GSA’s new contracting policy tackles IG’s concerns about management interference

Federal Acquisition Service Commissioner Tom Sharpe tried to balance the need for management oversight with contracting officer autonomy. But some in industry w...

The General Services Administration is attempting to clarify to managers and vendors alike the proper approach to overseeing the schedules program.

A February memo and policy is part of the way GSA’s Federal Acquisition Service is trying to address a 2013 inspector general report that found examples of improper management interference on decisions by contracting officers under the schedules program.

“We’ve taken a number of actions to reinforce proper procurement while also focusing on doing more for our customers to save them time and money in acquisition,” said Tom Sharpe, commissioner of GSA’s Federal Acquisition Service, in an exclusive interview with Federal News Radio. “We’ve moved out on training. We’ve moved out on providing tools for the multiple award schedules, and we are in the process of standardizing part numbers, instilling horizontal pricing pressure. The schedules are priced vertically, the most favored customer price, so we are looking at comparison across suppliers to provide horizontal pricing pressure, and we’ve taken on initiatives to make the processes within the multiple award schedules faster.”

In June, the GSA IG found FAS managers improperly interfered with negotiations for new schedule contracts for Carahsoft, Deloitte and Oracle. GSA executives ended up suspending one senior official in light of what the IG found and have been taking steps over the last nine months to clarify and reinforce the role of managers in schedule contract negotiations.

“To me, the role of management is to support and reinforce those contracting officers,” said Sharpe, who has served as a contracting officer, a contracting officer supervisor and in several other acquisition operations positions during his career. “Contracting officers have difficult jobs and make subjective decisions, and the role of management is obviously to hire, to mentor, to supervise or to guide, to be a point of escalation to resolve issues, and quite frankly when it’s on the other side when there is an issue to support and correct a contracting officer. … I’m holding management responsible to fulfill that role, and I won’t tolerate improper intervention or improper execution of that role. In fact, every executive in FAS holds in their performance plan an outcome of proper procurement and proper procurement controls in fiscal 2014.”

Record and file it away

The instructional guidance requires contracting officers to document all communications with vendors, members of Congress and their staffs and any other interested party. Additionally, the contracting officer must document any discussions with managers outside of the business portfolio’s business control process.

“What folks should take away from it is, the memo expressed support for the contracting officers and the very important difficult jobs they do. So I expressed my support,” Sharpe said. “The second thing I would suggest be taken away from it is, there is a proper role for management, and management is accountable for proper procurement and for supporting our contracting officers. The third is how important price is, and how important getting the best price possible on behalf of our customers to save them, in this instance, money, but also time.”

These documentation requirements don’t address the real problems — only the symptoms, said Roger Waldron, president of the Coalition for Government Procurement.

The CGP was one of three industry associations who wrote to Sharpe last June, expressing concerns over the IG’s recommendations and the steps GSA initially took to resolve the findings.

“The acquisition letter and guidance about documentation about contacts and going up the chain, doesn’t from CGP’s perspective address concerns raised in our letter and potential suggestions we made for how to handle situations where contractor wants to raise concerns about the negotiation process,” Waldron said. “We made suggestions about having a schedules’ ombudsman to handle potential problems. We suggested fixing the pricing policy. It’s outdated, going back 40 years and is product based. Outdated policies make for challenges, especially when applying them to current contracts, and they create questions of interpretations among contracting officers and acquisition centers.”

Waldron said the pricing policy based on the price reduction clause is the biggest problem that needs to be addressed. He said vendors do not have a way to escalate concerns to find creative solutions.

Sharpe said good procurement is always about “Why this source?” and “Why this price?” He said the horizontal pricing pressure, reverse auctions and several other things are aimed at driving the best prices possible.

IG conflict of interest?

Waldron said all the talk about price is fine as long as there is a way to solve disagreements over what is the best price.

“There is a lack of balance in the management of these programs,” Waldron said. “The acquisition letters FAS has issued give the IG great discretion in elevating issues beyond the contracting officer, but there is not a commensurate path that is endorsed by GSA or by FAS for contractors. It’s a double standard here.”

Sharpe said FAS has reached out to industry and listened to its concerns and suggestions over the last year.

“For the most part, we’ve embraced their suggestions,” he said. “We are taking a number of steps to streamline and standardize our schedules solicitations. Now terms and conditions are largely consistent across the programs. We also are standing up a MAS training guide, and we are in the final stages of piloting a new online MAS internal course for the workforce in addition to the instructional letter. The voice of industry is very important to us. I would point out that one of the items of the FAS fiscal 2014 report card is supplier satisfaction. It’s very important to us.”

One of the other big issues the memo and policy do not address, but is of concern to many in industry, is what some call a conflict of interest about the IG’s roles when it comes to FAS oversight.

The GSA IG conducts pre-award audits but also conducts program audits to make sure the agency received the vendor’s lowest price.

Waldron expressed concerns at the CGP’s recent spring conference about this conflict of interest.

“You can have an audit where [the IG is] part of the fact pattern that you will turn around and audit in a program audit where you may say something to the effect, ‘Contracting officer failed to take advantage of all the potential discounts we identified in an audit.’ You are essentially auditing or reviewing the contracting officer’s use of your work product,” Waldron said. “I’m wondering if there is any sensitivity in your office about that? I’m wondering if there is any appearance there of essentially grading your own work, for lack of a better term. Is that something you consciously think about in your office when you look at these situations? In other organizations, those two things are separated, whether it’s Defense Contract Audit Agency (DCAA) versus IG’s office, or some other.”

Richard Levi, the counsel to the GSA IG and a member of the panel that Waldron asked these questions of, said the IG office conducts peer reviews and follows quality standards.

“The peer review never raised that as an issue,” Levi said. “I don’t think it is an issue. I don’t think there is a conflict. I don’t think we’ve considered it. We certainly will now that you raised it.”

Sharpe said he can’t comment about a perception of a possible conflict of interest.

“I consider the IG a business partner. We take their pre-award pricing advice as just that. We have an instructional letter out that guides the contracting officers to understand how to meet that advice,” he said. “The IG goes to a lot of effort to perform their audits to provide that advice, and it’s of very valuable assistance to the contracting officers.”

Sharpe added the instructional letter helps the contracting officers set their pre-award pricing positions, how they document their negotiations and how they support their final prices.

“Part of that is the proper role of management,” he said. “A contracting officer can escalate where they are having difficulties, and as far as I’m concerned, they should feel free to escalate all the way up the chain to myself, and I’ll engage my counterparts in the IG to best understand that pricing advice and ensure we’ve used it and applied it to the best of our abilities.”


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