GSA Issues Guidance on Upfront Payments for Cloud-Based Software-as-a-Service Licenses
The General Services Administration (GSA) has issued new guidance on the use of upfront payments for cloud-based Software-as-a-Service (SaaS) acquisitions. In Acquisition Letter MV-2024-01, GSA clarifies that upfront payments for SaaS licenses do not constitute an “advance” payment under certain conditions.
According to the guidance, upfront payments for SaaS licenses are allowed when access to the software is granted at the same time as payment, the license is acquired under a fixed-price or fixed-price with economic price adjustment, and the pricing model does not include any utilization or consumption metrics that affect costs.
This new guidance follows Acquisition Letter MV-21-06, which allowed federal agencies to order cloud computing services on a consumption basis through GSA’s Federal Supply Schedule program. The goal of these changes is to align the federal government’s acquisition practices for information services with commercial practices.
Overall, this new guidance is expected to streamline the acquisition process for SaaS licenses and make it easier for federal agencies to procure the technology they need.
