Washington Management Group

Office of the Inspector General (OIG)

Practical Advice on GSA Schedule Contracting
By: Carolyn Alston, General Counsel, Washington Management Group

January 2012

It’s January! A good time to plan for issues that might crop up in the new year. I thought a look back at GSA audit reports might be a way to identify pitfalls we want to avoid in the coming year. Some interesting trends are apparent in the most recent GSA Office of the Inspector General (OIG) semiannual report. You can read the entire report yourself at the link provided at the end of this article. There are, however, a few items I want to highlight.

During the six month period April to September 2011 the OIG conducted 52 pre-award audits of GSA Schedule contract. The estimated dollar value of the contracts was $4 billion. The OIG reports that it recommended more than $220 million in “funds put to better use”. Translated, that means that GSA auditors recommended that GSA contracting officers negotiate lower prices on most of the offers audited. Interestingly, the Report notes that management decisions were made on the majority of those reports and that management agreed on all of their recommended savings.

The OIG reports that recommended savings in this and the previous fiscal year were primarily due to three issues. The OIG concluded that these issues recur so frequently that they have a program-wide impact. Specifically, the OIG reports that

  • The majority of vendors provided information that was not current, accurate, and/or complete
  • Nearly half of the vendors had minimal or no commercial customers, making it impossible to use commercial sales as a basis for determining price reasonableness; and,
  • More than a quarter of vendors supplied labor that did not meet the minimum contract educational or experience qualifications

The OIG wrote a letter to GSA management recommending that GSA

  • Ensure that contracting officers appropriately evaluate discount information. The evaluation should consider the difference between “standard” and “non-standard” discounts, the frequency and range of discounts, and the impact of rebates.
  • Take appropriate steps to ensure that (1) Schedule prices meet the stated goal of being the vendor’s best price, and (2) there is an effective mechanism to enforce the price reductions clause of the contract. ( Although not mentioned in the OIG Report the GSA Acquisition regulations do state that the Government recognizes that the terms and conditions of commercial sales vary and there may be legitimate reasons why the best price is not achieved)
  • Ensure that vendors provide ordering agencies with individuals who meet the labor qualifications called for under the contract.

Given the OIG’s broad conclusions and recommendations to GSA management, expect to have rigorous price negotiations this year, whether you are audited or not. Prepare for negotiations by thoroughly vetting commercial sales practices information internally prior to disclosure. Have ready persuasive explanations for any differences between prices offered to the government and favorable commercial clients. Finally, service contractors make sure that you have a process for qualifying all employees assigned to a government contract.

Another issue to keep your eye on - the OIG maintains a focus on investigating Trade Agreements Act (TAA) violations. Two companies were hit with significant settlements during the recently completed fiscal year for misrepresenting the county of origin of products delivered under GSA contracts. The next Carolyn’s Corner will address requirements of the TAA.

Semiannual Report to the Congress (April 1, 2011 to September 30, 2011)

Do you have a government contracting question? Please email it to me at CarolynsCorner@washmg.com.

About Carolyn:

Carolyn Alston is General Counsel of Washington Management Group. She provides legal counsel to WMG's federal acquisition consulting operation, focusing on Multiple Award Schedule contract award, compliance, and audit procedures.

Prior to joining WMG, Carolyn had a distinguished career with the U.S. General Services Administration. Her experience as a senior attorney in the GSA's Office of General Counsel led to her role as the lead in developing and writing GSA's Multiple Award Schedule policy. Her GSA career culminated in running the agency's successful GSA Schedule program as Assistant Commissioner for Acquisition at GSA.

Carolyn holds a BA from Cornell University and a JD from Georgetown Law Center. Carolyn is a member of the bar in Maryland and the District of Columbia.



DISCLAIMER

WMG offers the information provided on this web site for informational purposes only.

WMG is a well recognized expert in GSA Schedule contracting, with more than 30 years of corporate experience. The information provided on this site is based on our substantial acquisition expertise, particularly with respect to commercial item contracting. Nothing on this site should be interpreted as legal advice.

As you recognize, most decisions regarding your GSA Schedule contract are highly dependent upon the facts of your particular circumstances. You should not rely on this site to make specific decisions about your contract. If you are considering taking specific actions on a matter affecting your GSA Schedule contract, we highly recommend that you contact WMG regarding a proposal for individual acquisition consulting services or that you seek advice from legal counsel with expertise in GSA Schedule contracting.

   

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