GAO Revises Contract Procedures After $94,000 Overpayment

The Government Accountability Office agreed to strengthen its invoice approval and contract-modification processes, modify its facility-maintenance blanket purchase agreement to reflect adjusted labor rates, and develop guidance on subcontracting. The changes apply to GAO's acquisition and procurement personnel.

In FY 2019 GAO entered a blanket purchase agreement for commercial facility maintenance under the GSA Schedule program, with a maximum value of about $119 million. After the contractor submitted higher labor rates from a collective bargaining agreement, GAO did not amend the BPA or the related time-and-materials orders before payment, resulting in a payment about $94,000 higher than the previously negotiated rates during the second option year. GAO was unable to explain why the BPA and orders were not modified prior to payment.

The OIG also observed that GAO's standard operating procedures did not provide clear guidance on evaluating a contractor's charges for indirect costs or profit on subcontractor work when the contractor adds no or only negligible value, nor did they clarify the applicability of federal regulations for contracting by negotiation to GSA schedule procurements. The lack of clarity could lead procurement staff to take unnecessary steps.

GAO responded by creating a standard operating procedure addressing subcontracting and potential pass-through charges, providing evidence that the BPA was modified to incorporate the adjusted labor rates, and initiating updates to policies for GSA schedule procurements. The agency will also provide training and verify that all orders under the BPA include the appropriate labor rates.

These actions are intended to ensure future payments align with negotiated rates and to improve efficiencies for GAO procurement staff.