An Introduction to Multiple Award Schedule (MAS) OIG Audits

At A Glance:

• Main Takeaway: GSA’s Office of Inspector General (OIG) regularly performs Multiple Award Schedule (MAS) contract audits, which can result in significant findings.
• Business Impact: understanding the OIG audit process helps inform best practices for MAS contract compliance.
• Next Steps: Establish or strengthen policies and procedures focusing on the OIG’s key findings to monitor contract compliance.

The Full Story:

The General Services Administration (GSA) Office of Inspector General (OIG) is an independent group that evaluates GSA’s programs and operations, including the Multiple Award Schedule (MAS) program.  The OIG conducts two main types of MAS contract examinations, preaward and postaward audits. The audits assess compliance with contract terms and conditions and ensure pricing disclosures are current, accurate, and complete.

The OIG determines an audit plan for the upcoming fiscal year annually, outlining the specific program audits and number of contract audits. The Fiscal Year 2024 audit plan included a potential for 21 preaward audits. The OIG budgets its number of preaward audits by considering contracts coming up for renewal, sales volume, auditor workload, and geographic considerations. The number of postaward audits varies based on triggering events. 

Preaward audits are based on examining data from 12 months and provide the GSA Contracting Officer with recommendations for negotiating contract awards or option renewals. Most preaward audits occur in conjunction with the option renewal. Contracts are selected for audit based on the annual contract sales. A higher sales volume puts contractors at risk of being selected for this type of audit. Most contracts selected for audit do not participate in the Transactional Data Reporting (TDR) pilot. This will likely change as the OIG finalizes its TDR audit work program.  If selected for a preaward audit, contractors are notified 365 days before the contract ends.

Postaward audits are based on examining data from the current five-year contract period and reviewing compliance with the contract terms and conditions. The scope of postaward audits varies as some may cover a full scope of review while others may be limited. Typically, a history of noncompliance, negative preaward audit findings, a mandatory disclosure, or a request from the GSA Contracting Officer triggers a postaward audit.

Throughout the audit process, the OIG examines Commercial Sales Practices (CSP) information, the administration of the price reductions and billing provisions, sales reporting and Industrial Funding Fee (IFF) procedures, sales monitoring and billing systems, segregation and accumulation of costs for task orders, and labor qualifications. Contractors will demonstrate their order and billing systems and various processes and procedures. In addition, the auditors will sample pricing proposals, contract awards, invoices, and resumes from the sales transaction data.

Key Findings Resulting from OIG Audits

At the conclusion of the audit, the auditors will issue an Audit Report to the GSA Contracting Officer. This report includes any findings that may result in money owed to the government. While the OIG reviews various areas of MAS contract compliance, the most common findings are described below.

1. Price Reductions Clause (PRC) Violations – In accordance with clause 552.238-81, MAS contractors not participating in TDR negotiate a discount relationship between GSA and a Basis of Award (BOA) customer that must be maintained throughout the contract’s life. A price reduction has occurred if sales to the BOA customer disturb the negotiated discount relationship. This can result in refunds to the government AND a reduction in the GSA ceiling rate.

• Unqualified Labor – MAS contractors establish unique labor categories and qualifications at the contract level. All staff billing against these categories, including subcontractors, must meet the qualifications for their assigned positions. GSA considers any staff member who does not meet the qualifications as unqualified. Unqualified labor results in a re-mapping to an appropriate GSA labor category and refunds issued to the government.

• Overcharges or Overstated Rates – MAS contracts include ceiling prices. An overcharge occurs when the order price exceeds the GSA ceiling price, resulting in a refund owed to the government. In addition, any unapproved markup applied to Other Direct Costs awarded on the MAS contract is also an overcharge.

Auditors make forward pricing recommendations using either awarded pricing on non-GSA orders or a cost buildup. The OIG may use this information to argue that the GSA ceiling prices are overstated, resulting in reductions to the rates going forward.

• Inaccurate Sales Tracking Systems – MAS contractors must have a system capable of accumulating and reporting GSA Schedule sales. If the audit uncovers unreported GSA sales, this will require a sales adjustment in the FAS Sales Reporting Portal (SRP).

• Inaccurate Commercial Sales Practices – After reviewing the sales transaction data and a sampling of non-GSA orders, the auditor may determine that the CSP disclosures are not current, accurate, and complete. The consequences vary, but they are frequently associated with PRC violations and/or go-forward rate reductions.

Understanding the OIG audit process informs best practices for compliance. It’s important to establish and strengthen your MAS contract policies and procedures well before your contract is selected for an OIG audit. Stay tuned for Aprio’s GSA OIG audit team’s insights on these key finding areas and recommendations for compliance.