Why We Performed This Audit
This audit was included in our Fiscal Year 2021 Audit Plan. Under the Multiple Award Schedule (MAS) Consolidation Initiative, the Federal Acquisition Service (FAS) is consolidating its existing 24 multiple award schedules into one single schedule for products, services, and solutions. As part of this initiative, FAS is working with contractors that hold multiple MAS contracts to consolidate those contracts into a single MAS contract.
In our audit of FAS’s 2015 MAS contract consolidation effort, we found that FAS did not consistently comply with federal regulations and GSA policies for evaluating and negotiating contracts.1 Among other things, FAS’s noncompliance resulted in the award of new contracts without establishing price reasonableness. Accordingly, we performed this audit of FAS’s current contract consolidation initiative, which began in 2018, to determine if FAS consolidated and maintained contracts in accordance with federal regulations, as well as GSA policies and guidance.
What We Found
In Fiscal Year 2022, FAS consolidated 305 MAS contracts with an estimated $21.4 billion in contract value into 149 MAS contracts under Phase 3 of its MAS Consolidation Initiative. Federal regulations and GSA policies and guidance require FAS to perform price analyses to establish price reasonableness for the products and services transferred from expiring and canceled contracts to the surviving consolidated contracts.
Based on our sample of 19 consolidated contracts, we found that FAS’s price analyses for the products and services transferred to consolidated contracts were frequently limited and did not consistently leverage the government’s collective buying power. In particular, when performing price analyses for contracts subject to the Commercial Sales Practices (CSP) requirement, FAS contracting personnel frequently accepted unsubstantiated most favored customer and commercial pricing information. This practice does not adhere to GSA policy, limits contracting personnel’s ability to fulfill their responsibilities, and ultimately reduces the effectiveness of the price analyses.
Meanwhile, when performing price analyses on Transactional Data Reporting (TDR) pilot contracts, FAS contracting personnel did not use TDR pilot data for pricing decisions; instead, they relied primarily on pricing comparisons to other MAS and government contracts. However, according to GSA policy, these comparisons are to be used only as part of a larger negotiation objective development strategy. In addition, several of the comparisons were invalid because the proposed services were not compared to similar services, as required by Federal Acquisition Regulation 15.4, Contract Pricing.
Therefore, FAS should strengthen its price analyses when consolidating MAS contracts so customer agencies can rely on MAS pricing to ensure that their orders will result in the lowest overall cost alternative to meet the government’s needs to comply with the Competition in Contracting Act of 1984.
What We Recommend
We recommend that the FAS Commissioner:
- Establish an oversight process for CSP-based contracts undergoing consolidation to ensure contracting personnel:
- Comply with General Services Acquisition Regulation 538.270-1, Evaluation of offers without access to transactional data, and FAS Policy and Procedure 2021-05, Evaluation of FSS Program Pricing; and gather supporting documentation to determine a contractor’s most favored customer pricing for use in negotiation objectives.
- Evaluate supporting documentation to verify a clear and relevant relationship between supporting documentation and each of the proposed prices it is meant to substantiate.
- Establish an oversight process for TDR pilot contracts undergoing consolidation to ensure contracting personnel do not rely solely on contract-level pricing tools; and, if prices paid data is not available, prioritize obtaining recent invoices or other than certified cost or pricing data from the contractor before relying on non-prices paid information.
- Re-evaluate previously consolidated MAS contracts to ensure that added products or services were evaluated to meet federal regulations and GSA policy requirements.
The Acting FAS Commissioner agreed with two of our recommendations and partially agreed with a third. Specifically, the Acting FAS Commissioner disagreed with part of the second recommendation that states, “if prices paid data is not available, [contracting personnel should] prioritize obtaining recent invoices or other than certified cost or pricing data from the contractor before relying on non-prices paid information.”
The Acting FAS Commissioner asserted, for TDR-based contracts, that there is no preference of prices paid information over other types of data (such as contract-level price list prices). However, while this may adhere to the guidance in the General Services Acquisition Manual, it does not align with Federal Acquisition Regulation 15.404-1(b), Price analysis. The Federal Acquisition Regulation states a preference for historical prices paid comparisons over a review of competitive price lists (or market research). Therefore, when TDR data is unavailable, we reaffirm our recommendation that recent invoices should be obtained. This would give insight into previous prices paid and leverage the government’s collective buying power better than contract-level price comparisons. Furthermore, it is not practical to remove the CSP and the price protections of the Price Reductions Clause to obtain prices paid data through the TDR pilot but then not use the data and, instead, use contract-level pricing data that was already available without the TDR pilot. Accordingly, we urge the Acting FAS Commissioner to reconsider this part of the recommendation.
GSA’s written comments are included in their entirety in Appendix B.
