As agencies continue transitioning to cloud solutions that make government services more efficient and accessible, simplifying how they pay for these solutions may seem like a minor detail, but it is critical and it’s a big deal.
Due to the expertise, influence, and progressive-thinking of GSA’s Information Technology Category (ITC), we’ve worked to find a new approach to give agencies better solutions while ensuring cost-effectiveness and compliance with regulations.
Effective May 2024, GSA changed its rules about upfront payment for software licenses delivered as Software as a Service (SaaS).
The change affects Multiple Award Schedule (MAS) Special Item Numbers (SINs), most significantly SIN 518210C Cloud Computing and Cloud Related IT Professional Services.
The change is another step toward delivering lower costs by aligning federal IT purchasing with commercial practices.
Background
We know that the software service delivery model has changed rapidly in recent years and to better serve our customer agencies and industry partners, we’re adapting, too.
Last year, we asked for industry feedback on the SaaS payment model and ways to align with industry best practices and the commercial marketplace.
Based on their feedback and our research, we published a significant update in the recent MAS refresh, which should allow for increased competition and lower-risk entrance of small businesses into the SaaS marketplace.
Good for agencies, good for cloud service providers
Traditionally, software was provided via a CD-ROM that needed installation and updates. However, with rapidly changing technology, most of it is now offered via the SaaS model. These services were billed in arrears on a month-to-month basis for a long time.
With our recent update, we are providing the option to allow for payment up front, that is, paid at time of delivery for software delivered as SaaS that meet specific criteria, while keeping the option for month-to-month billing.
This change provides agencies with more flexibility and control to align task orders to SaaS license needs. Using the upfront payment model allows agencies to negotiate with vendors and resellers to realize more potential savings.
Next steps for vendors
To offer the upfront payment option, vendors must submit a modification adding it to their schedule contract. We encourage vendors to offer SaaS through the Cloud SIN 518210C so customers can easily discover it. And along with that, adding the upfront payment pricing and month-to-month pricing options to give agencies more flexibility.
Aligned with commercial best practices, upfront payments can significantly reduce not only the cost of SaaS licenses, but also the administrative burden through one task order and one invoice to process.
Best practices and resources
GSA has developed several resources to assist agencies in navigating cloud payments and IT procurement:
- Acquisition Resource Guides: These guides provide detailed advice on managing costs, ensuring data protection, and selecting the right vendors.
- Data Dashboards: Tools like the searchable data dashboard help track AI-related contract actions and spending, providing valuable insights for decision-making.
- Cloud SME Support: Our cloud subject matter experts are here to support agencies and vendors navigating our systems. They can be reached by email through cloudinfo@gsa.gov.
By following these best practices and utilizing available resources, federal agencies can effectively manage their cloud payments and enhance their IT infrastructure.
Visit our website to learn more about the MAS Refresh, or follow the Cloud and Software community on Interact.