(TAA Compliance): Working with the GSA is a worthy endeavor for most businesses. The astute nature of a GSA contract helps bolster the company’s reputation immediately. Plus, most companies perceive a GSA Schedule as an opportunity to generate and save money.
Yet, when companies get involved in the GSA process, they may encounter unfamiliar words and concepts that make their application more difficult. One of the most common portions of GSA Schedule applications that give companies pause is TAA Compliance. Thus, they often wonder what TAA compliance is and how it affects their organization.
The Trade Agreements Act (TAA)’s enaction aimed to promote equitable international trade with specific countries. To stay compliant with the TAA and GSA, companies who work with foreign-made products or services must know which companies are barred. Specifically, only products and services created in the United States or end products from TAA member countries purchased by the US government.
This rule also applies to the GSA as a government department, which means that contract holders must sell items and services created in the United States or countries in TAA compliance.
Although it is simple to comprehend what TAA Compliance entails, it is more difficult to understand how it relates to businesses and why it is critical to be TAA Compliant while working under a GSA Schedule Contract.
The following sections will address this issue.
How is TAA Compliance Related to GSA Contracts
The most important element of comprehending TAA compliance is knowing which countries to avoid doing business to avoid violating one’s GSA Schedule terms and conditions.
China, Russia, India, and Malaysia are the primary countries on which businesses should focus. These nations are all on the non-compliant list, and selling products or services from these countries through a GSA Schedule might cause a lot of headaches for GSA Schedule contractors. If the contractor’s products get created in the United States from start to finish, or 50% from a designated country, they need not worry.
The following countries are not in TAA Compliance:
● Sri Lanka
Furthermore, the Trade Agreements Act (TAA) applies to GSA Schedule Contracts, which means that all products included on the contract must get cultivated or “substantially converted” in the United States or a TAA “designated nation.”
The designated countries include:
● World Trade Organization Government Procurement Agreement Countries;
● Free Trade Agreement Countries;
● Least Developed Countries; and
● Caribbean Basin Countries
The Role of TAA Compliance for GSA Schedule Contractors
Businesses with a GSA Schedule must agree that any products or services they offer that originate outside of the United States must already be “substantially transformed.” When businesses seek suppliers, they must choose the right manufacturer to ensure TAA compliance.
The term “substantially transformed” refers to transforming a product into a new and separate article of commerce with a distinct name, character, or usage from the original product.
Contractors may find themselves in a situation where a product must get constructed in multiple countries. Still, the “substantially transformed” criterion applies only to the final country the product passes through before arriving in the United States. GSA Schedule contractors are safe as long as 50 percent of the production happens in a TAA-compliant country.
The business is solely responsible for ensuring that products and services comply with TAA regulations. Furthermore, it is the business’s job to ensure that the products have gotten transformed substantially before selling them. This stipulation is why understanding TAA compliance in the context of a GSA contract is critical.
Knowing the ins and outs of TAA compliance can help GSA contract holders keep their business in control if they plan to bring supplies outside the US. There are a few things GSA contract holders should have in addition to being aware of what is compliant to ensure they do not run into any issues:
● Maintain records of all supplier agreements, including a letter of supply;
● Always have proper, up-to-date country of origin documentation, including origin markings, country of origin code, and the most recent country of origin documents;
● Keep track of all sample products, product marks, and product matching;
● Keep up-to-date on any new information from US Customs and Border Protection;
● Regularly participate in product market sampling and training;
● Investigate any difficulties with TAA compliance to identify and resolve the problem swiftly; and
● Seek professional assistance if you executed a large volume of sales with a country that is not TAA-compliant.
GSA contract holders will better understand what constitutes TAA compliance and what does not by undertaking the above steps. GSA contract holders will be able to spot any concerns before they spiral out of hand if they have a mechanism in place.
Finally, the best thing a contractor can do for their business is to seek professional advice if they have any concerns. GSA Schedule contract holders can easily determine whether they have any TAA Compliance concerns and facilitate a speedy solution with the help of a government contracting specialist.
To avoid penalties, contractors must proactively commit to guaranteeing that their company’s products, services, and operations comply with GSA Compliance terms and conditions after obtaining a GSA Schedule contract. Moreover, to avoid losing their GSA Schedule contract due to new legislation and acquisition requirements, contractors must only conduct activities within the confines of their GSA Contract and maintain TAA compliance.
Essentially, the US government will only buy products or services that are entirely made in the US or another “designated country” or have been substantially changed in the US or another “designated country” under the Trade Agreements Act (TAA).
GSA contract holders must not sell items or services from nations that are not “designated countries,” such as China, India, Malaysia, Russia, or Thailand, to name a few, to comply with the TAA. Contractors must also provide an accurate Country of Origin (COO) for each product or service they offer under their GSA Schedule contract.
TAA compliance and honoring GSA Schedule contracts can be worthwhile and profitable, despite the difficulty. GSA Contract holders should remember that it is better to remain in TAA compliance now than to risk the consequences of non-compliance later.
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