GS $Mart is an innovative acquisition finance program designed to facilitate State of California agencies and local governments with installment or lease purchases, while meeting all requirements of a competitively bid process.
1. How is a lender selected for financing?

The Lender is selected by the Agency that requires the financing. The Marketplace Administrator is not the one that selects the Lender.

The Agency makes the decision on which order(s) that they would like to have financed. They then look over the posted rates on the Web. The contact at the Agency then selects, as requested by DGS, between three and five Lenders from the Participating Lenders page on the Web. The Lenders that are normally selected are those that have the lowest rates posted on the Web pages that correspond with the terms (number of payments and amount to be financed) that the Agency is looking for. The Agency then contacts the Lenders, discusses the specifics of the upcoming financing, then receives a rate quote from the Lender. The Agency then selects the Lender from those that respond with a rate quote and payment schedule.

The Agency does not have to contact all of the Participating Lenders. As stated in the previous paragraph, they normally choose the Lenders that have the lowest posted rates for the terms that the Agency is looking for. If a Lender does not quote interest rates for a particular amount or number of payments, or does not quote rates at all, the Agency does not have to contact them. 

2. How does a new lender become "Qualified" to quote rates on GS $Mart?

The process for a new Lender to get qualified is located on the Lender Qualification pages. The process has remained the same since the inception of GS $Mart®. It is important that all Lenders abide by the qualifications that were in place when they applied to become a qualified Lender. 

3. Are agencies shopping rates?

To better answer this question, "shopping rates" should be defined.

Shopping rates is when an agency receives a bid or response from a Lender (Lender A), then calls another Lender (Lender B) to ask if Lender B can beat Lender A's rate. I heard of one example where the agency called a lender and asked "Lender A quoted an interest rate of ____% for this deal, can you (Lender B) beat it." This is what shopping rates is about. GS $Mart® is not like the retail stores out there that will meet or beat the competitions price.

In using GS $Mart®, shopping rates is unacceptable. GS $Mart® would like to keep a level playing field for everybody involved, and shopping rates does not do it. As a Lender, when asked for an interest rate quote, you should provide your best offer. Lenders should not expect to get a second chance to quote a better rate. A rate quote should be honored just as a bid for equipment. Does the State tell equipment vendors what their competition is bidding on equipment? 

The State of California has financed contracts on a tax exempt basis since 1980. Prior to that, bank financing by suppliers was the norm when any financing was needed. Since 1980, the State has done tax exempt and taxable transactions utilizing monthly, quarterly, semi-annual, and annual payment periods. In the mid 1980's, the State established standard terms and conditions in its Model Purchase Rider E. Those terms and conditions have been modified into various standard financing plans offerred in GS $Mart®.

As of November 18, 1995, the State had 181 financed transactions dating back to 1986 involving $331 million of equipment and services, mostly in the technology area, for 28 State agencies. The top eleven State agencies comprise 98% of the financed amounts. They are as follows:

1. Franchise Tax Board $72,028,055
2. California State Universities $64,842,717
3. Health & Welfare Center $62,174,016
4. Department of General Services $41,027,468
5. Department of Justice $40,049,309
6. Department of Corrections $21,610,676
7. Teale Data Center $13,938,006
8. Department of Insurance $2,950,766
9. Board of Equalization $2,364,726
10. Department of Motor Vehicles $2,270,904
11. Prison Industry Authority $2,113,725

Of these contracts, approximately 25% are for three years or less, 25% are for four years, 25% for five years, and 25 % are for beyond five years.

The California State University campuses are no longer processing their contracts through DGS so their current numbers including the last few years may be higher. Just looking at the last three full fiscal years, however, the number of financed contracts have varied between 29 and 43 involving between $ 50 and $77 million. With California Multiple Award Schedule (CMAS) order limits at $500,000 for technology and $100,000 for commodities, and the availability of this quick, convenient process, more financed contracts are anticipated.

The above historical data should provide a basis to project business activity for this marketplace for all participants. As for transactions done through this marketplace, the history remains to be made.

Key - G$ = GS $Mart, L$ = Lease $Mart, $$ = Both Programs

$$ Acceptance
The decision by the State agency that the contracted asset is acceptable to the State.

$$ AcceptanceTesting Period: The period of time specified in a contract where the State agency has the right to test the assets to meet certain criteria for acceptance.

$$ AgencyThe State of California organization that has contracting authority.

G$ Amortization Schedule: Document provided by the Lender which specifically outlines the payment stream for an installment purchase.

$$ AssetsThe goods and/or services to be acquired in a contract. 

$$ Buyer: Party who buys or contracts to buy assets.

$$ Capitalized Finance Charge: Additional fee the Lender/Lessor is charging to conduct this deal. The State prefers that this fee be all inclusive to either the lending interest rate (GS $Mart) or the lease factor (Lease $Mart).

$$ Capitalized InterestNot allowed in either program.

$$ ContractA legally binding agreement between two or more entities.

$$ Cost of BorrowingThe added cost of borrowing funds to acquire assets. 

$$ Counsel: The attorney representing any party.

$$ E-commerce: Slang for "electronic commerce," derived from conducting business over, and through, the Internet.

G$ Escrow Funding: The concept of a State agency paying budgeted funds into a holding account prior to acceptance of an asset.

