Federal Supply Service Not Buying Goods at Lowest Possible Price

PSAD-77-69: Published: Mar 4, 1977. Publicly Released: Mar 4, 1977.

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Some contractors charge the government more for their products than they charge commercial customers who buy smaller or comparable quantities of those products.

Prices charged the Federal Supply Service (FSS) by 5 of 12 multiple award schedule contractors were much higher than prices charged other customers. This was probably because FSS did not have procedures for considering the total purchases expected under a contract when evaluating offers and prices. As a result, FSS did not obtain the volume discounts normally available to other customers. Had it done so, the government could have saved about $1.2 million on purchases totaling $11.2 million from the five contractors. Although sales from FSS contracts amounted to $840 million, contractors' proposals were rarely independently audited. Sales and discount information submitted on 6 of 15 contract proposals was not accurate, current, or complete. Therefore, the pricing information used by FSS in evaluating offers and negotiating prices may have been inaccurate.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: FSS should develop procedures to enable it to obtain discounts given by contractors to other customers buying large quantities of goods and increase its verification of contractors' proposals and audit coverage of completed contracts. The General Services Administration needs to reevaluate its role and adopt the concept that it represents the government as an entity rather than as individual purchasing units.

    Agency Affected:

 

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