Contracting Strategies:

Data and Oversight Problems Hamper Opportunities to Leverage Value of Interagency and Enterprisewide Contracts

GAO-10-367: Published: Apr 29, 2010. Publicly Released: May 24, 2010.

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Agencies can use several different types of contracts to leverage the government's buying power for goods and services. These include interagency contracts--where one agency uses another's contract for its own needs--such as the General Services Administration (GSA) and the Department of Veterans Affairs multiple award schedule (MAS) contracts, multiagency contracts (MAC) for a wide range of goods and services, and governmentwide acquisition contracts (GWAC) for information technology. Agencies spent at least $60 billion in fiscal year 2008 through these contracts and similar single-agency enterprisewide contracts. However, concerns exist about duplication, oversight, and a lack of information on these contracts, and pricing and management of the MAS program. GAO was asked to assess the reasons for establishing and the policies to manage these contracts; the effectiveness of GSA tools for obtaining best MAS contract prices; and GSA's management of the MAS program. To do this, GAO reviewed statutes, regulations, policies, contract documentation and data, and interviewed officials from OMB and six agencies.

GWACs, MACs--two types of interagency contracts--and enterprisewide contracts should provide an advantage to the government in buying billions of dollars worth of goods and services. However, data are lacking and there is limited governmentwide policy to effectively leverage, manage, and oversee these contracts. The total number of MACs and enterprisewide contracts is unknown, and existing data are not sufficiently reliable to identify them. In addition, GWACs are the only interagency contracts requiring OMB approval. Agencies GAO reviewed followed statutes, acquisition regulations, and internal policies to establish and use MACs and enterprisewide contracts. Avoiding fees associated with using other agencies' contracts and more control over procurements are some of the reasons agencies cited for establishing MACs and enterprisewide contracts. However, many of the same contractors provided similar products and services on multiple contracts--a condition that increases costs to both the vendor and the government and misses opportunities to leverage the government's buying power. Recent legislation and OMB's Office of Federal Procurement Policy initiatives are expected to strengthen management of MACs, but no such initiatives exist for enterprisewide contracts. GSA's MAS program--the largest interagency contracting program--uses several tools and controls to obtain best prices, but the limited application of certain tools hinders its ability to determine whether it achieves this goal. GSA has established two regulatory pricing controls for MAS contracts: seek the best prices vendors provide to their most favored customers; and a price reduction clause that provides the government a lower price if a vendor lowers the price for similarly situated commercial customers. GSA uses other pricing tools--e.g., pre-award contract audits by its Inspector General and Procurement Management Reviews--on a limited basis. For example, the Inspector General performs pre-award audits on a small sample of MAS contracts annually, but has identified contract cost avoidance of almost $4 billion in recent years. In 2008, GSA established a MAS advisory panel that recommended changes to the pricing controls noted above; concerns remain that such changes could adversely affect GSA's ability to negotiate best prices. A lack of data, decentralized management, and limitations in assessment tools create challenges for GSA in managing the MAS program. The agency lacks data about customer agencies' use of the program, limiting its ability to determine how well the program meets customers' needs. The MAS program office lacks direct program oversight, as GSA has dispersed authority for managing MAS among nine acquisition centers under three business portfolios. Program stakeholders have identified concerns that this structure has impaired consistent policy implementation. Shortcomings in assessment tools also result in management challenges. For example, performance measures are inconsistent, including inconsistent emphasis on pricing. GSA's customer satisfaction survey has such a low response rate that its utility for evaluating program performance is limited.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Office of Federal Procurement Policy (OFPP) has worked to improve available information on the universe of interagency and enterprisewide contracts. In October 2012, an updated version of the Interagency Contract Directory was released, which is a searchable online database of existing interagency contracts. Additionally, information on new interagency contract vehicles, including multi-agency contracts, as well as enterprisewide contracts established under OFPP's September 2011 business case guidance will also be posted on OMB's website and available to federal agencies, which will enable the collection of information on new contract vehicles as they are created and renewed. We believe these efforts meet the general intent of the recommendation.

