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.
Contacts
Insights
Client Alert | 4 min read | 03.25.26
NAIC Intensifies AI Regulatory Focus: What Health Insurance Payors Need to Know
The National Association of Insurance Commissioners (NAIC) is intensifying its oversight of how insurers use AI — and the pace of regulatory activity shows no signs of slowing. Over the past several months, the NAIC has published a formal Issue Brief staking out its position on federal AI legislation, launched a multistate AI Evaluation Tool pilot aimed at examining insurers’ AI governance programs, and continued to expand adoption of its AI Model Bulletin across state lines. These developments continue a trend towards enhancing regulation; the NAIC adopted AI Principles in 2020 and a Model Bulletin in 2023 clarifying that existing insurance laws apply to AI systems and establishing expectations for governance, documentation, testing, and third-party oversight. That Model Bulletin has now been adopted in approximately 24 states.
Client Alert | 11 min read | 03.25.26
White House National AI Policy Framework Calls for Preempting State Laws, Protecting Children
Client Alert | 3 min read | 03.24.26
California Considering A Massive Expansion of Its Antitrust Laws
Client Alert | 2 min read | 03.23.26



