The General Services Administration’s inspector general has found that the agency’s Federal Acquisition Service does not follow its own policies. Some contractors say they’ve sensed that for a while now. For some analysis, the Federal Drive with Tom Temin talked with Federal Sales and Marketing Consultant Larry Allen.

Interview transcript:

Larry Allen
Tom, the IG does have a history of passing its own judgment on the operations of the rest of the General Services Administration. Sometimes industry, kind of, takes a jaundiced view, maybe, of what the IG says. But in this case, I think the inspector general got it exactly right. What we’re talking about here, specifically, is a report that the IG did on performance based contracting. Where they found that GSA has an internal policy to properly administer and manage contracts, but that the GSA Federal Acquisition Service, does not always follow that policy. Now, to people who look at the General Services Administration, particularly, the Federal Acquisition Service with the same degree that I do, we all can maybe get a little bit of a laugh out of this. Improper laugh, but a little bit of a laugh nonetheless. The fact is, that there’s plenty of anecdotal evidence to support what the IG found on performance based contracting. In terms of other GSA policies, Tom. Probably the most recent example of that, is where the General Services Administration acquisition policy people, put out two sets of guidance, intended to make it easier for contractors to get price increases on their scheduled contracts, as a result of inflationary pressures. And the idea was, you don’t give contractors free range to raise their prices. But you do acknowledge that inflation has had an impact, an unusual impact this year and that flexibility is required. That was great. Unfortunately, the way it was implemented, was very uneven. Some companies had an extremely difficult time of getting price increases, some companies just plain weren’t able to get a price increase and ended up having to take items off their scheduled contracts or lose money on every sale. So that’s just another example. You have the policy, which is well intended. And the practice, which is somewhat disconnected from it.

Tom Temin
And you’re saying that contractors have felt this has been the case all along?

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Larry Allen
Well, I think it has been the case all along. But it varies in in degrees, Tom. I can give another example, one that’s been around for a while. Again, with the Multiple Award Schedules Program, where the GSA objective, is to obtain a contractor’s most favored customer price. That’s been the objective since longer than I’ve been involved with the schedules program. Most contracting officers and contract specialists understand that, even if you don’t reach the objective, if you can determine that you’ve received a fair and reasonable price, you make a contract award. something that started several years ago and it’s kind of intensified lately is, if you don’t offer the best price, you’re likely not going to get a contract. And that’s, particularly, being applied to small businesses. small businesses that need to have a little extra, so that they can conduct their business and thrive on the program, yet contracting specialists and to some extent contracting officers looked at the pricing and said, no, if this isn’t the best price, you’re not going to be awarded a contract. Which results in companies either not getting a contract or worse, they get a contract with a price that they can’t possibly survive on.

Tom Temin
And we should point out, getting back to the issue with the IGs report, in particular, about performance based contracting and not following the rules in administering them. The GSA agree with the findings of the IG and will presumably go on with its recommendations. We’re speaking with Larry Allen, he’s president of Allen Federal business Partners. And, ironically, to the GSA IG report, you’re also advising clients about the recent Justice Department report, that false claims act qui tam settlements are up a lot. So companies have to be on their P’s and Q’s or a whistleblower will point them out and it’ll cost them money.

Larry Allen
Tom, this is absolutely prima facie evidence, that contractors need to take contract compliance seriously. Look, as you said, 652 qui tam resolutions during fiscal year 2022. That’s near or at an all time high, for whistleblower actions. And aside from that, Tom. They were another significant number of, False Claims Act cases bought by IG’s and auditors, in addition, to these whistleblower cases. All of that amounts to contractors needing to remember that, it’s not just the sales, it’s how you manage and comply with the contract that counts. And while the total dollar numbers were covered in False Claims Act cases, dipped a little bit, but we’re talking about a dipping two, Tom, was $2.2 billion. And on top of that, every one of these cases had significant legal fees. Very frequently, they had fees for expert witnesses or forensic accountants, not to mention lost productivity and potentially, even the loss of a productive one or two employees, who get caught up in the compliance effort. It’s not worth it, Tom. It’s absolutely pennies on the dollar for a company to put compliance programs in place. And when you’ve got this type of whistleblower activity, it just makes sense.

Tom Temin
And also maybe, communicate to your employees, if you see something that needs fixing, let us know and we’ll fix it.

Larry Allen
That’s, kind of, a baseline part Tom, you’re absolutely right. If you’re one of these companies, if you’re a company, you have to have a way for employees to register their concerns, to have a complaint box, if you will. And do it in a way that there’s absolutely no employee retaliation for that effort. Frequently, we see qui tam cases, filed by disgruntled, either current or former employees. People who did find something wrong. They tried to point it out inside the company, before they went outside. The company either didn’t listen, or worse, took retaliatory action against that person. And it’s a very short walk from there to a plaintiffs bar lawyer, who was happy to take your qui tam case. And now the company has a problem, that it didn’t need to have.

 

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