General Services Administration:

Actions Needed to Stop Buying Supplies From Poor-Performing Vendors

GGD-93-34: Published: Jan 11, 1993. Publicly Released: Jan 22, 1993.

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Pursuant to a congressional request, GAO reviewed the General Services Administration's (GSA) governmentwide purchases of common-use supplies and equipment, focusing on: (1) purchases of supplies under competitive, indefinite delivery contracts; (2) the GSA practice of awarding supply contracts to vendors with poor performance histories; and (3) the causes, costs, and operational effects of such awards.

GAO found that: (1) most GSA vendors met responsibility requirements, but between 1988 and 1991, GSA awarded contracts to 285 vendors with poor performance histories; (2) the poorly performing vendors adversely affected GSA operations by requiring excessive contract monitoring, which impeded GSA ability to adequately monitor other supply contracts, comprising over 50 percent of the testing laboratory's workload but only 7 percent of the supply contracts subject to testing, and forcing customer agencies to purchase supplies on the open market at higher prices; (3) 5 of the 9 vendors sampled committed improper or illegal acts, such as falsifying quality certifications and product substitution; (4) GSA continued to use poorly performing vendors because it lacked complete and readily usable data on vendors' past and current performances, and a database for contract administration and decisionmaking; (5) GSA did not consistently emphasize or consider vendor capability, past product quality, or delivery terms in contract awards; (6) GSA used a flawed formula for determining vendors' delivery performance ratings, and did not provide adequate guidance to contracting officers for judging and considering past poor vendor performance; (7) GSA procurement practices and employee performance appraisal and rewards systems created disincentives for contracting offices to deny contracts to poor-performing vendors; (8) contracting officers were also averse to denying or terminating supply contracts due to poor contractor performance because such actions could lead to time-consuming administrative and legal procedures, thus delaying the procurement; and (9) GSA initiated a number of corrective actions, such as improving guidance and implementing a vendor rating system and a new procurement data system.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: GSA completed several initiatives which emphasized to vendors the effects and seriousness of poor performance, encouraged more and better monitoring of vendors' products, and improved its capabilities to prevent and detect poor performance.

    Recommendation: The Administrator of General Services should reevaluate the adequacy and effectiveness of the GSA Quality Approved Manufacturer Agreement (QAMA) program and other internal controls designed to prevent and detect receipt of defective or poor quality products into the governmentwide supply system.

    Agency Affected: General Services Administration

  2. Status: Closed - Implemented

    Comments: GSA's OIG reviewed controls over vendor performance in two commodity centers and concluded that the controls were adequate to ensure that vendor performance was being monitored.

    Recommendation: The Administrator of General Services should make effective use of the new data, criteria, and guidelines, which GSA is developing, to deny additional contracts to repeat poor-performing vendors and terminate existing contracts or otherwise deal more effectively with documented poor performance and/or improper or illegal vendor activities.

    Agency Affected: General Services Administration

  3. Status: Closed - Implemented

    Comments: GSA developed and issued a contractor alert list that identifies poor-performing contractors.

    Recommendation: The Administrator of General Services should complete and fully implement ongoing initiatives to: (1) develop more complete and readily usable data on supply vendors' capabilities and past performance; and (2) more fully address the product quality and delivery problems that result from poor vendor performance.

    Agency Affected: General Services Administration

  4. Status: Closed - Implemented

    Comments: GSA issued guidance on terminations for quality, which allows for terminating contracts for recurring deficiencies.

    Recommendation: To help make supply purchases less vulnerable to fraud, waste, and mismanagement and ensure that GSA stops awarding supply contracts to poor-performing vendors, the Administrator of General Services should make this a more clearly stated agency goal and place more emphasis on product quality, on-time delivery, and vendors' capability and past performance in awarding as well as administering supply contracts.

    Agency Affected: General Services Administration

  5. Status: Closed - Implemented

    Comments: GSA has modified its criteria for evaluating employee performance to (1) deemphasize the importance of maintaining supply products contract coverage and (2) emphasize the importance of vendors' contract performance.

    Recommendation: The Administrator of General Services should reexamine the emphasis that GSA procurement and performance pay and bonus systems now place on product contract coverage in assessing the performance of its commodity centers and procurement officials.

    Agency Affected: General Services Administration

 

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