# Presentation: 745821

## Thriving Through Partnership 

**October 3 & 4, 2005**
**Chicago Marriott O’Hare Hotel **

## Overview of Audit Reviews After Contract Award 

**October 3 & 4, 2005**
**Chicago Marriott O’Hare Hotel **

## Topics

**Post-award Reviews**
**Voluntary Disclosures**
**Public Law 102-585, Section 603 Compliance Reviews**
**Referrals to Department of Justice**

## Post-award Reviews

**Purpose:  Verify accuracy and completeness of disclosures; review compliance with the Price Reductions clause, Industrial Funding Fee, and other terms and conditions (e.g. overbillings)**
**Performed at the request of the contracting officer, or initiated by OIG, or result from a contractor’s voluntary disclosure and refund offer**

## Post-award Reviews

**Phone call to contractor followed up with notification letter**
**Initial data request will include a request for sales data tapes **
**Review of contract file, including the offer, all communications prior to and after award, and the contracting officer’s price negotiation memorandum**

## Post-award Reviews- What is Defective Pricing?

**Three elements to a Defective Pricing Case**
- Data disclosed during negotiations for initial award and on modifications adding products was not accurate, complete, and current
- Contracting officer relied on data to make award
- Contract was overpriced as a result of defective data

## Post-award Reviews- What is Defective Pricing?

**Right to proactively initiate an audit**
- exists for 2 years after contract award and after modifications adding products

## Post-award Reviews for Price Reductions

**Determine compliance with the Price Reductions Clause and with Industrial Funding Fee reporting**
**Authority to initiate an audit for compliance with Price Reductions Clause, Industrial Funding Fee, and contract billings exists for up to 3 years after final payment**
**Basic contract and each option will be treated as separate contracts for purposes of these reviews**

## Basis for Price Reductions

**Issue is whether the customer is the Tracking Customer or is a member of the Tracking Customer**
**If notification requirement was not met, comparability of the basis for the discount is not relevant to whether the Government is entitled to the discount under the Price Reductions Clause**

## Basis for Price Reductions

**The Tracking Customer can be changed if we determine that inaccurate or incomplete information caused the contracting officer to select another Tracking Customer**
**Remedy:  Re-price contract from date of award and process a modification for prospective change to Tracking Customer**

## Post-award Reviews-Other Issues

**Calculations of overcharges will take into account Economic Price Adjustment increases only to the extent that the price to the Tracking Customer also increased**
**We will review products added to the contract via modification in the same manner as we review those originally awarded**

## Post-award Reviews-Other Issues

**Share our analyses with the Contractor**
**Administrative settlements:  negotiate with the contractor and make recommendations to the contracting officer, usually to issue a Bill for Collection**
**Settlement agreements requesting waiver of suspension/debarment must go through VA’s Suspension Debarment Committee and be signed by the Department’s Procurement Executive**

## Common Problem Areas

**Unavailability of data**
**Delays in providing the data requested**

## Voluntary Disclosures

**Total Dollar Recoveries October 1993-June 2005: $202.4 million. Voluntary Disclosures during the same period:**
- 107 voluntary disclosures completed
- Amount Offered: $37.5 million
- Amount Collected: $112.6 million
**Currently Pending:**
- 12 voluntary disclosures
- Amount offered: $10.2 million

## Some Do’s and Don’ts of a Self-Audit

**Determining the Sample:**
- Only include FSS sales/items
- Under most circumstances include items whose sales comprise 75-80% of the sales under the contract
**Use actual sales transactions**
- Do not use average prices
- Do not use contract prices

## Some Do’s and Don’ts of a Self-Audit

**Document how the data used was reliable**
**Also consider rebates, trade-in allowances, end-of-year discounts and other concessions that result in lower pricing**
**Do not exclude prices/contracts on the basis of non-comparability**

## Some Do’s and Don’ts of a Self-Audit

**“****Sole-source” or “committed” contracts are not per se non-comparable**
**Do not exclude products added via modification**
- If products were added determine whether there were separate disclosures

## Public Law 102-585 § 603 Compliance Reviews

**Performed:**
- at the request of Contracting Officer based on risk factors
- in response to a voluntary disclosure and refund offer
- at the request of the NAC Office of General Counsel Attorney
**Can be initiated by our office**
**Perform full system reviews or narrow scope reviews such as the impact of late implementation of Federal Ceiling Prices**

## Referrals to DOJ

**If pricing violations rise to the level of fraud, we are required to refer the matter to DOJ**
**Criminal**
- Evidence of intent
- False statement
- Fraud
**Civil – False Claims Act**
- Evidence of intent or reckless disregard
- Preponderance of the evidence
- _Qui Tam_ actions

## Referrals to DOJ

**Decisions are made on a case by case basis and are fact specific**
- Prior history of inaccurate disclosures
- Number of items defectively priced
- Percent of total sales defectively priced

## Last Slide

**Q&A**
**John B. Ames**
- 202-565-4814
- _[john.ames@va.gov](mailto:john.ames@va.gov)_

**Marci Anderson**
- 202-565-5444
- _[marci.anderson@va.gov](mailto:marci.anderson@va.gov)_
**Copy of Presentation will be made available after 5 p.m. on October 4**** ****at**** **_**[www.va.gov/vastorenac](http://www.va.gov/vastorenac)**_
**	****	*****Thank You***