the location from which the service is ultimately provided.
What can a contractor do to enhance its ability to comply with TAA?
Document your manufacturing processes.
Require notification to your GSA Contracts Administrator when there is any manufacturing change that affects country of origin.
Require suppliers to periodically certify country of origin; require suppliers to promptly notify your GSA Contracts Administrator of any changes in country of origin.
Use the Modifications clause to promptly delete non-compliant products.
Do you have a government contracting question? Please email it to me at CarolynsCorner@washmg.com.
Carolyn Alston is General Counsel of Washington Management Group. She provides legal counsel to WMG's federal acquisition consulting operation, focusing on Multiple Award Schedule contract award, compliance, and audit procedures.
Prior to joining WMG, Carolyn had a distinguished career with the U.S. General Services Administration. Her experience as a senior attorney in the GSA's Office of General Counsel led to her role as the lead in developing and writing GSA's Multiple Award Schedule policy. Her GSA career culminated in running the agency's successful GSA Schedule program as Assistant Commissioner for Acquisition at GSA.
Carolyn holds a BA from Cornell University and a JD from Georgetown Law Center. Carolyn is a member of the bar in Maryland and the District of Columbia.
WMG offers the information provided on this web site for informational purposes only.
WMG is a well recognized expert in GSA Schedule contracting, with more than 30 years of corporate experience. The information provided on this site is based on our substantial acquisition expertise, particularly with respect to commercial item contracting. Nothing on this site should be interpreted as legal advice.
As you recognize, most decisions regarding your GSA Schedule contract are highly dependent upon the facts of your particular circumstances. You should not rely on this site to make specific decisions about your contract. If you are considering taking specific actions on a matter affecting your GSA Schedule contract, we highly recommend that you contact WMG regarding a proposal for individual acquisition consulting services or that you seek advice from legal counsel with expertise in GSA Schedule contracting.
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