GAO says pre-award audits protect prices

To keep prices stable on its Multiple Award Schedules contracts, the General Services Administration should continue to rely on pre-award audits as much as pricing policies, officials say.

James Fuquay, assistant director for acquisition and sourcing management at the Government Accountability Office, told the Multiple Award Schedule Advisory Panel on July 21 that the audits ensure good prices. However, he said the number of audits is only now increasing, as the GSA inspector general's office conducted 68 pre-award audits in 2007, an increase compared with three years ago.

Fuquay said GSA auditors conducted 154 audits of pre-contract award prices in 1995, but only 40 in 2004. Meanwhile, the sales have grown to $36 billion in 2007, from $6.6 billion in 1997, he said.

The reason for the decline is that the GSA inspector general’s office didn’t, and still doesn't, have the resources to conduct 154 audits a year, he said.

That office audited the 68 schedules contracts just before a decision by GSA to exercise a contract's option, or extend the original contract, said Andrew Patchan, the agency's assistant inspector general for audits.

“Most of the schedule’s dollars are in the extensions,” and the office has to prioritize its scarce resources, Patchan said.

Even as the number of pre-award audits increases, regulations requiring contractors to give the government the same price as their most-favored customer is a strong guard for the government, Fuquay told the panel.

The panel is reviewing the MAS program and debating among other things whether the most-favored customer policy is relevant today in light of so much competition at the task-order level and the increase in contracts for services.

The most-favored customer provision and others included in the Federal Acquisition Regulation’s price reduction clause helps GSA maintain competitive prices that track changes in the market, Fuquay said.

If GSA ended its most-favored customer pricing requirement as the panel is debating, officials would have to develop another way to create same protections, he said.