How and why to assure TAA compliance with your GSA contract

The United States Government provides a huge market of opportunities for domestic and international businesses via GSA contracts. To ensure reliable, transparent and fair trade, GSA contractors are subject to a set of compliance rules laid out in the Trade Agreements Act (TAA).

What is the Trade Agreements Act?

The Trade Agreements Act concerns government acquisitions costing over $193,000, and outlines a list of designated countries from which the United States Government can acquire products or services. A lower cost threshold applies to some countries, including Canada, Mexico, and Australia. The list comprises member countries of the World Trade Organisation Agreement on Government Procurement, Free Trade Agreement, and certain Least Developed countries and Caribbean Basin countries. Notably, a number of Asian and South American countries are absent from the list, including Brazil, Russia, India and China.

When a product is assembled in multiple countries, TAA compliance rules require that at least 50% of the final product must have undergone ‘substantial transformation’ in the US or a designated country. ‘Substantial transformation’ refers to any changes in the name, properties, or use of a product’s components during the manufacturing process.

TAA compliance and your GSA contract

As a GSA contractor, you must be able to demonstrate that you are TAA compliant.

There are a number of ways to ensure this:

1.Work with reliable manufacturers and suppliers who can prove that they adhere to the Trade Agreements Act.

2. Keep your documents organised and up-to-date, including supplier agreements and detailed inventories. This will help if you are audited.

3. Stay informed. U.S. Customs and Border Protection determines the criteria of ‘substantial transformation’, and the list of TAA-designated countries can change often.

4. Seek the advice of professionals if you conduct significant business with non-TAA-designated countries or are unsure about any aspect of your TAA compliance.

Businesses whose products or services fail to adhere to TAA compliance rules risk serious consequences: having their GSA contract terminated; facing sanctions from the United States Government; and even being prohibited from undertaking further federal contracts. In recent years, TAA violations have cost companies millions of dollars in terminated contracts and fines issued under the False Claims Act.

Assuring TAA compliance

Assuring that your GSA contract is compliant with the Trade Agreements Act strengthens the reputation of your business and paves the way to lucrative future opportunities with the United States Government. However, it is a complex and time-consuming process. Price Reporter has over 14 years of experience with GSA contracts: our consultants can advise you on TAA compliance rules, and you can focus on sales and business development.