Acquisition Management: Opportunities Exist for GAO to Strengthen Its Policies and Procedures

Overview

The GAO OIG audit found gaps in contract administration for a blanket purchase agreement (BPA (Blanket Purchase Agreement)) awarded under the GSA (General Services Administration) Schedule program, noting that invoice and modification controls failed to capture higher labor rates derived from a collective bargaining agreement. The BPA’s maximum value after modification was about $119 million, and GAO paid roughly $94,000 above negotiated rates during the second option year because the BPA and associated time-and-materials orders were not modified prior to payment. The audit also flagged unclear agency procedures on evaluating indirect costs and profit when contractors pass through subcontractor work with little or no added value (excessive pass-through charges), and on applying contracting-by-negotiation rules to GSA schedule procurements (FAR (Federal Acquisition Regulation) Part 15 and FAR 52.215-22 are relevant). GAO reported updates to subcontracting procedures and is working to update its GSA schedule policies. Contractors should treat this as an operational signal to review their contract-modification, invoicing, and subcontractor pass-through practices to reduce audit exposure and payment disputes.

Immediate Actions (This Week)

• [ ] Review current BPAs and time-and-materials orders you hold under GSA Schedule vehicles for any pending or recent collective bargaining or rate adjustments; identify any orders where rates may not have been formally modified.
• [ ] Put a hold or add an extra verification step on approvals for invoices tied to rate changes until you confirm the BPA/order reflects the adjusted rates.
• [ ] Assemble documentation demonstrating how any subcontractor labor or services were priced, including evidence of contractor-added value, to support against excessive pass-through charge scrutiny.

Short-Term Actions (30 Days)

• [ ] Update your internal invoice-approval checklist to require a contract/order modification reference or formal rate-authority documentation before higher labor rates are paid.
• [ ] Create or update a subcontractor pass-through policy template that documents when and how indirect costs and profit are applied to subcontractor work, and the justification for contractor value-added.

Long-Term Actions (90+ Days)

• [ ] Conduct a program-level review of SOPs for procurements under GSA Schedule vehicles to align internal procedures with guidance on applying FAR Part 15 and FAR 52.215-22 where applicable and to minimize unnecessary negotiation steps.
• [ ] Implement periodic internal audits of contract modifications and invoice approvals for time-and-materials orders and BPAs to detect and correct unmodified rate payments and excessive pass-through practices.

Compliance Checklist

• [ ] FAR Part 15 — Ensure understanding of when negotiation procedures apply to schedule procurements and document decision rationale when negotiation-like steps are taken.
• [ ] FAR 52.215-22 — Ensure contract clauses and invoice review processes support auditability of indirect costs and changes in labor rates.
• [ ] Subcontracting Regulations — Maintain subcontracting records that demonstrate contractor-added value vs. pass-through activity.
• [ ] Excessive Pass-Through Charges — Apply and document an evaluation framework for pass-through arrangements, including thresholds for review and required justifications.

Resources

• FAR Part 15 — Contracting by Negotiation (https://www.acquisition.gov/far/part-15)
• FAR 52.215-22 — Limitations on Pass-Through Charges (if applicable) (https://www.acquisition.gov/far/52.215-22)
• GAO (agency site) (https://www.gao.gov)
• GSA (agency site) (https://www.gsa.gov)

Primary hub: Winning Federal Contracts Guide (/insights/winning-federal-contracts)

Related guides: CMMC (Cybersecurity Maturity Model Certification) Compliance Guide (/insights/cmmc-compliance-guide), CUI (Controlled Unclassified Information)-Safe CRM Guide (/insights/cui-safe-crm-guide)

How Cabrillo Club Automates This

• Cabrillo Signals War Room — War Room has already detected this GAO OIG audit and delivered this briefing within minutes. It continuously monitors audit releases, agency policy updates, and contract-vehicle changes so your team receives immediate notification when agency procedures or BPA-related issues surface.
• Cabrillo Signals Match Engine — When events like this change the risk profile or spotlight contract-vehicle practices, the Match Engine automatically rescoring your opportunity pipeline. It reprioritizes opportunities affected by GSA Schedule/BPA policy updates, adjusts keyword relevance (e.g., “pass-through charge,” “time-and-materials”), and surfaces orders with elevated audit risk so capture and contracts teams can re-evaluate bid/no-bid decisions.
• Cabrillo Signals Intelligence Hub — The Intelligence Hub tracks affected agencies (GAO, GSA), NAICS codes, and contract vehicles (GSA Schedule, multiple-award schedules, BPAs). Use saved searches to get alerts when follow-on solicitations, policy updates, or related audit findings appear on SAM.gov (System for Award Management) or agency pages that match this event’s profile. It also centralizes documents and links to relevant FAR clauses for your team to reference.
• Proposal Studio (Proposal OS) — Proposal OS generates compliance matrices and first-draft technical approaches that incorporate your past performance on facility and commercial services engagements. It can auto-populate contract-modification histories and build sections explaining subcontractor management and pass-through controls, accelerating responses to RFPs or corrective-action plans.
• Proposal Studio Workflow Tracker — The Workflow Tracker enforces a 9-gate capture process that routes procurement, legal, and finance reviews for any proposal or contract modification involving higher labor rates or subcontractor pass-throughs. It creates audit-ready documentation packages that show approval trails, modification references, and invoice-verification steps.

Call-to-action: Explore these features in your Cabrillo Club console to automate monitoring, re-score your pipeline, and embed audit-ready controls into capture and invoice workflows.