A120161/Q/6/P13003

Improper Management Intervention in

Multiple Award Schedule Contracts

Federal Supply Schedule 70 – Information 

Technology Contracts

Federal Acquisition Service

Report Number A120161/Q/6/P13003

June 4, 2013

Office of Audits

Office of Inspector General

U.S. General Services Administration
A120161/Q/6/P13003 i

REPORT ABSTRACT

OBJECTIVE

The objective of this audit 

was to review the 

circumstances related to 

FAS management 

intervention in contracting 

actions related to MAS 

contracts.

Heartland Field Audit 

Office (JA-6) 

1500 E. Bannister Road, 

Room 2075 

Kansas City, MO 64131 

(816) 926-7052 

Improper Management Intervention in Multiple Award Schedule 

Contracts

Federal Supply Schedule 70 – Information Technology Contracts

Federal Acquisition Service

Report Number A120161/Q/6/P13003

June 4, 2013

WHAT WE FOUND

Finding - Improper Federal Acquisition Service (FAS) management 

intervention in Multiple Award Schedule (MAS) contracts resulted in inflated 

pricing and/or unfavorable contract terms, and undermined the authority of 

contracting officers.

WHAT WE RECOMMEND

The Commissioner, FAS, should:

1. Ensure that the contracting process is independent and free from FAS 

management interference due to contractor pressure. These steps 

should include:

a. Requiring FAS management not to intervene in contracting 

actions in response to requests from contractors except for 

instances of misconduct or other serious administrative issues;

b. Requiring FAS management to fully document all conversations 

and correspondence with contractor officials regarding specific 

contracts and offers, to include such information as date, time, 

participants, and specific details of information exchanged; and

c. Issuing a memorandum expressing support for contracting staff 

making independent determinations, including decisions to not 

award contracts or contract extensions.

2. Take appropriate action to either renegotiate or cancel the Carahsoft and 

Deloitte contracts.

3. Take appropriate administrative action to address the FAS management 

and contracting staff conduct identified in this report.

MANAGEMENT COMMENTS

The FAS Commissioner concurred with the recommendations. 

Management’s written comments to the draft report are included in their 

entirety as Appendix B. 

Office of Audits

Office of Inspector General

U.S. General Services Administration
A120161/Q/6/P13003 ii

Office of Audits

Office of Inspector General 

U.S. General Services Administration

DATE: June 4, 2013

TO: Thomas A. Sharpe, Jr.

Commissioner, Federal Acquisition Service (Q)

FROM: John F. Walsh

Regional Inspector General for Auditing

Heartland Field Audit Office (JA-6)

SUBJECT: Improper Management Intervention in Multiple Award Schedule 

Contracts

Federal Supply Schedule 70 - Information Technology Contracts

Federal Acquisition Service

Report Number A120161/Q/6/P13003

This report presents the results of our audit of management intervention in Multiple 

Award Schedule contracts. Our findings and recommendations are summarized in the 

Report Abstract. Instructions regarding the audit resolution process can be found in the 

email that transmitted this report.

Your written comments to the draft report are included in Appendix B of this report. 

If you have any questions regarding this report, please contact me or any member of 

the audit team at the following:

Erin Priddy Audit Manager erin.priddy@gsaig.gov 816-926-8610

Tracy Twombly Auditor-In-Charge tracy.twombly@gsaig.gov 816-926-8621

On behalf of the audit team, I would like to thank you and your staff for your assistance 

during this audit. 
A120161/Q/6/P13003 iii

Table of Contents

Introduction ..............................................................................................................1

Criteria ..........................................................................................................1

Results

Finding – FAS Management Intervention...................................................................3

Oracle Contract Number GS-35F-0009T.................................................3

Carahsoft Contract Number GS-35F-0131R ...........................................7

Deloitte Contract Number GS-35F-0060L .............................................10

Adverse Effect on Morale............................................................................12

FAS Procurement Management Review Reports Improper Management 

Intervention............................................................................................13

Recommendations......................................................................................13

Management Response..............................................................................14

Conclusion..............................................................................................................15

Appendixes

Appendix A – Purpose, Scope, and Methodology............................................. A-1

Appendix B – Management Response ............................................................... B-1

Appendix C – Report Distribution....................................................................... C-1
A120161/Q/6/P13003 1

