The General Services Administration (GSA) is increasing the number of pre-award audits of vendors with GSA schedule contracts up for renewal. What should vendors do to guard against adverse pre-award audit findings?

• Disclose your discounting practices accurately.
• Establish written corporate discounting policies and discuss the new policies with your sales team. Management should then monitor the sales staff closely to confirm that the written policies are being followed. After award of your GSA Schedule contract, a procedure should be put in place to ensure that any price reductions to the basis of award group are reported to your GSA contracting officer and that corresponding price reductions are offered to GSA.
• Implement written procedures to make certain that your accounting department is able to (i) accurately track GSA contract sales, (ii) calculate the Industrial Funding Fee (IFF) owed at the end of each quarter, and (iii) pay the IFF on or before its quarterly due date.

Additional Preventive Measures to Avoid Having Problems If An Audit Occurs

We recommend taking steps to protect your company in the event that the government decides to audit your business prior to or after the award of a GSA Schedule contract. In many instances, a number of months may have elapsed between the time you submit your company's offer to GSA and the time the final review of your proposal occurs. For this reason, it is critical to make sure that your original discounting disclosures are still accurate at the time of the contract's final negotiation stage. Write down your current discounting practices and compare them to those disclosed in the original submission. This comparison may reveal that your discounting practices have changed and that the original disclosures are no longer accurate. Take corrective action, if necessary. A similar analysis should be done after the award of your contract. If you have offered your product or services to basis of award customers at a lower price than your awarded GSA prices, the contract's price adjustment clause is triggered and you must notify your contracting officer accordingly.

GSA contract administration is not complex. To summarize, it is critical that vendors make accurate disclosures, monitor price reductions to the basis of award group, and pay their Industrial Funding Fee on time. Don't cut corners. If you discover problems, correct them immediately and communicate the problem and corrective action taken with the Contracting Officer.