On February 22, 2018, the General Services Administration (GSA) issued a final rule that addresses commercial supplier terms that are inconsistent with, or create ambiguity in relation to, federal law. The new rule states that "[s]tandard commercial supplier agreements contain terms and conditions that make sense when the purchaser is a private party but are inappropriate when the purchaser is the Federal Government." Accordingly, the rule makes changes to avoid conflict with common commercial terms.

The GSA pursued this rule because commonly recurring conflicting or ambiguous terms and conditions found in commercial agreements require the GSA to negotiate individual agreements to address the conflicts, often at significant delays and cost to the GSA and contractors. This rule should reduce proposal and administrative costs for the GSA and contractors, and improve time efficiency for the contracting process.

Notably, the rule adds a paragraph to GSAR 552.212-4 identifying 15 common commercial terms that are unenforceable against the government. This includes a prohibition against automatic renewals and provisions conflicting with the Anti-Deficiency Act, 31 USC section 1341. The rule clarifies that federal law controls, that the government is not bound by commercial supplier terms and that the contract is subject to the Contract Disputes Act (GSAR 552.212-4(w)). (83 Fed. Reg. 7,631, 02/22/2018).

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