Open GSA OIG’s report underscores challenges faced by schedule contractors

In its annual report to the GSA Administrator, the Office of Inspector General (OIG) for GSA highlighted what it viewed to be the most significant management issues facing the agency.  First up was a number of issues identified within the Schedules Program itself.  These included pricing, contractor compliance, acquisition workforce issues, proposed changes to the GSA Acquisition Regulation (GSAR), and notably, the perception from “a growing number” of customer agencies that the pricing offered under the Schedules Program is not fair and reasonable.

The report cites a number of initiatives currently underway that have been well covered in recent articles and publications, including the Competitive Pricing Initiative, the Contract Awarded Labor Category tool, and the proposed transactional data rule, which would compare offered prices to actual government sales (as opposed to comparing pricing among Schedule contractors).  The bottom line here is that there is tremendous downward pressure on pricing right now, and GSA is acutely aware of the observations from DoD and others regarding the competitiveness of GSA Schedule prices.  Interestingly, the report does highlight a number of potential weaknesses or deficiencies with a few of these approaches, and it’s well worth a careful read.

To underscore some of the potential issues with contractor compliance, the report reiterated some rather startling facts related to its findings in prior years.  According to the OIG’s 2014 audit findings, more than 75% of audited contractors “did not disclose current, accurate, and/or complete commercial sales practices information.” Although other contractor compliance issues were addressed as well, this one, in particular, should be of concern to Schedule holders.  One implication here is the notion that auditors showing up on your doorstep may well be of the opinion that there’s likely a problem with the pricing disclosures that preceded your contract award.  As always, if you suspect an issue on this front, consider engaging outside help to investigate and advise you on the best path forward.

On the acquisition workforce front, the report cited a number of issues.  Of particular interest was the familiar concept that GSA Contracting Officers (COs) are stretched thin.  In the last two years, each CO administered something on the order  of 86 contracts on average.  Consider that fact in addition to the new tools, new initiatives, and things like the Professional Services Schedule consolidation that’s underway, and it’s not difficult to imagine how this might impact your dealings with your GSA CO.

Recommendations

• Contractors should educate themselves on the GSA pricing initiatives and the potential implications for their business.  The pain associated with these varies depending on whether you’re offering products or services, and a well-informed contractor is better able to achieve successful outcomes in negotiations with the GSA.
• Contractors, as always, should fully understand their GSA compliance obligations.  A failure to do so from the outset of the contract can be costly. 
• Ensure that commercial sales practices are thoroughly documented and based on a historical pricing analysis that examines all prices offered to non-federal entities, including prime contractors.
• Be prepared for an increased focus on your lowest offered price and a shortened negotiation timeline. 

For more information on this topic, or to learn how Baker Tilly government contractor specialists can help, contact our team.