Acquisition Management: Opportunities Exist for GAO to Strengthen Its Policies and Procedures

What the OIG Found Proper contract administration is critical to ensure GAO complies with contract terms and conditions. In FY 2019, GAO entered into a blanket purchase agreement for commercial facility maintenance (the BPA), which it awarded under the General Services Administration (GSA) Schedule program. After subsequent modification, the BPA’s maximum value was about $119 million. Although the contractor submitted adjusted labor rates from a collective bargaining agreement, GAO did not modify the BPA and associated time-and-materials orders to reflect these higher rates before payment. As a result, the agency paid about $94,000 more than the previously negotiated rates during the second option year. GAO was unable to explain why the BPA and the associated orders were not modified prior to payment. The OIG also observed that GAO’s standard operating procedures for procurements did not provide clear guidance on evaluating a contractor’s charges for indirect costs or profit on work performed by a subcontractor when the contractor adds no or only negligible value (excessive pass-through charges). The OIG also found that GAO could clarify its policies and procedures regarding the applicability of federal regulations for contracting by negotiation to GSA schedule procurements. The lack of clarity could result in procurement staff taking unnecessary steps. The agency indicated it had updated its procedures regarding subcontracting and was in the process of updating its policies for GSA schedule procurements. By enhancing its oversight of contract modifications and invoice approvals, GAO could ensure that payments are consistent with negotiated rates. Further, GAO’s updated policies and procedures regarding excessive pass-through charges and future updates to the applicable procurement processes when using the GSA schedule could strengthen GAO’s acquisition program and improve efficiencies for procurement staff. Why the OIG Did This Audit Careful contract administration, especially concerning invoice review and approval, is critical to ensure GAO pays the correct labor rates for time-and-materials orders. The OIG conducted this audit to assess time-and-materials orders issued under the BPA.

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