GAO says FSS comes up short on best-price negotiations

The General Services Administration's Federal Supply Service is getting heat from Congress for not guaranteeing that it is getting the best prices available under its schedule programs, according to a new Government Accountability Office report.

The audit agency said in the report released that it found FSS conducted on average 21 pre-award audits but no post-award audits between fiscal 1998 and 2004 on schedule contracts to ensure the government is getting the best price possible.

GAO also found three of four regional offices reviewed did not report the results of its evaluation of price negotiations, and the fourth did not conduct any analyses. "As a result of these weaknesses, GSA cannot be assured that fair and reasonable prices have been negotiated for its [schedule] contracts," GAO said.

GSA's inspector general found, and GAO confirmed, that 60 percent of its acquisition centers did not document the negotiation of best-value prices. Over the last 12 years, agency spending has increased to $32.4 billion from $4 billion, GSA said.

Auditors made four recommendations, and GSA officials said they already have begun working on them. GSA has a goal of conducting 70 pre-award audits in 2005. Officials said GSA has provided funding to the IG's office for pre-award audits and to increase the audits on large-dollar contracts. It also revised FSS' program operating procedures to require reports on pre-negotiation offers and is considering other potential policy improvements.

"Neither FSS nor GAO turned up evidence to suggest that the weaknesses in documentation resulted in prices that were unreasonable," GSA said in its response to the GAO report. "FSS re-examined a sampling of the contract files where we had our most serious documentation concerns. Those eight contract files, in fact, did have excellent pricing."

Sen. Susan Collins (R-Maine), chairwoman of the Senate Homeland Security and Governmental Affairs Committee, requested the study. A spokeswoman for the committee said the senator has reviewed the report and is concerned about continued deficiencies in the program. The spokeswoman added Collins intends to follow-up immediately with GSA about those concerns.