Procurement

GSA misses cost avoidance goals

money drain

In 2011, the General Services Administration’s contracting officers intended to get money due the government from GSA contractors, but a new report found they were largely usuccessful in bringing in the cash.

Based on previous audits, GSA’s inspector general estimated that the agency could get as much as $240,177,868 in a fiscal year if contracting officers pressed companies to pay what they owed based on quarterly schedule sales. As it turns out, however the officers brought in only 36 percent of the potential cost avoidances, or $85,716,396.

In one case, auditors found a company reported only 12 percent of the GSA sales. This one company – not identified in the report -- may have underpaid GSA by roughly $84,000 over the life of the contract.

Auditors were less than impressed, based on a report released March 8. “While this case may not seem significant, the recurrence of this issue throughout the schedules program would have a major monetary impact,” the investigators wrote.

The multi-billion-dollar schedules program’s costs are covered by the Industrial Funding Fee. GSA tags a 0.75 percent charge on the award price of goods and services. The agency requires vendors to accurately report schedule sales quarterly and to send the IFF within 30 days of the end of each reporting period. The schedules program had more than $38 billion in sales in fiscal 2011, making it the largest interagency contracting vehicle.

Beyond the money though, auditors found more than a third of companies that underwent an audit in fiscal 2011 had inadequate systems to even accumulate and then report their sales.

The contracting officers agreed to use the audit findings in establishing pre-negotiation objectives, the IG wrote.

“We understand that negotiations involve concessions on both sides; however, the schedules program represents billions of dollars per year in government spending,” the IG wrote. “While we commend the contracting officers for their intent to use those figures in preparation for negotiations, we question the achieved amount given the extent of their agreement.”

The IG recommended the FAS commissioner deal with the IFF issues and less-than-expected savings. At press time, GSA officials had not replied to requests for comment.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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Reader comments

Thu, Mar 14, 2013 Carol

Cutting Government Spending has absolutely nothing with not reporting and collecting IFF fee under the GSA FSS program. The numbers listed above - is interesting - i.e. GSA relys on the reporting by the contractors to know how much money is going through the schedule program. So I would venture to say that $38 billion in sales should actually be quite a bit more. Here's the other BS - GSA charges the fee to contractors / of which the contractors bump up their price to the government for the fee. But GSA takes like 12 months to modify contracts - it is not very efficient for the commercial company at all, and more importantly - with that kind of revenue flowing into their coffers - they should have a hefty staff - they don't

Wed, Mar 13, 2013

If GSA was a private sector company, you can bet they would not have let this happen. But with a government organization, it is all Other People's Money so it is no big deal and the losses to the taxpayer continue. This is one reason why we need to seriously cut government spending - which would cut both the amount of wasteful spending and make the Government more cost concience so what would be spent would be spent more wisely. This is why the sequester needs to happen.

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