IG: GSA Wastes Millions Due to Pricing Problems in Computer Resale Program

Watchdog finds many identical IT items with varying price tags.

Despite years of efforts to streamline multiple award schedules used by information technology resellers, the General Services Administration has been offering many identical items at varying prices, said an inspector general’s report released on Monday.

“GSA’s ability to obtain competitive, market-based prices may be impaired when IT schedule resellers have no/low commercial sales and when the Price Reductions clause is modified to exclude certain sales,” the report said, warning of “millions of dollars in unnecessary costs to the government.”

IT resellers typically buy computers and software in bulk and then add value through customization before selling the adopted product to agencies or commercial customers.

As of July 2015, GSA maintained 16,301 schedule contracts, with fiscal 2015 sales to agencies at $33.4 billion, the report said. GSA's Federal Acquisition Service manages the IT resellers program through its Office of IT Schedule Programs. 

“The wide price variances for identical items raise the question of how the prices were determined to be fair and reasonable,” the IG wrote. “In addition, we found lower commercial prices for the majority of the schedule items we evaluated. This indicates that GSA pricing for some IT schedule resellers is not competitive.”

The watchdog recommend that the FAS commissioner establish procedures to ensure that price variances for identical schedule items are supported by price analyses documenting additional concessions or services received on higher-priced items. It also recommended that the FAS establish performance measures for its contracting staff “that reinforce the objective to obtain the resellers’ most favored customer prices for schedule contract items during price negotiations.”

Finally, the IG proposed that GSA cancel IT reseller contracts that do not meet the $25,000 minimum sales requirement for the multiple award schedules program, beginning with those contracts that generated no sales.

The FAS deputy assistant commissioner for integrated technology services agreed with the recommendations, noting that the FAS has been “working towards improving pricing and reducing price variability, especially for identical items, by implementing commercial pricing tools.”

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