Agencies Should Drive Harder Bargains for Supplies, GAO Says

In ordering $33.1 billion in goods and services through the Federal Supply Schedules, federal, state and local agencies too often failed to take advantage of discounts, a congressional watchdog found.

“Agencies are paying insufficient attention to prices when using FSS,” said the Government Accountability Office’s review of fiscal 2014 purchases by the General Services Administration, the Health and Human Services Department and the Pentagon. “Ordering agencies did not consistently seek discounts from schedule prices, even when required” by the Federal Acquisition Regulation. GAO found cases in which purchasing officers did not assess prices for certain items, as required, or had insufficient information to assess prices. “Contracting officials were not always aware of the requirement to seek discounts and told GAO that the need to assess prices was not emphasized in training and guidance.”

In analyzing data from the Federal Procurement Data System-Next Generation, GAO noted that overall purchases from the FSS declined from $31.8 billion in 2010 to $25.7 billion in 2014—a 19 percent inflation-adjusted decrease. “This is consistent with the decline in overall federal contracting obligations,” auditors said. The FSS portion of total federal contracting obligations remained steady—between 5 percent and 6 percent.

GAO also reviewed the extent to which each major agency obtained multiple price quotes from prospective vendors. “HHS had the highest percentage of completed FSS orders, but received only one or two quotes—51 percent—compared to DOD and GSA, which received one or two quotes for 35 and 32 percent of their FSS obligations, respectively,” said the report requested by the top two members of the Senate Homeland Security and Governmental Affairs Committee. “HHS’ practice of targeting solicitations to fewer vendors may be contributing to this higher rate.”

The auditors recommended that all three agencies issue guidance and boost training to obtain more competitive prices. The agencies agreed.

“The United States is the largest purchaser in the world and should use its bulk purchasing power to get good deals,” said Senate panel chairman Ron Johnson, R-Wis. “If government employees simply treated taxpayer money as if it were their own, we’d save hundreds of millions in contracting costs.”

Added ranking member Sen. Tom Carper, D-Del., “Most Americans know that when buying a car, you should never just accept the sticker price as the final price, and you should always shop around.” The report “also points to the importance of the administration’s new initiative to develop better government-wide pricing data so that contracting officers are smarter shoppers,” Carper said. “Too often, one federal agency has no idea what another agency has paid for the same goods or service.”

Separately, a GAO review of 32 noncompetitive commercial-item contracts credited the Pentagon for requesting contractor price information before making awards. “Contractors did not always provide all of the requested information, but contracting officials were able to use the available information to conclude that the prices paid were fair and reasonable,” auditors wrote in a review of compliance with the National Defense Authorization Act. “For 20 contracts, officials did not request any contractor information to determine price reasonableness. Officials determined the prices fair and reasonable based on information already available to the government, such as prices paid on previous contracts,” said GAO, concluding that overall, “contracting officials faced challenges when determining price reasonableness, such as data currency and contractor reluctance to share data.”

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