Investigative Group

Feds Lose Millions Ignoring Reforms Watchdog Sought For Years

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Federal officials are missing huge potential savings because of long-ignored problems in a purchasing program designed to ensure the government pays the lowest possible competitive price for billions of dollars worth of equipment and supplies.

“It is imperative that … management take appropriate measures to address the issues identified in this memorandum,” the General Services Administration (GSA) Inspector General (IG) said in a report made public Wednesday.

The report described a litany of problems — many identified in previous IG reports — with GSA’s Multiple Awards Schedule (MAS) program. As the government’s “housekeeping agency,” GSA is the central purchasing agent for virtually everything used by federal employees.

The program was established by the Competition in Contracting Act, which requires “full and open competition” in most federal procurement. With $32 billion in annual sales, the MAS is the biggest purchasing program used by agencies across the federal government.

The program was established during President Reagan’s federal spending reforms after GSA was wracked by repeated revelations in the 1970s of corrupt bureaucrats and contractors conspiring to defraud taxpayers of hundreds of millions of dollars.

Among the numerous problems the IG described were these:

• The government is losing $405 million every year because firms selling to federal agencies through MAS frequently don’t provide officials with required information to determine if they are charging a fair price. Nearly 80 percent of the prices reviewed lacked such information.
• Less than half of $221 million in potential savings identified by the IG in previous years were realized, totaling only $93 million. The savings were lost in contract extensions that couldn’t be obtained due to the lack of required information.
• Firms participating in MAS don’t always comply with terms of their contracts, “including, but not limited to, labor qualifications in service contracts, the reporting of sales and computation of the Industrial Funding Fee (IFF), and customer billing requirements.” The IFF is the fee firms pay the government to be included in the program.
• 83 percent of the firms reviewed by the IG were mis-calculating their IFF, meaning the government is not collecting millions of dollars it should be.
• More than half of the contracted labor provided by one MAS firm reviewed by the IG failed to meet requirements. Overall, a fourth of those reviewed government-wide failed to meet the requirements. “When a contractor provides labor that fails to meet these contractual requirements, customer agencies do not receive the level of services they pay for and overpay for the labor that they receive,” the IG said.

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