GSA Schedule Contracts - Audits

Yesterday we discussed GSA rights to access a contractor's or prospective contractor's books and records for the purpose of performing post-award audits; that is audits for over-billings and compliance with the price reduction and industrial funding fee clauses. These are loosely termed under the heading of post-award audits. The probability that GSA will perform a post-award audit on a particular contract however, is not high. Some contracts are selected at random while others are selected based on some form of audit lead or perhaps a phone call through GSA's fraud hotline. Far more likely is the chance that contractors will undergo "pre-award" audits.

Contractors that submit proposals in response to a GSA solicitation give GSA the right to poke around their books and record even if there is no contract. One of the standard solicitation clauses states:

By submission of an offer in response to this solicitation, the Offeror grants the contracting Officer or an authorized representative the right to examine, at any time before initial award, books, records, documents, papers, and other directly pertinent records to verify the pricing, sales and other data related to the supplies or services proposed in order to determine the reasonableness of prices(s). 

The "authorized representative" in this case is usually GSA's Office of Inspector General however, DCAA (Defense Contract Audit Agency) has been called upon from time to time to perform these pre-award audits, particularly if that Agency is already in resident at a particular contractor location.

Any data submitted in response to a solicitation is fair game for a pre-award audit. The audit will focus on the propriety of contractor representations: commercial customers and prices charged,, discounts, quantity/volume, FOB terms, concessions, deviations, and sales data. Validation of those key elements will be the auditor's primary focus.

Some experts believe that pre-award audits are not necessarily bad events. Any findings during a pre-award audit that can be corrected, may prevent the Government from being harmed after contract award. Over billings carry their own set of problems and contractors definitely want to avoid those.