    Recommendation: To provide better transparency and a coordinated approach in awarding MACs and enterprisewide contracts, the Director of the Office of Management and Budget should direct the Administrator of the Office of Federal Procurement Policy to survey departments and agencies to update the 2006 Office of Federal Procurement Policy Interagency Contracting Data Collection Initiative to identify the universe of MACs and enterprisewide contracts in use throughout federal departments and agencies and assess their utility for maximizing procurement resources across agencies.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  2. Status: Closed - Implemented

    Comments: OFPP continues to work with the agencies to ensure that the data reported in the federal procurement data system (FPDS) are accurate and complete. Agencies were asked to randomly sample fiscal year 2010 contract action records and to compare the records to the data captured in FPDS. For the sample taken for the funding agency FPDS field, a key field indicating use of another agency's contract, the government-wide accuracy rate for the sample was 96.5 percent. OFPP will continue to work with agencies to ensure that they have policies, procedures, and internal controls in place to monitor and improve procurement data quality generally. In support of the broader effort to improve the quality of data reported in FPDS, on May 31, 2001, OFPP issued a memorandum describing the steps agencies are expected to take to ensure that FPDS data and other acquisition-related information are reported correctly. An interagency procurement data quality working group has been established and will be considering various efforts agencies are employing to improve data quality and looking to leverage successful efforts across the acquisition community.

    Recommendation: To provide better transparency and a coordinated approach in awarding MACs and enterprisewide contracts, the Director of the Office of Management and Budget should direct the Administrator of the Office of Federal Procurement Policy to ensure that departments and agencies use the survey data to accurately record these contracts in FPDS-NG.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  3. Status: Closed - Implemented

    Comments: OFPP released guidance in September 2011 that included a new process for developing, reviewing, and approving business cases for new multiagency and enterprisewide contracts meeting certain dollar value thresholds. The guidance requires business cases to address 3 key elements: (1) the scope of the contract vehicle and potential duplication with existing contracts; (2) the value of the new contract vehicle, including expected benefits and costs of establishing a new contract; and (3) expected interagency use of the contract and administration of the contract vehicle. The guidance also requires senior agency officials to approve the business cases and post business case information on an Office of Management and Budget website, which should provide increased visibility to other federal agencies. A final FAR rule was issued in January 2012 that required the development of business cases for multiagency contracts in accordance with this guidance.

    Recommendation: To provide better transparency and a coordinated approach in awarding MACs and enterprisewide contracts, the Director of the Office of Management and Budget should direct the Administrator of the Office of Federal Procurement Policy to establish a policy and procedural framework in conjunction with agencies for establishing, approving, and reporting on new MACs and enterprisewide contracts on an ongoing basis; the framework should stress the need for a consistent approach to leveraging the government's buying power across departments and agencies while continuing to use their statutory authorities for buying goods and services.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  4. Status: Closed - Implemented

    Comments: OFPP is committed to ensuring adequate information is available on interagency and agency-wide contracts, so agency acquisition planners can evaluate available options before awarding contracts. Our research has led us to conclude that the limited number of multi-agency contracts that we know of is more a reflection of current reality than data inadequacies, that is, there are, in fact, a limited number of multi-agency contracts beyond the GSA Schedules and GWACs. Accordingly, we believe that information on the great majority of the available options is already available to agency acquisition personnel. The major sources of interagency contract activity - the Schedules and GWACs - are well known to the acquisition community and provide readily accessible information on their contracts to interested sources. In addition, we have identified at least one commercial source that a number of agencies use to obtain information about the existing non-schedule interagency contracts and large agency-wide contracts. As a result, while we will continue to consider ways to help ensure the ready availability of information, it appears the effort to create a new and potentially costly government-run database of interagency contracts may be unnecessary. Until a determination has been made regarding the creation of a centralized database, agencies will be notified about a new page on the MAX system to find links to web pages with information about government-wide acquisition contracts (GWACs) and other known interagency contract vehicles. In addition, agencies will also be asked to post information about new multi-agency contracts and multi-agency blanket purchase agreements on the MAX page.