L$ Financed Lease: A lease where the purchase price at the end of the payment stream is nominal. Title to the asset never passes to the State unless the State exercises its purchase option (if applicable to the specific deal). 

$$ Financial MarketplaceState of California, Department of General Services' Internet based, E-commerce financial program, comprised of "GS $Mart" and "Lease $Mart."

$$ Funding CloseThe time when all activity related to acquiring funds for a deal is completed, including the execution of closing documents and disbursement of those documents to the appropriate parties.

G$ GS $MartThe financing arm of the State's financial marketplace.

G$ GS $Mart Manager: The person responsible for managing the GS $Mart program.

G$ Installment PurchaseA purchase where payment for the asset is made in installments (similar to that of a personal automobile or home mortgage - title passes to the borrower). Title to the assets transfer to the buyer once interest on the purchase commences.

$$ InsuranceAn agreement by one party to indemnify or guarantee another party against loss by a specified contingency or peril.

L$ LeaseSee Financed Lease.

L$ Lease FactorA decimal number used to calculate the lease payment (i.e., lease factor x purchase price = lease payment).

L$ Lease Payment ScheduleDocument provided by the Lessor which specifically outlines the payment stream for a financed lease.

G$ Lease PurchaseSee Installment Purchase. 

L$ Lease $Mart: The leasing arm of the State's financial marketplace.

G$ Lender: The firm that arranges for the funding of a installment purchase.

G$ Lending Fees: See Capitalized Finance Charge.

L$ LessorThe firm that arranges for the funding of a financed lease.

L$ Lease Fees: See Capitalized Finance Charge.

L$ Lease $Mart ManagerThe person responsible for managing the Lease $Mart® program.

L$ Operating LeaseSee Financed Lease.

$$ PaymentDelivery of money in fulfillment of an obligation.

L$ Payment Factor: See Lease Payment Factor.

$$ PurchaseA contract for the ownership of an asset.

L$ Purchase Option: Right to exercise an option to purchase the assets at the end of term.

$$ ReceiptThe taking of physical possession of assets.

$$ Rental AgreementA contract for the right to use an asset for a given period of time (i.e., the State's Master Rental Agreement [MRA] program).

$$ Supplier: Party who sells or contacts to sell assets.

$$ TitleThe ownership rights to an asset. 

Closing Documents

In order for a Supplier to be paid, the following closing documents must be executed quickly for funding. The Lender will identify required documents and provide instructions to the State as to the timing and where to send executed documents. Once all documents have been signed and delivered, the Lender will then pay the supplier on behalf of the State, there are no other documents required:

  • Copy of Contract (The State executes and references the specific financing plan and attaches the Lender's payment schedule)
  • Opinion of Counsel (The $Mart Manager will have state counsel execute and return to $Mart Manager)
  • Opinion of Bond Counsel (If the State requests, the Lender has Bond Counsel prepare and sent to $Mart Manager) 
  • Alpha Plan Certification Form (Lender prepares, the State executes and returns to the Lender)
  • Tax Certification (If the Lender requests and prepares, the State executes and returns to the Lender)
  • Opinion of Counsel (If Lender requests, the $Mart Manager will have state counsel execute and return to $Mart Manager)
  • UCC-1 (If the Lender requests and prepares, the State executes and returns to the Lender)
  • IRS 8038-G and or GC (Lender assists, $Mart Manager prepares, execute and files with Internal Revenue Service)


In responding to a Rate Quote Request Form, the Lender agrees to the applicable GS $Mart Terms and Conditions, the possible selection by the State to be the State's awarded Lender for the specific Contract, as well as the incorporation of their response into the Contract.

When financing is to be used and the Lender has been selected, the following paragraph must be incorporated into the Contract:

The terms and conditions of the GS $Mart Alpha Plan, Version ______, dated __________, (optional: "and the Technology Refresh Rider" or "and the Salvage Rider") found in the State Financial Marketplace, and the attached payment schedule, scheduled provisions and notes, are hereby incorporated into this contract by reference. The State designates (Lender name) as its Lender for this contract. The Lender will pay the Supplier(s) and bond counsel for assets/services on behalf of the State. The Lender's rate quote dated (Payment Schedule Date) is hereby incorporated in this contract. The Lender is entitled to all payments owed pursuant to the Payment Schedule in consideration for the Lender's payment of the cost of the Assets (less any down payment as directed by the State) to the Supplier.

The SFM would prefer that the contract is not issued until the Opinion of Counsel is received from the DGS Office of Legal Services. The following paragraph is an alternate paragraph to include on the RFP if a Lender has not been chosen by the time the RFP needs to be issued: The State reserves the right to select the form of payment for all procurements, be it either an outright purchase with payment rendered directly by the State, or a financing/lease-purchase or operating lease via the State Financial Marketplace (GS $Mart and/or Lease $Mart). If payment is via the financial marketplace, the Supplier will invoice the State and the State will approve the invoice and the selected Lender/Lessor for all product listed on the State's procurement document will pay the supplier on behalf of the State.


State Financial Marketplace

Department of General Services
Procurement Division

707 Third Street, Second Floor, MS 207
West Sacramento, CA 95605


Patrick Mullen:
Kristopher Bianchini:
Sam Longhofer: