GSA Cooperative Purchasing for Software Companies: State and Local Sales

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By — Founder of GovExpress; prior domain experience at Bloomberg Government and GovWin IQ.

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A GSA schedule is usually thought of as a federal contract. For software companies it can also be a way into state and local government. States, counties, cities, school districts and public universities can buy IT products and services from GSA schedule contractors under a program GSA calls Cooperative Purchasing. For a company that already holds a schedule, that can shorten a sales cycle that would otherwise start with a state-level solicitation.

This guide covers which programs let non-federal buyers use GSA schedules, how a contractor opts in, and what changes when the buyer is a state or local entity instead of a federal agency. The rules cited here are from 40 U.S.C. 502, the E-Government Act of 2002 and GSA’s schedule clauses.

The three programs

GSA runs three programs that open schedules to state and local buyers. Each has its own statute and scope.

Cooperative Purchasing. Section 211 of the E-Government Act of 2002 amended 40 U.S.C. 502 to let state and local governments buy information technology from what was then Schedule 70. The Local Preparedness Acquisition Act of 2008 added the security, law enforcement and emergency equipment schedule that was Schedule 84. Since GSA folded its schedules into the single Multiple Award Schedule, eligibility follows the special item numbers (SINs) that came over from those two schedules. Software, SaaS, cloud and IT services SINs are the ones most software companies hold.

Disaster Purchasing. Section 833 of the John Warner National Defense Authorization Act for Fiscal Year 2007, as later amended, lets state and local governments buy from all GSA schedules for disaster preparedness, response, and recovery from major disasters declared under the Stafford Act or from terrorist, nuclear, biological, chemical or radiological attack. This program is not limited to IT SINs, but the purchase has to serve one of those purposes.

Public Health Emergencies. State and local governments can also buy from GSA schedules when they use federal grant funds to respond to a public health emergency declared by the Secretary of Health and Human Services under section 319 of the Public Health Service Act.

For most software sales, Cooperative Purchasing is the program that matters, because it covers ordinary IT buying with no disaster or emergency trigger.

Who counts as a state or local buyer

The statute defines state and local governments broadly. The definition covers the states and territories, counties, municipalities, cities, towns and townships, tribal governments, public authorities, school districts, public colleges and universities, and other instrumentalities of state and local government.

Federal grant recipients that are not governments, such as most nonprofits, are not eligible under Cooperative Purchasing. If a buyer is unsure whether it qualifies, GSA’s guidance for state and local buyers is the place to check, not your sales team’s reading of the statute.

Opting in

Participation is voluntary. A schedule contractor chooses whether to accept state and local orders, usually through a modification to its schedule contract that accepts the cooperative purchasing terms. Once it participates, GSA’s catalog tools mark its eligible offerings so non-federal buyers can find them.

Even after opting in, the contractor can decline an individual order from a non-federal entity. GSA’s clause on use of Federal Supply Schedule contracts by non-federal entities sets out that right and the terms that apply to these orders. Read the current version in your contract before you accept the first one.

Opting in does not create a separate contract or a separate price list. The same schedule prices, terms and SINs apply.

What changes when a state or local entity orders

The schedule terms carry over, but several things work differently from a federal order:

  • The buyer follows its own procurement rules. A state or local entity is not bound by the federal ordering procedures in FAR subpart 8.4. Its own law decides whether it needs multiple quotes, a written justification or board approval. Many states treat a GSA schedule as an approved source but still require competition.
  • Prices are ceilings. Your schedule price is the most the buyer can pay. It can ask for a lower price, and a buyer comparing GSA pricing against a state contract will often ask. Our guide to GSA schedule pricing explains how the ceiling is set.
  • The buyer can add terms. The ordering entity may add terms required by its own law, such as state-specific privacy, records or accessibility requirements, as long as they do not conflict with the schedule contract. Read them before you accept.
  • GSA is not a party. The order is between your company and the state or local entity. GSA does not manage performance or payment, and disputes are yours to resolve with the buyer.
  • Commercial terms need a second look. Your Commercial Supplier Agreement was negotiated against federal law, where clauses such as automatic renewal or customer indemnification of the vendor are unenforceable against the government. State law treats some of these terms differently. Our guide to software license terms in federal contracts covers the federal side, and your counsel should review the state side.
  • Sales count as schedule sales. Orders placed under your schedule are reported as schedule sales and carry the Industrial Funding Fee, the same as federal orders.

Where cooperative purchasing fits in a state and local strategy

GSA schedules are one route into state and local IT buying, not the only one. Many states run their own IT contracts, and multi-state cooperatives such as NASPO ValuePoint and Sourcewell award contracts that public entities across many states can use. Some buyers prefer those vehicles because their terms were written under state law.

A cooperative purchasing option helps most when:

  • A buyer already knows GSA. IT offices that work with federal grant programs or federal partners are often familiar with schedule pricing and terms.
  • The buyer needs to move quickly. If its rules accept a GSA schedule as a competed source, an order can be placed without a new solicitation.
  • Your schedule pricing is competitive. Buyers compare. A schedule price that is higher than what a state contract offers will not win the order.

It helps least when the buyer’s own rules do not recognize GSA schedules, or when a statewide contract already covers your product category.

Checklist before you accept state and local orders

  • Confirm your SINs are eligible. Cooperative Purchasing follows the SINs that came from the former IT and security schedules.
  • Opt in through a contract modification, and confirm GSA’s catalog shows your eligible offerings.
  • Prepare a state terms addendum. Know which of your commercial terms you can accept under each state’s law, and which you need to drop.
  • Train your sales team on the limits. A buyer still follows its own procurement rules, so a GSA schedule does not guarantee a sole-source order.
  • Track and report the sales as schedule sales, including the Industrial Funding Fee.
  • Read the current rule text. GSA schedule clauses and the FAR are being revised, so clause numbers and terms can change. Confirm the version in your contract, and get advice from counsel on a specific question.

The short version

  • State and local governments can buy IT from GSA schedules under the Cooperative Purchasing Program, authorized by 40 U.S.C. 502(c).
  • Disaster Purchasing and Public Health Emergencies open all schedules to state and local buyers for specific purposes.
  • Participation is voluntary, and a participating contractor can still decline a non-federal order.
  • The buyer follows its own procurement rules, schedule prices are ceilings, and GSA is not a party to the order.
  • Your commercial terms need review against state law, because federal unenforceability rules do not carry over.

Where this fits

A GSA schedule is one of the signals buyers use to judge whether a software company is ready to sell to government, whether the buyer is federal or state. A company’s own description of its contract vehicles is self-attested. A schedule award that a buyer can look up in GSA’s systems is a different kind of evidence, and buyers treat the two separately. Score your company’s federal readiness to see how your company looks across the categories buyers check.

Frequently Asked Questions

Can state and local governments buy from a GSA schedule?

Yes, within limits set by statute. Under 40 U.S.C. 502(c), added by Section 211 of the E-Government Act of 2002, state and local governments can buy information technology from the schedule that was Schedule 70. The Local Preparedness Acquisition Act of 2008 extended this to the security and law enforcement schedule that was Schedule 84. GSA calls this the Cooperative Purchasing Program.

Do I have to sell to state and local buyers if I hold a GSA schedule?

No. Participation is voluntary. A schedule contractor chooses whether to accept orders from state and local entities, and a contractor that participates can still decline an individual order from a non-federal buyer.

Do state and local buyers follow FAR ordering procedures?

No. A state or local entity ordering under cooperative purchasing follows its own procurement rules, not the federal ordering procedures in FAR subpart 8.4. Many states still require competition or a written justification, so expect the buyer to ask for quotes.

Can a state or local buyer get a lower price than my schedule price?

Yes. Schedule prices are ceiling prices. The ordering entity can ask for a lower price, just as a federal ordering activity can, and many will.

Is GSA a party to a state or local order?

No. The order is between your company and the ordering entity. GSA is not responsible for performance or payment, and disputes over the order are between you and the buyer.

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