GSA IG Recommends Pricing Review of over 300 Migrated Professional Services Schedule Contracts

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The General Services Administration (GSA)’s Office of Inspector General (OIG) published a report on March 21, 2017, titled “Audit of Price Evaluations and Negotiations for the Professional Services Schedule Contracts.” According to the IG audit, GSA’s process to consolidate eight pre-existing schedules into the Professional Services Schedule (PSS) resulted in the award of new contracts without establishing price reasonableness. Contracting officers also used a combined “Pre and Price Negotiation Memorandum” template that does not conform to Federal Acquisition Regulations (FAR) and Federal Acquisition Service (FAS) policy. Finally, contract files lack sufficient documentation to determine fair and reasonable pricing. In February 2017, GSA’s FAS initiated price reevaluations for all 322 migrated contracts to ensure prices awarded were fair and reasonable.

OIG Findings and Recommendations: The OIG reviewed 45 of the 322 migrated contracts established from the consolidation of 721 separate pre-existing professional services contracts. 44 of the 45 contracts were awarded without required price analysis, as new offers were to be submitted with the same pricing, terms, and conditions included in the original contracts. The OIG recommended that GSA perform a formal price analysis on PSS migrated contracts to determine if pricing is fair and reasonable. Additionally, the OIG recommended that GSA discontinue the use of the “Pre and Price Negotiation Memorandum” template and replace it with the Pre-Negotiation Memorandum and Price Negotiation Memorandum from FAS Instructional Letter (IL) 2011-02. The IG report also stated that GSA should develop and issue guidance to contracting staff regarding detailed documentation of Management Services Center pricing database price analyses, including reviews of comparable labor categories and rates, to support price reasonableness determinations.

Impact on GSA Contractors: GSA’s FAS concurred with the “overall substance” of the findings and recommendations. For the 322 migrated PSS contracts, a formal price analysis will be performed to ensure prices awarded were fair and reasonable. Current contracting officers for each migrated contract have been reevaluating contracts since February 2017. The reevaluation process includes:

  • Verification that the current Commercial Sales Practices (CSP) information was incorporated into awarded contracts
  • Verification that appropriate price analysis was conducted, and if not:
    1. a new price analysis will be conducted that could include price negotiations
    2. if rates are significantly overstated and/or a contractor’s CSP disclosures were not current at the time of the migration, a post-award audit may be initiated
  • Documentation of reevaluation findings

Impacted contractors may not hear from GSA if the reevaluation verifies that the awarded prices are fair and reasonable and CSP disclosures current as incorporated. Otherwise, contractors may be required to provide updated pricing and CSP disclosures, with pricing negotiations and post-award audit as additional possibilities.

Other Observation, Continuous Contracts: As part of the PSS consolidation, contractors were allowed to retain current contracts to continue performance under existing blanket purchase agreements. The OIG recommended that GSA develop more detailed guidance to ensure that the price reductions are administered properly and overlapping contract sales are properly reported. Contractors could see a trickle-down effect if this guidance becomes a new compliance area for Industrial Operations Analysts at compliance reviews (Contractor Assessments).

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About Vanessa Payne

Vanessa Payne is a Managing Consultant in Aronson LLC’s Government Contract Services Group with over 15 years of full life-cycle government contracts and consulting experience. Her expertise includes GSA contract management, subcontract administration, contractor task order proposals, and “Big Four” management consulting in the areas of process improvement, business process reengineering, cost accounting, survey development and analysis, workflow mapping, and facilitation services. She specializes in GSA Schedule contract preparation, renewals, and providing ongoing contract management, administration, and compliance support with a special interest in organizational procedure and policy review, improvement, and standardization. Vanessa is an Aronson-featured and guest speaker on GSA Schedules and social media topics for other industry organizations, and she is a co-founder and frequent contributor to Aronson’s Fed Point blog. She received her Master’s Degree in Organizational Development and Strategic Human Resources as well as a Graduate Certificate in Skilled Facilitation from Johns Hopkins University, and she completed her Bachelor’s Degree in Communications at the University of Pennsylvania.

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