    Recommendation: To provide better transparency and a coordinated approach in awarding MACs and enterprisewide contracts, the Director of the Office of Management and Budget should direct the Administrator of the Office of Federal Procurement Policy to assess the feasibility of establishing and maintaining a centralized database, which could provide sufficient information on GWACs, MACs, and enterprisewide contracts, for contracting officers to conduct market research and make informed decisions on the availability of existing contracts to meet the agencies' requirements.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  5. Status: Closed - Implemented

    Comments: In December 2010 the FAR was updated to require that agencies take specific actions before using an interagency contract. The FAR update, which implements section 865 of the Duncan Hunter National Defense Authorization Act (NDAA) for Fiscal Year 2009, is designed to ensure the benefits of interagency contacting are consistently achieved. In conjunction with the FAR update, OFPP released guidance in September 2011 that includes a new process for developing, reviewing, and approving business cases that will improve the communication and visibility for proposed interagency and agency-specific contract vehicles. This visibility will help OFPP determine whether agencies are implementing and following the guidance. As part of the business case analysis, the new guidance also requires an agency to expressly consider the potential for duplication and to describe how its proposed vehicle is unique.

    Recommendation: To provide better transparency and a coordinated approach in awarding MACs and enterprisewide contracts, the Director of the Office of Management and Budget should direct the Administrator of the Office of Federal Procurement Policy to, as part of developing the pending FAR rule to implement the 2009 National Defense Authorization Act, ensure that departments and agencies complete a comprehensive business case analysis as described by the SARA panel, and include a requirement to address potential duplication with existing contracts, before new MACs and enterprisewide contracts are established.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  6. Status: Closed - Implemented

    Comments: The MAS Program Office in conjunction with the Office of the Inspector General (OIG) targeted additional MAS contracts for pre-award audits. GSA guidance instructs contract negotiators to request audit assistance for new contract offers and extensions as appropriate when a contract's estimated sales exceed $25 million for the 5-year contract period. However, not all contracts that meet this threshold receive an audit. For example, 69 preaward audits were completed in fiscal year 2008. The GSA Inspector General's audit planning effort for the two year period of 2009 through 2011, more than 250 contracts that exceeded the $25 million threshold were not selected for audit due to resource contracts. Pre-award audits can result in lower prices for the users of MAS contracts by identifying opportunities for GSA to negotiate more favorable price discounts when awarding contracts. The GSA Inspector General has identified almost $4 billion in potential cost avoidance through pre-award audits from fiscal year 2004 through 2008. In November 2010, in response to GAO's recommendation, GSA developed a plan to conduct 118 pre-award audits in fiscal year 2011, a 70 percent increase compared to the number of preaward audits conducted in fiscal year 2008.

    Recommendation: To strengthen GSA MAS program pricing and management, the Administrator of the General Services Administration should, in coordination with the GSA Inspector General, target the use of pre-award audits to cover more contracts that meet the audit threshold.

    Agency Affected: General Services Administration

  7. Status: Closed - Implemented

    Comments: In June 2011 and April 2012, GSA updated its policies and procedures for conducting prenegotiation clearance panels (PNCP). The updated policy eliminated dollar thresholds for PNCPs and now requires each Federal Supply Schedule to complete a set number of reviews on an annual basis. The updated policy also includes a requirement for each of the organizations that administer MAS contracts to report quarterly on completed reviews, and GSA has developed a tracking sheet to ensure that required reviews are completed.

    Recommendation: To strengthen GSA MAS program pricing and management, the Administrator of the General Services Administration should fully implement the process that has been initiated to ensure that vendors that meet the pre-negotiation clearance panel threshold receive a panel review.

    Agency Affected: General Services Administration

  8. Status: Closed - Not Implemented

    Comments: The MAS Advisory Panel, a Federal Advisory Committee tasked with providing independent advice to GSA to help ensure to negotiate the best prices possible for GSA's customers. GSA reviewed the Panel recommendations on the MAS program and according to GSA, many changes are already in place or in process, either as a result of or in sync with the Panel recommendations. However, no regulatory actions has been taken to eliminate the price reduction clause.

    Recommendation: To strengthen GSA MAS program pricing and management, the Administrator of the General Services Administration should, when considering the MAS Advisory Panel recommendations to clarify the price objective and eliminate the price reduction clause, ensure that any alternative means to negotiate and determine best prices are validated and in place before eliminating these pricing provisions.

