Tuesday Insight – August 16th, 2022: GSA OIG Releases Audit on Use of 4P Tool for Price Determinations

Aug 18, 2022

On July 27, GSA’s Office of Inspector General (OIG) issued an audit on the use of the 4P Tool by the Federal Acquisition Service (FAS) when performing price analyses for Multiple Award Schedule (MAS) contracts. The 4P Tool was developed by FAS to help the organization “evaluate proposed pricing on MAS contracts offering products”. FAS personnel use the tool to determine fair and reasonable pricing determinations. However, the OIG found that FAS employees lack guidance and oversight regarding their use of the tool. According to the OIG, this has led to frequent pricing decisions that do not comply with the Federal Acquisition Regulation, FAS policy, and the Competition in Contracting Act of 1984. Additionally, the OIG is concerned that this leaves Federal agencies at risk of overpaying for products on MAS contracts, as well as the possibility of taxpayer dollars being misused. Specifically, GSA OIG found the following misuses of 4P: 

  • Improper reliance on the 4P Tool to establish price reasonableness without conducting additional price analysis;
  • Awarding proposed pricing based on a 4P Tool comparison to the current pricing on the same contract, known as self-hits;
  • Awarding proposed pricing based on a 4P Tool comparison to other government pricing, despite the 4P Tool identifying better commercial pricing; and
  • Awarding pricing that either exceeded the market thresholds established by the 4P Tool or for which the 4P Tool found no market research comparisons, without any further justification or analysis.

GSA OIG gave the following recommendations to the FAS Commissioner to address these issues: 

  • Develop and implement oversight controls to ensure contracting personnel adhere to FAS Policy and Procedures 2020-02 and 2021-05, and only use the 4P tool as part of a larger negotiation strategy that seeks the lowest overall cost alternative to meet the needs of the Federal Government, as required by the Competition in Contracting Act of 1984.
  • Update the 4P Application User Guide to require contracting personnel to:
    • Conduct additional price analysis on products for which the 4P tool returns only self-hits;
    • Include commercial market pricing information presented in the 4P tool in price evaluations and provide justification when the awarded pricing exceeds the lowest commercial market price found;
    • Seek, analyze, and document justification for product pricing that exceeds the market threshold; and
    • Manually research an appropriate sample of products for which the 4P tool found no market research comparisons to ascertain applicable market pricing information.

Download Newsletter to Read More

Ten Checkpoints - On the Way to Your GSA Schedule

Download our new step-by-step guide to learn the process for getting your own GSA Schedule!