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

Executive Summary

This OIG finding focused on GAO’s administration of a GSA (General Services Administration) Schedule–awarded BPA (Blanket Purchase Agreement) for commercial facility maintenance (BPA value after modification about $119 million; award in FY 2019). The audit found GAO paid about $94,000 more than previously negotiated rates when adjusted labor rates from a collective bargaining agreement were not incorporated into the BPA and associated time-and-materials orders before payment. The report also identified gaps in GAO’s standard operating procedures for evaluating subcontractor pass-through charges and in guidance about applying contracting-by-negotiation rules to GSA schedule procurements. GAO has indicated it updated procedures related to subcontracting and was in the process of updating its GSA schedule procurement policies.

For contractors across Facility Maintenance, Commercial Services, and Building Services, the immediate implications are administrative and contractual: expect closer scrutiny of invoice-to-contract compliance, more attention to documented labor-rate changes, and potential clarification or tightening of procedures around subcontractor pass-through charges. Contractors should prepare to support rate adjustments with clear documentation, to respond to requests for justification of indirect/profit on subcontracted work, and to work with contracting officers to ensure BPAs and time-and-materials orders are modified before payment where appropriate.

Impact Matrix

Facility Maintenance

• Risk Level: High
• Opportunity: Increased demand for precise contract administration expertise and services that help agencies reconcile labor-rate changes and invoice approvals. Specific opportunities: NAICS codes listed in Tags (561210, 561720, 561730, 562910) and use of contract vehicles in Tags (GSA Schedule, GSA Multiple Award Schedule, BPA).
• Timeline: FY 2019 (BPA award); overpayment occurred during the “second option year”; GAO indicated it had updated subcontracting procedures and was updating GSA schedule procurement policies.
• Action Required:
• Ensure labor-rate adjustments (e.g., from collective bargaining agreements) are accompanied by clear modification requests and supporting documentation submitted to the contracting officer promptly.
• Strengthen internal invoice-review controls to detect divergence between billed rates and negotiated rates before submission.
• Be prepared to respond to agency inquiries about pass-through charges and to provide documentation of contractor-added value.
• Competitive Edge: Offer bundled compliance and contract-administration services (e.g., rate-change implementation, invoice-validation tools, and pass-through charge justifications) to contracting officers and prime contractors to reduce agency risk and administrative burden.

Commercial Services

• Risk Level: Medium
• Opportunity: Contracts awarded via GSA Schedule/BPA may see renewed emphasis on clear modification processes and subcontracting transparency; contractors that can document rate changes and subcontractor value-add may be favored. Specific opportunities: NAICS and vehicles listed in Tags.
• Timeline: FY 2019 award context; “second option year” impact noted; agency policy updates ongoing per Summary.
• Action Required:
• Maintain auditable records linking collective bargaining or other rate changes to contract modifications.
• Proactively clarify pass-through pricing and subcontractor roles in proposals and task orders.
• Train billing and contract staff on agency expectations for modifying BPAs/time-and-materials orders before payment.
• Competitive Edge: Differentiate by submitting task-order-level narratives that explicitly state subcontractor value, indirect cost allocation, and change-implementation steps to reduce buyer uncertainty.

Building Services

• Risk Level: Medium
• Opportunity: Similar to Commercial Services and Facility Maintenance—contractors who reduce administrative burden for agencies by providing clear price-modification workflows and pass-through justifications may gain preference for follow-on orders under GSA vehicles. Specific opportunities: NAICS and contract vehicles from Tags.
• Timeline: FY 2019 for the BPA award; issues identified in the second option year; policy updates in progress.
• Action Required:
• Standardize documentation packages for labor-rate changes and for subcontractor pass-through calculations.
• Coordinate early with contracting officers when collective bargaining outcomes affect labor lines on time-and-materials orders.
• Review subcontract agreements to ensure ability to demonstrate contractor-added value if asked.
• Competitive Edge: Build standardized, contract-ready change packages (mod templates, supporting certifications, pass-through justification language) that speed modification approval and lower perceived agency risk.

Cross-Segment Implications

• Shared contract vehicles (GSA Schedule / Multiple Award Schedule / BPA) and the focus on time-and-materials orders mean procedural changes at GAO (or other agencies adopting similar clarifications) will affect Facility Maintenance, Commercial Services, and Building Services in parallel. Expect agencies to ask for more robust documentation for labor-rate changes and for explicit justification of subcontractor fees across these segments.
• Increased agency scrutiny of excessive pass-through charges could shift subcontracting practices: primes may need to demonstrate added value or adjust pricing structures, impacting margins and proposal approaches across all named segments.
• If procurement staff take fewer or different steps due to clarified policy on applying contracting-by-negotiation rules to schedule procurements, administrative workflows and response times for modifications and invoice approvals could change industry-wide—either reducing unnecessary steps or imposing new evidence requirements that contractors must meet.