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GSA Clarifies Permissibility of Upfront Payments for Software-as-a-Service Offerings

Client Alert | 1 min read | 04.18.24

On March 15, 2024, the General Services Administration (GSA) issued Acquisition Letter MV-2024-01 providing guidance to GSA contracting officers on the use of upfront payments for acquisitions of cloud-based Software-as-a-Service (SaaS).  Specifically, this acquisition letter clarifies that despite statutory prohibitions against the use of “advance” payments outside of narrowly-prescribed circumstances, upfront payments for SaaS licenses do not constitute an “advance” payment subject to these restrictions when made under the following conditions:

  • access to the software is granted contemporaneously with payment (i.e., delivery of the license is made contemporaneously with payment);
  • the license is acquired under a fixed-price or fixed-price with economic price adjustment, even if other portions of the task order or contract are not fixed price;
  • the license is priced at a single seat, multi-seat, unit, or subscription price covering a fixed term, defined as “a limited period of time”;
  • the license’s pricing/billing model allows for no utilization or consumption metric other than quantity to affect the costs incurred over the negotiated term;
  • the license does not require any upfront payment other than the fixed seat, unit, or subscription cost as a prerequisite for access or a pricing discount; and
  • within end user or other license agreements, the licensed service is continuous and uninterrupted for the negotiated term of access to the license.

This guidance follows Acquisition Letter MV-21-06, which permitted federal agencies to order cloud computing services on a consumption basis through GSA’s Federal Supply Schedule program (and eliminated application of the Price Reductions Clause to such offerings), and it represents the latest in a series of steps by GSA to better align the federal government’s acquisition practices for information services with customary commercial practices.

Insights

Client Alert | 3 min read | 11.21.25

A Sign of What’s to Come? Court Dismisses FCA Retaliation Complaint Based on Alleged Discriminatory Use of Federal Funding

On November 7, 2025, in Thornton v. National Academy of Sciences, No. 25-cv-2155, 2025 WL 3123732 (D.D.C. Nov. 7, 2025), the District Court for the District of Columbia dismissed a False Claims Act (FCA) retaliation complaint on the basis that the plaintiff’s allegations that he was fired after blowing the whistle on purported illegally discriminatory use of federal funding was not sufficient to support his FCA claim. This case appears to be one of the first filed, and subsequently dismissed, following Deputy Attorney General Todd Blanche’s announcement of the creation of the Civil Rights Fraud Initiative on May 19, 2025, which “strongly encourages” private individuals to file lawsuits under the FCA relating to purportedly discriminatory and illegal use of federal funding for diversity, equity, and inclusion (DEI) initiatives in violation of Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan. 21, 2025). In this case, the court dismissed the FCA retaliation claim and rejected the argument that an organization could violate the FCA merely by “engaging in discriminatory conduct while conducting a federally funded study.” The analysis in Thornton could be a sign of how forthcoming arguments of retaliation based on reporting allegedly fraudulent DEI activity will be analyzed in the future....