Recently, the General Services Administration (“GSA”) issued a proposed rule to codify a class deviation regarding GSA’s approach to common Commercial Supplier Agreement (“CSA”) and End User License Agreement (“EULA”) terms.  We have previously addressed the class deviation here and in an article for the Coalition for Government Procurement available here.  While the Proposed Rule apparently is intended to assuage contractor concerns about the class deviation, it falls short of this goal, so contractors must remain vigilant if and when the Proposed Rule is finalized and GSA begins to attempt to implement it through contract modifications.  Comments on the Proposed Rule are due by August 1, 2016.

Like the class deviation, the Proposed Rule would declare “unenforceable” 15 typical CSA/EULA terms and conditions that GSA believes are inconsistent with federal law. This change would thus allow GSA to ignore these clauses during negotiations, with the stated goal of reducing time and expense in negotiating CSAs/EULAs.

But the Proposed Rule does not stop there. Rather, it also creates a new GSAR clause, 552.212-4 (the “GSAR Clause”), which contains a non-standard Order of Precedence provision[1] that differs dramatically from the Order of Precedence provision currently in GSA Schedule contracts.  This new provision would dramatically impact the ability of contractors to rely even on the CSAs and EULAs that are negotiated with GSA.  In this regard, the new provision provides that, to the extent a term of a negotiated CSA/EULA conflicts with a term of the solicitation or another provision of the GSAR Clause itself, the solicitation and/or GSAR Clause governs.  This is not merely an administrative change.  As contractors are well aware, CSAs/EULAs can contain critical terms that were formed by negotiations and agreements between the two parties.  Contractors thus want to make sure such negotiated terms are not inadvertently trumped by arguably inconsistent terms in the solicitation or in the GSAR Clause — both of which are unilaterally drafted by GSA.

To mitigate the risk that would be created by the new Order of Precedence provision, contractors negotiating CSA/EULA provisions will need to ensure that any negotiated CSA/EULA terms do not create conflicts with the solicitation terms or the GSAR Clause. Moreover, to the extent GSA attempts to add the new GSAR Clause to an existing Schedule contract, contractors should address whether a price adjustment is necessary to account for the impact the change in the Order of Precedence provision will have.

[1] An Order of Precedence clause is a standard clause found in agreements with multiple documents or attachments. It clarifies how to resolve inconsistencies between the documents by listing the documents in order of control – i.e., the terms of a document higher on the list control over the terms of documents lower on the list.

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Photo of Kevin Barnett Kevin Barnett

Kevin Barnett represents clients in all aspects of government contracts law. He has represented contractors in litigating claims against the United States before the Court of Federal Claims, the boards of contract appeals, and against a foreign government in an international arbitration. He…

Kevin Barnett represents clients in all aspects of government contracts law. He has represented contractors in litigating claims against the United States before the Court of Federal Claims, the boards of contract appeals, and against a foreign government in an international arbitration. He has counseled clients on GSA schedule contract compliance, Buy American Act and Trade Agreement Act issues, and the attorney-client privilege. Mr. Barnett also routinely assists clients of all sizes in navigating the Freedom of Information Act (FOIA) process from drafting and negotiating requests through litigating in federal court.