Federal Agencies Are at Risk of Overpaying for Products in the Multiple Award Schedule Program Due to Significant Price Variability

Why We Performed This Audit

We performed this audit as part of the GSA Office of Inspector General’s Fiscal Year 2024 Audit Plan. Our audit objective was to determine whether GSA’s Federal Acquisition Service (FAS) is addressing price variability in its Multiple Award Schedule (MAS) Program to ensure schedule pricing results in the lowest overall cost alternative to meet the government’s needs in accordance with federal laws, regulations, and internal guidance.

What We Found

According to Federal Acquisition Regulation 8.404(d), Pricing, federal customer agencies using MAS contracts are not required to make a separate determination that the prices are fair and reasonable because GSA has already made that determination at contract award. However, federal customer agencies relying on GSA pricing on schedule contracts are at risk of overpaying for products due to significant price variability.

We examined schedule pricing for frequently purchased products and found significant price variability. At times, the difference between a product’s lowest price and highest price exceeded 1,000 percent. The significant price variability exists because: (1) contracting officers did not adequately evaluate proposed product pricing, (2) contractors submitted inaccurate data to GSA Advantage!, and (3) key FAS policies and procedures addressing MAS Program pricing issues are unused and ineffective. As a result, federal customer agencies are at risk of overpaying for products purchased through the MAS Program.

What We Recommend

We recommend that the FAS Commissioner:

1. Resume iterations of the Competitive Pricing Initiative at the MAS Program level to identify, address, and reduce price variability.
    
2. Strengthen policies and procedures to:
   1. Address data inaccuracies within FAS pricing tools; and
   2. Ensure bilateral contract modifications are submitted and approved prior to catalog changes.
       
3. Provide additional guidance to contracting officers regarding adequate sampling techniques for large catalogs to ensure information accuracy.
    
4. Inform federal customer agencies that they should perform separate and independent price determinations because significant price variability puts federal customer agencies at risk of overpaying for products on MAS contracts.
    
5.  Increase oversight and implement additional controls related to temporary price reductions.

The FAS Commissioner agreed with Recommendations 1, 3, and 5. He partially agreed with Recommendation 2b, and disagreed with Recommendations 2a and 4. FAS’s written comments are included in their entirety in  Appendix C.