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Tag: audit

Not everyone is sold on the Transactional Data Reporting (TDR) pilot

Almost five years ago GSA launched the Transactional Data Reporting (TDR) pilot to replace the Price Reduction Clause (PRC). GSA’s goal is to use the data received, to obtain better pricing from contractors. GSA calls TDR a success, critics are not so quick to agree. (Federal News Network May 10, 2021)

Jeff Koses, GSA’s senior procurement executive said, “GSA has successfully demonstrated the value of TDR under the existing scope of the pilot. It has shown steady progress over the past four years, met most of the pilot’s objectives in the most recent year, and has made the necessary investments to leverage TDR’s potential in the years to come. We will continue to make improvements, especially in contracting officer usage.” However, Koses made no mention of using the TDR information in 2019 or 2020 (ibid).

Some argue that TDR works on paper, but not in reality. Many contracting officers are reluctant to use the data for decision-making. One industry expert went so far as to say, “I have not experienced any negotiations based on TDR data in order to form an opinion.” Others have suggested that the data is incomplete and that GSA has no strategy to back the pilot. (ibid)

One consultant pointed out that as more companies participate in TDR, the IG’s ability to audit prices before an award is made is more difficult. She noted, “under the TDR pilot, the population of auditable contracts has ostensibly been cut in half. When you remove the major resellers and the integrators, what remains are largely professional service contractors and products companies under Schedules 84 (Law Enforcement), 71 (Furniture), and 66 (Scientific). The audit threshold for annual sales is also reduced due to the smaller pool of contracts from which the OIG is selecting. Small businesses who would never have been a blip on the OIG’s radar are now at much higher risk of pre-award audit.” (ibid)

Another complication is GSA’s move toward unpriced contracts under Section 876 of the 2018 National Defense Authorization Act. The Act makes the Price Reduction Clause as well as TDR less necessary because the burden is on vendors to provide the lowest price possible as part of contract negotiations. (ibid)

Koses said GSA will refine and consider:

  • The ability of Federal Supply Schedule contracting officers to use transactional data for price negotiations in lieu of commercial sales practices and price reduction clause disclosures
  • The impact of an expanded data collection on GSA’s ability to use the data it currently collects
  • The impact on current/future GSA schedule contract holders
  • Communication to industry partners
  • Training and tools for category managers not impacted by TDR
  • Possible impacts on other FAS initiatives such as the National Defense Authorization Act (ibid)

So when will the pilot move to production? The waters remain murky. Whether the IG will move from the production stage should be made more clear when the Inspector General report on the TDR pilot is released, in the coming weeks. Vendors should be ready to invest in systems to collect and report pricing data, should the TDR pilot go into production.

Questions concerning how to collect and report pricing data? Give us a call.

Don’t be caught non-compliant

With each new year comes a new set of sub and prime contract goals each non-small business contractor and government agency must adhere to. Agencies achieve their goals by awarding prime contracts to small businesses. Non-small business contractors who compete for contracts worth $750,000 or more ($1.5 million for construction contracts) are required to submit a small business subcontracting plan. The plan must include how a contractor will attract small businesses and ensure that those businesses actually have an opportunity to subcontract (FAR 19.702). The plan must show separate dollar and percentage goals for small businesses, those services/supplies to be subcontracted, and an explanation of how small business contracts will be secured. (JDSupra April 23, 2020)

To keep contracts in check, the federal government may intermittently audit contractors. The audits verify small business subcontracting plan s are being fulfilled. The Small Business Administration (SBA) is the lead for the evaluations, the SBA may delegate this authority to other federal agencies. Department of Defense contracts are generally evaluated by the Defense Contract Management Agency (DCMA). (ibid)

Compliance reviews are random and any contractor with a subcontracting plan can be selected for review. The government considers the following factors during compliance reviews:

  • Number and size of the contractor’s government contracts
  • Date of last compliance review
  • Most recent compliance review results
  • Importance/sensitivity of the project
  • Reporting compliance in the electronic subcontracting reporting system (ibid)

The following may be reviewed during an audit:

  • Contract files/correspondence related to the contract
  • IT systems
  • Documentation on subcontracting methods and procedures (ibid)

Once the audit is complete, a contractor can expect to receive a report on non-compliant items found and a rating based on the review. A rating can range from unsatisfactory to outstanding. No further action is necessary if a contractor receives an outstanding rating. When the rating is below satisfactory, the contractor must create a corrective action plan (CAP) within 30 days, explaining the steps they will take to become compliant. (ibid)

It is a good idea for contractors to have the required documents on hand, should they receive notice of an upcoming audit. They may include the following:

  • Small business certification paperwork
  • Subcontracting program policies
  • Any prior compliance reviews
  • Organizational charts
  • Policy letters from the company CEO verifying subcontracting program
  • Historical subcontracting reports
  • Listing of any small business conferences or trade shows attended
  • Documentation of success stories – showing contracts awarded
  • A letter identifying small business liaison officer (ibid)

Companies that are well prepared for audits and have a subcontracting plan in place will undoubtedly move through a review smoothly and quickly.

Do you have all of your ducks in a row for a possible upcoming audit? Give us a call.

 

Self Certification — No More ;-(

The 2015 National Defense Authorization Act mandated that the Small Business Administration (SBA) discontinue self-certification of women-owned and other small businesses. In 2020, SBA plans to finalize a self-certification rule that closes a loophole allowing participants in the SBA’s Women-Owned Small Business (WOSB) program to self-certify. (Federal News Network, June 2019)

Approximately one-quarter of all federal contracts are held by small businesses, which over the past six years has helped federal agencies to  exceed  SBA’s governmentwide small business contracting goal. This year’s spending of more than $120 billion on small business contracts surpasses last year’s spending by nearly $15 billion.

The Government Accountability Office reported in March that almost 40 percent of WOSB-certified businesses were ineligible. Meanwhile, SBA’s Office of Inspector General June 2018 audit found 89 percent of sole-source (50 out of 56 contracts) did not meet all program criteria. Basically, there is currently no way to know if the contracts, listed in the chart below, were actually eligible for the sole-source awards. (ibid)

Rob Wong, SBA’s associate administrator of the Office of Government promotes a formal certification to  give the program some much-needed integrity. Wong said, “simply put, the wrong companies were receiving our contracts, we want to make sure that, if a company receives a contract through these programs, they’re actually eligible to receive it.” (ibid)

SBA has subsequently published a proposed rule in the Federal Register eliminating self-certification and providing a free online certification application to WOSB. Comments on the proposed rule are being accepted until July 15. In Wong’s opinion, it is high time to streamline the vetting process for the many other set-aside programs, all of which have different sets of eligibility criteria. Wong feels that going to three formal certifications for 8(a), Historically Underutilized Business Zones, women-owned, and service-disabled veterans will unify the processes. The rule with set-aside screening is expected to take a year for the changes to take effect. (ibid)

Do you have questions about the new certification process and how it may affect your current contract or an upcoming opportunity? Give us a call at 301-913-5000.