FAS-IG working group: Deja vu all over again

This column was originally published on Roger Waldron’s blog at The Coalition for Government Procurement and was republished here with permission from the author.

This week, Jason Miller’s Reporter’s Notebook highlighted a recent GSA Inspector General (IG) Memorandum regarding potential savings under the Multiple Awards Schedule (MAS) program. The article focused in large part on the audit process, scope of data reviewed, and cost elements associated with the MAS pricing and compliance regime. The article also noted that the Federal Acquisition Service and the GSA IG had formed a working group to improve the value of pre-award audits under the MAS program. The FAS-IG working group developed new policy and performance metrics. The establishment of the working group is a positive development. It is a recognition and acknowledgement that the policy, process, and structural challenges surrounding the MAS audit process need to be adjusted. These adjustments should reflect the ever-changing commercial market and business practices.

By way of full disclosure, 20 years ago I headed up the Federal Supply Service (FSS) team as part of an FSS-IG Working Group focused on improving the audit process. FSS and the IG worked together, focusing on the mechanics and timing of the audit process. The result was a set of acquisition letters updating the audit process. We did not tackle the bigger questions surrounding the efficacy of the MAS pricing policy and access to the commercial market. In retrospect, we should have.

As noted in previous blogs, the current philosophical underpinnings of the MAS pricing policy date from the early 1980’s. The standard provisions, like the Price Reduction Clause (PRC), in some form or another, are close to 40 years old. That is to say, the fundamental core of the MAS pricing policy dates from a time before the Competition in Contracting Act (CICA), the Federal Acquisition Streamlining Act, the Clinger-Cohen Act, the Services Acquisition Reform Act, and wide-spread use of the Internet and the PC. In the 1980’s, we had no broad use of cell phones; the fax machine was just becoming part of business life; and ubiquitous cloud services and the internet were not what they are today. It is no wonder, then, that we find the current statutory framework for the federal procurement system at odds with the MAS pricing policy.

The basic precepts of the MAS policy have remained static while the commercial market has changed radically. Indeed, the market has embraced technology, and that embrace has altered and continues to alter how business is done and how firms go to market. Further, the IT and services industries are radically different. The MAS pricing policies have become almost anachronistic, as they limit access to the best value tempo of the commercial market, especially when it comes to commercial solutions and services. Although it might be argued that MAS Consolidation will improve the ability of vendors to provide commercial solutions, without real pricing reform, MAS Consolidation’s full potential will remain unmet.

Back to the current FAS-IG working group. It is notable that one of the three critical parties to the process was not included as part of the working group. A lesson learned from my experience is that including the private sector, MAS contractors, in a review of the audit process would be of great value to FAS and the IG. GSA has been very transparent with regard to its Federal Marketplace Strategy. Under Administrator Emily Murphy’s vision for the agency, transparency supports GSA’s values: Service, accountability, and innovation. We are hopeful that the ongoing FAS-IG working group will seek contractor input regarding the audit process, and the Coalition stands ready to provide transparent, experience-based feedback on the audit process.

Additionally, to the extent the FAS-IG working group has developed new policy around the audit process and pricing, the public should have an opportunity for review and comment on that policy. For example, if the policy restricts the ability of firms to provide pricing based on how firms offer solutions in the commercial market, such an approach would be inconsistent with the goals of the MAS program and the underlying statutory and regulatory framework for the acquisition of commercial items. Consistent with GSA’s values, just as any such approach should be subject to rule-making and public comment, so to would any formal policy developed to address the scope of information collection pursuant to the audit process.

Finally, it would be interesting to learn whether the FAS-IG working group addressed the apparent organizational conflict of interest (OCI) at the core of the contract audit process. As noted by many stakeholders, the IG’s role providing direct MAS contract audit support, while at the same time conducting oversight reviews of the MAS contracting process, creates an apparent OCI. Under the FAR OCI rules, the government would prohibit a contractor from performing these competing functions. Certainly, the IG’s oversight function plays a positive role in ensuring accountability and transparency in the procurement system. How the IG’s conflicting roles impact GSA, FAS, and the IG’s statutory oversight role, however, is a fair topic of inquiry for all stakeholders in the procurement community.

The Coalition looks forward to future dialogue with FAS and the IG.

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