    Agency Affected: General Services Administration

  9. Status: Closed - Implemented

    Comments: GSA has taken steps to collect and use transactional data on Multiple Award Schedules program transactions, including prices paid. GSA initiated the Point of Sale/Transactional Data pilot program in May 2011, which requires vendors on three product Schedules to automatically provide the Schedules price on all purchases made using a GSA SmartPay card. Customers also receive transactional data on their purchases. GSA also initiated a price comparison tool pilot, which assists MAS contract negotiators by providing them pricing data from government and commercial databases for certain products.

    Recommendation: To strengthen GSA MAS program pricing and management, the Administrator of the General Services Administration should collect transactional data on MAS orders and prices paid, possibly through the expanded use of existing electronic tools or through a pilot data collection initiative for selected MAS schedules and make the information available to MAS contract negotiators and customer agencies.

    Agency Affected: General Services Administration

  10. Status: Closed - Implemented

    Comments: GSA established a MAS program-wide performance scorecard for use beginning in fiscal year 2012 to provide consistency in MAS program performance management. The scorecard is organized around strategic themes including acquisition excellence, workforce excellence and financial performance. In terms of measures related to pricing, the scorecard includes a measure comparing the percentage of prenegotiation clearance panels completed to the percentage required. Prenegotiation clearance panels are held on contracts to review the contract's negotiation objectives with an emphasis on pricing.

    Recommendation: To strengthen GSA MAS program pricing and management, the Administrator of the General Services Administration should establish more consistent performance measures across the MAS program, including measures for pricing.

    Agency Affected: General Services Administration

  11. Status: Closed - Implemented

    Comments: GSA has taken steps to increase the response rate of its MAS customer surveys, which are administered for both the information technology (IT) and non-IT portions of the MAS program. These steps have included the use of pre-survey notifications alerting recipients of the survey, working with agency security and information technology contacts to ensure that surveys reached potential respondents, and reducing the length of the survey. Additionally, GSA transitioned from a customer satisfaction survey model to a customer loyalty survey model in order to gather more meaningful and actionable information. As a result, the response rates for the fiscal year 2011, 2012 and 2013 MAS customer surveys have notably increased relative to the prior surveys, with fiscal year 2013 response rates for the IT and non-IT MAS surveys of 29 and 20 percent, respectively. While these surveys do not include a nonresponse analysis, which Office of Management and Budget guidance recommends for survey response rates below 80 percent, GSA's actions should help continue to better position it to which should help GSA gather more meaningful information on MAS program performance.

    Recommendation: To strengthen GSA MAS program pricing and management, the Administrator of the General Services Administration should take steps to increase the MAS customer survey response rate by using a methodologically sound means to identify bona fide program users and employing survey techniques that produce meaningful and actionable information that can lead to program improvements.

    Agency Affected: General Services Administration

  12. Status: Closed - Implemented

    Comments: In response to this recommendation, the Assistant Commissioner for Acquisition Management in GSA's Federal Acquisition Service, in a May 2011 decision paper, committed to improving consistency in MAS program implementation across GSA's acquisition centers and business portfolios. In addition, GSA strengthened the authority of the MAS program office to drive program direction and priorities by adding senior GSA officials to the governance council. Specifically, GSA made the Assistant Commissioner for Acquisition Management the head of the council and added the Federal Acquisition Service Deputy Commissioner as a council member.

    Recommendation: To strengthen GSA MAS program pricing and management, the Administrator of the General Services Administration should clarify and strengthen the MAS program office's charter and authority so that it has clear roles and responsibilities to consistently implement guidance, policies, and best practices across GSA's acquisition centers including policies and practices related to the above recommendations.

    Agency Affected: General Services Administration

  13. Status: Closed - Implemented

    Comments: On November 22, 2010, GSA provided the Office of Federal Procurement Policy with an update of its plan and status to address the recommendations from GAO. This update included a summary of each recommendation and the current actions taken by GSA.

    Recommendation: To strengthen GSA MAS program pricing and management, the Administrator of the General Services Administration should report GSA's plans to address these recommendations to the Administrator of the Office of Federal Procurement Policy.

    Agency Affected: General Services Administration

 

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