GSA's Williams disputes IG charge of missed contract discounts

A senior General Services Administration official disputed the GSA inspector general’s charge of an “extensive practice” of contractors submitting incorrect invoices, according to a new report.

Agencies that buy from GSA’s Multiple Award Schedules (MAS) contracts generally can save money with prompt-payment discounts PPDs). The PPDs allow purchasers to get additional savings and reduce their costs in exchange for paying vendors early. However, agencies often rely on vendors to cite the discount terms on their invoices. The IG reported that contractors aren’t listing the terms, according to a report released March 15.

Jim Williams, commissioner of GSA’s Federal Acquisition Service (FAS), said the IG was incorrect.

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Williams then pointed out a note in the IG’s report. The audit’s results weren’t based on statistical sampling of the more than 15,000 MAS vendors, the report states. It also acknowledged, “An analysis of invoice and payment information relative to the universe of MAS contract users may yield different results.”

According to the report, auditors found that MAS vendors “routinely submit” invoices with incorrect payment terms. They looked at 43 companies and found that 28 companies, or 65 percent, didn’t cite the discount terms. Those 28 vendors had more than $900 million in sales in fiscal 2007. As a result, auditors said the government could have missed out on $9.1 million in savings.

The report also states GSA contracting officials compound the problem because they don’t always include PPD terms on order forms as required by the GSA acquisition manual.

In Williams’ response, he wrote that FAS, which oversees the MAS program, would have benefited from knowing why the 28 vendors didn’t submit the early-payment terms, although the auditors didn’t survey the companies. He also wrote that auditors only acknowledge in a footnote that their amount of savings lost may be off the mark because of other factors, such as purchases using government credit cards. Those types of purchase aren’t eligible for the discount.

By going more in-depth in the inspection, the auditors may have been able to estimate a more accurate calculation of how much in savings was at risk, Williams wrote.

Meanwhile, Williams agreed with many of the recommendations would review guidance and policies related to the discounts and invoices.