From Thorns to Roses: Taming Unqualified GSA Labor

At a Glance:

• The main takeaway: Using unqualified labor can trigger significant financial risk for GSA Multiple Award Schedule (MAS) contractors.
• The impact on your business: Ensuring employees and subcontractors are qualified for their GSA labor categories can be a complicated process.
• Next steps: Applying a few key best practices can greatly reduce the likelihood of negative outcomes.

Without an established process for validating employee qualifications, contractors may be perpetuating an expensive compliance failure. Aprio’s GSA consulting practice can help MAS contractors quantify risk and implement corrective actions to address this common issue.

Contact Aprio’s GSA consulting practice for help quantifying risk and implementing solutions today.

The Full Story:

An interesting thing happens when GSA’s Office of Inspector General (OIG) finds the same issue over and over in audits, it becomes a focus in Contractor Assessments. One area with an outsized impact on service companies is the use of unqualified labor on GSA task orders. This is why GSA examines resumes at every single assessment. While the review may seem innocuous, contractors should be aware of the potential for serious adverse actions if they are not compliant with their labor category requirements.

GSA Classifies Unqualified Labor as an Overcharge

When GSA negotiates labor rates, qualifications are critical to establish a fair price. Each description includes minimum education and experience, and may also include requirements for certifications, security clearances and specialized skills. These act as the position’s specification.

It makes sense that a Project Manager with eight years of experience and a master’s degree would sell at a higher rate than one with two years of experience and an associate degree. When a contractor fills a position with someone who doesn’t meet the requirements, it qualifies as an overcharge.

Labor Overcharges can Snowball

Liability for unqualified labor equals the delta between the category billed and the one the resource qualifies for times total hours. Damages can accumulate rapidly, especially if the contract does not have a substitution methodology. Here is an example:

Joe Smith billed 1,560 hours against the Senior Electrical Engineer 2 category, which requires a bachelor’s degree in engineering and 10 years of experience. Joe has 20 years of experience, but only an associate degree in computer science. The MAS contract does not allow the substitution of experience for education, which means Joe cannot be mapped to any category requiring a bachelor’s degree.

The highest category Joe qualifies for is a Senior Engineering Aide 2, which requires a high school diploma and five years of experience. The difference between the Senior Electrical Engineer 2 and Senior Engineering Aide 2 hourly rate is over $90.00. The resulting overcharge is $141,975.60.

Employee Name	Project Labor Category	GSA Labor Categories	Hours Billed	GSA Rate	Extended Price
Smith, Joe	Electrical Engineer III	UNQUALIFIED: Senior Electrical Engineer 2	1,560.00	$196.47	$ 306,493.20
		QUALIFIED: Senior Engineering Aide 2		$105.46	$ 164,417.60

Best Practices for Ensuring Compliance with Labor Qualifications

GSA contractors can reduce the risk of unqualified labor by incorporating the following best practices.

At the MAS contract level:

• When drafting labor descriptions, avoid writing to fit existing resources or being unnecessarily specific. The current Systems Engineer may have a PhD in quantum physics and 20 years of experience, but that doesn’t mean future staff need the same qualifications.
• Incorporate a single education and experience substitution methodology for all labor categories. Don’t forget to allow substitutions for certifications such as the Project Management Professional (PMP).
• Ensure categories evolve to fit the market. This is especially true for technology industries. Revise position descriptions, add new categories and delete outdated ones regularly.

At the task order level:

• Ordering agencies CANNOT waive GSA’s labor category requirements.
• Ensure resumes are on file for everyone billing on MAS orders, whether employee or subcontractor. Require billable resources to update resumes at least annually.
• Validate each resource’s qualifications prior to authorizing them to bill time to the project.
• Document the application of substitutions and mappings of task order categories to MAS categories.
• Fixed-price work is NOT exempt from the requirement to provide qualified labor. Regardless of contract type, MAS services are the basis for pricing. Fixed-price budgets should use GSA categories and those billing should be mapped to an MAS category internally.

Contractors who provide unqualified labor on their GSA task orders may be setting themselves up for substantial penalties, but there are key actions to take to reduce risk and improve the contract’s flexibility. Failing to establish a flexible MAS labor structure creates unnecessary compliance risk that can trigger significant financial liability. Aprio’s GSA Schedule consulting team can fine-tune your MAS labor categories and compliance procedures to mitigate risk and increase profitability.

Related Resources/Assets/Aprio.com articles/pages

Are Your GSA Labor Categories Setting You Up for Failure?

The Ten Commandments of GSA Schedule Compliance

GSA Schedules 101

Schedule a consultation with Aprio’s GSA Schedule consulting team today.