Are you prepared for a letter from the U.S. General Services Administration Office of Inspector General (GSA OIG) stating that your company has been selected for a pre-award audit of the Commercial Sales Practice (CSP) pricing information that will become the basis for the pricing on your contract option extension?
The Primary Purpose of a Pre-Award Audit
The purpose of the pre-award audit pursuant to Clause 52.215-21 Alternate IV (GSAM 515.408(a) (4) of the contract is to ensure that the CSP information is an accurate, current, and complete description of your practices and pricing. Keep in mind that the advisory nature of the pre-award audit is different from most other audits. The results of the pre-award audit will be passed on to your Contracting Officer to provide additional information for negotiation purposes. In addition, you should expect to be granted authority to review the results of the audit.
What Happens During a Pre-Award Audit?
- The auditor will seek to verify the accuracy of the latest CSP information submitted.
- The auditor will want to know the methodology used to develop the CSP information in addition to the source sales data reviewed in preparing the CSP information.
- You will be asked to explain why any sales information, such as specific classes of customers or discounting, were excluded and the reasons for the exclusion.
- The auditor will review your company’s billing and information systems to verify the completeness and accuracy of the information submitted.
- The auditor will review the terms and conditions with major commercial customer’s master agreements (as applicable).
What Are the Time Constraints and Consequences of Not Complying?
- Information will be required approximately one (1) month from the receipt of a letter of notification.
- Contact your assigned auditor within seven (7) days of receipt of the letter and be prepared to discuss specific data requirements.
- Your Contracting Officer can elect not to extend your contract if there is failure to respond to your auditor.
- Failure to cooperate with the GSA OIG could result in contract cancellation in accordance with GSAR Clause 552.238-73, Cancellation.
What Are the Results of GSA OIG Pre-Award Audits?
During the reporting period of April 1, 2016 – September 30, 2016, the IG auditors performed pre-award audits of 37 contracts with an estimated value of almost $9.5 billion and recommended that more than $324 million of funds be put to better use. Significant findings included that contractors had supplied commercial sales practices information that was not current, accurate, and complete; had proposed overstated labor rates and used unqualified labor; and that Price Reductions Clause compliance monitoring was ineffective.
In summary, the answer to my original question is NO; it is not time to panic. It’s time to ensure your CSP is accurate, current, and complete and provides all required disclosures and that all requested documentation/data is provided to your auditor within the required time frames.
If you need assistance in responding to your Contracting Officer/GSA OIG auditor, contact our GSA team.
About the Author:
Executive Director of Contracts and Consulting
Maureen Jamieson has more than twenty-five years of experience managing federal contracts. She is highly experienced in solving client pricing problems and implementing effective pricing strategies for placing products and services on GSA Schedule contracts.