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Breakout Session # 2101 James S. Phillips, Esq., Centre Consulting, Inc. Date April 14, 2008

The Expanding World of GSA Audits. Breakout Session # 2101 James S. Phillips, Esq., Centre Consulting, Inc. Date April 14, 2008 Time 11:00 – 12 :00. The Expanding World of GSA Audits. Types of Audits Pre-Award Post-Award IFF/Sales Reporting Compliance Issues.

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Breakout Session # 2101 James S. Phillips, Esq., Centre Consulting, Inc. Date April 14, 2008

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  1. The Expanding World of GSA Audits Breakout Session # 2101 James S. Phillips, Esq., Centre Consulting, Inc. Date April 14, 2008 Time 11:00 – 12:00

  2. The Expanding World of GSA Audits Types of Audits • Pre-Award • Post-Award • IFF/Sales Reporting • Compliance Issues

  3. The Expanding World of GSA Audits Basic Government Audit Rights Per GSAR 552.215-71GSA May Audit Contractor Records “Involving Transactions” related to contract for: • Over Billings, • Billing Errors, • Compliance with the Price Reduction Clause, • Compliance with the Industrial Funding Fee Clause, or • Compliance with Other Obligations.

  4. The Expanding World of GSA Audits Scope of Audit Rights • Records Regarding Non-GSA Sales Transactions Reviewable to Ensure Compliance with Price Reduction Clause & Accurate CSP Submission • Review of GSA Sales Records to Ensure GSA Pricing Terms Were Fulfilled & GSA Sales Are Reported. • Review of Labor Records under Service orders • Compliance with Special Requirements – e.g.TAA; Small Business Subcontracting

  5. The Expanding World of GSA Audits Audit Players • Industrial Operations Analysts (IOA): Perform Annual Reviews of Contract Compliance Systems. • GSA Office of Inspector General (IG): Conducts Pre- & Post-award Audits as Requested by PCOs or Whistleblowers. • DCAA: Seeking Audits of Subcontractor Costs, ODCs & Open Market Items.

  6. The Expanding World of GSA Audits Contractor Assessment Initiatives (CAsI) Conducted by Industrial Operations Analysts (IOAs)

  7. The Expanding World of GSA Audits CAsI Audits: • Review Contractor Compliance in Multiple Areas • Provide information to FSS Contracting Officers on Option Exercise • Conduct Customer Satisfaction Surveys • Provides Past Performance Information that Becomes Part of the Past Performance Information Retrieval System (PPIRS)

  8. The Expanding World of GSA Audits CAsI Audits: • GSA Goal - Each Contract will be Reviewed Once a Year.

  9. The Expanding World of GSA Audits New Report Card – Three Categories • Mandatory & Critical Elements (Total of 9 elements) • Mandatory But Not Critical Elements (Total of 11 elements) • Above & Beyond Elements (Total of 6 elements)

  10. The Expanding World of GSA Audits New Report Card Ratings • Category 1: One or More Failures = Finding of “Serious Concern” • Category 2: No Failures = “Exceptional”; 1 Failure = “Very Good”; 2 or 3 Failures = “Satisfactory” • Category 3: Extra Credit – Allows vendors to move from “Very Good” to “Exceptional” if only one category 3 failure

  11. The Expanding World of GSA Audits New Report Card – Critical Elements • Scope of Contract • Trade Agreements Act • Using Current Price List • Accurate Sales Tracking System • Meeting Minimum Sales Criteria • Process for Monitoring Price Reductions • Charging Customers the Contract Price or Lower • Economic Price Adjustments • Achievement of Subcontracting Goals

  12. The Expanding World of GSA Audits Category 2 “Mandatory” Elements IFF Issues • Timely reporting of sales – Yes or No? • Timely IFF remittance – Yes or No?

  13. The Expanding World of GSA Audits Information On Ordering How are orders accepted and tracked? How are GSA orders “tagged”? How are prices verified? How do dealers report sales? When does a sale occur? How is IFF verified?

  14. The Expanding World of GSA Audits Recording a Sale • When the order is received • When delivery occurs • When the invoice is sent • When payment is received

  15. The Expanding World of GSA Audits When Recording Sales • Separate FSS from non FSS orders • Record FSS Orders by SIN • Separate Open Market Items

  16. The Expanding World of GSA Audits Category 2 “Mandatory” Elements Selling Issues • Advantage! up to date- Yes or No? • Timely delivery on task orders (based on sampling) – Yes or No? • Is the contractor honoring warranty terms – Yes, No or NA? • Is the contractor capable of accepting the government purchase card – Yes or No? • If applicable, are the participating dealers correctly listed on the price list & Advantage! – Yes, No or NA?

  17. The Expanding World of GSA Audits Category 2 “Mandatory” Elements Contract Admin Issues • Are the records location and administrative rep. information correct – Yes or No? • Have change of name or novation agreements been fulfilled – Yes, No or NA? • Is the contractor free of cure notices from the Schedule C.O. for the past 36 months – Yes or No? • If applicable, are prompt payment terms shown on invoices – Yes, No or NA?

  18. The Expanding World of GSA Audits Category 3 Elements Extra Credit • Is the contractor proactive in proposing to add or delete items? • Does the contractor accept credit cards above the micropurchase threshold? • Is the contractor using applicable e-contracting tools (E-Buy, E-Offer, E-Pay)? • Does the contractor offer discounts on BPAs issued against the GSA contract? • Is the contractor free from bankruptcy proceedings?

  19. The Expanding World of GSA Audits Administrative Report Card (ARC) Prepared by IOA http://vsc.gsa.gov

  20. Frequent Problems We See • GSA Sales Reports Conflict with Govt Records/FPDS • No Records Regarding Original GSA Pricing Basis • No Systems for Monitor TAA Compliance • No Systems for Tracking Sales to BOA Customers • No Effective Monitoring of Small Business Plan Compliance • Obsolete GSA Price Lists • GSA Prices Higher than Prices Charged Elsewhere • GSA Items No Longer Sold Outside the Schedules • No Record of Original Basis for GSA Pricing • Original GSA Prices Based on CSP But Items Now No Longer Sold Commercially

  21. The Expanding World of GSA Audits Audits by the GSA Inspector General (IG) Focus on Pricing Issues!

  22. The Expanding World of GSA Audits IG Audits - Who Gets Audited & Why • Schedule vendors with high GSA sales are audited at renewal. • IG focuses on whether Schedule rates are reasonable vs. commercial sales. • Considered a “pre-award” audit because focus is on pricing going forward. -- But can lead to audit of past pricing practices!

  23. The Expanding World of GSA Audits Government Remedies • Price adjustments for defective price disclosures:recover prices overpaid based on adjusted price, plus interest • Price reductions for breach of price reductions clause:recover prices overpaid based on reduced GSA price, plus interest • Civil False Claims Act: Treble damages plus FCA penalties ($5K - $10K per false invoice)

  24. The Expanding World of GSA Audits Additional Penalties • Suspension/Debarment • Contract Termination/Cancellation • Criminal Prosecution

  25. The Expanding World of GSA Audits Questions?

  26. The Expanding World of GSA Audits Thank You! jphillips@centreconsult.com

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