Introduction

In the course of performing Multiple Award Schedule (MAS) contract audits, the Office 

of Inspector General (OIG) identified numerous instances where Federal Acquisition 

Service (FAS) management, based on complaints from contractors, overrode 

contracting officer determinations without proper justification, pressured contracting 

officers to extend or award contracts, and reassigned contracts to different contracting 

officers. These instances of FAS management intervention included direct 

communications between contractors and FAS management, often without the 

knowledge and participation of the responsible contracting officers. In at least one 

case, FAS management interference resulted in a contract with higher prices and less 

favorable terms than those recommended by the original contracting officers. In other 

cases, interference resulted in questionable contract extensions. To more fully assess 

the extent and possible impact of these cases on the integrity of the MAS contracting 

process, we reviewed the circumstances related to some of these management 

intervention actions.

This report focuses on three large MAS contracts representing over $900 million in 

contract sales in calendar year 2011 (CY 2011):

o Oracle America, Inc., (Oracle) Contract Number GS-35F-0009T for software 

products, software maintenance, and associated services. Total contract sales in 

CY 2011 were $358,408,767.

o Carahsoft Technology Corporation (Carahsoft) Contract Number GS-35F-0131R 

for various information technology (IT) products and services. Total contract 

sales in CY 2011 were $432,024,376. Carahsoft currently represents 63 vendors 

under its MAS contract.

o Deloitte Consulting LLP (Deloitte) Contract Number GS-35F-0060L for IT 

services. Total contract sales in CY 2011 were $119,520,662.

The objective of this audit was to review the circumstances related to FAS management 

intervention in contracting actions related to MAS contracts.

See Appendix A – Purpose, Scope, and Methodology for additional details.

Criteria

The Federal Acquisition Regulation (FAR) Part 1 includes a “Statement of guiding 

principles,” as well as the authorities and responsibilities of the contracting officer.

FAR 1.102-4(a) states:

Government members of the [acquisition] Team must be empowered to 

make acquisition decisions within their areas of responsibility, including 

selection, negotiation, and administration of contracts consistent with the 
A120161/Q/6/P13003 2

Guiding Principles. In particular, the contracting officer must have the 

authority to the maximum extent practicable and consistent with law, to 

determine the application of rules, regulations, and policies, on a specific 

contract.

In addition, the following FAR citations outline the authorities and responsibilities of the 

contracting officer.

No contract shall be entered into unless the contracting officer ensures 

that all requirements of law, executive orders, regulations, and all other 

applicable procedures, including clearances and approvals, have been 

met. [FAR 1.602-1(b)]

Contracting officers are responsible for ensuring performance of all 

necessary actions for effective contracting, ensuring compliance with the 

terms of the contract, and safeguarding the interests of the United States

in its contractual relationships. In order to perform these responsibilities, 

contracting officers should be allowed wide latitude to exercise business 

judgment. Contracting officers shall—

(a) Ensure that the requirements of 1.602-1(b) have been met, 

and that sufficient funds are available for obligation;

(b) Ensure that contractors receive impartial, fair, and equitable 

treatment; and

(c) Request and consider the advice of specialists in audit, law, 

engineering, information security, transportation, and other 

fields, as appropriate. [FAR 1.602-2]

Government business shall be conducted in a manner above reproach 

and, except as authorized by statute or regulation, with complete 

impartiality and with preferential treatment for none. Transactions relating 

to the expenditure of public funds require the highest degree of public trust 

and an impeccable standard of conduct. The general rule is to avoid 

strictly any conflict of interest or even the appearance of a conflict of 

interest in Government-contractor relationships. While many Federal laws 

and regulations place restrictions on the actions of Government personnel, 

their official conduct must, in addition, be such that they would have no 

reluctance to make a full public disclosure of their actions. [FAR 3.101-1]

The concentration of authority in the contracting officer is critical to maintain the integrity 

of the contracting process. FAR 4.1 requires that, “Only contracting officers shall sign 

contracts on behalf of the United States.” In addition to the FAR requirement of wide 

latitude, contracting officers must also complete educational and training requirements 

before being granted a contracting warrant. The FAR, therefore, vests significant 

contracting authority and responsibility in the contracting officer and ensures that the 

contracting process is independent from all impairments.
A120161/Q/6/P13003 3

Results

Finding – FAS Management Intervention

FAS management1 improperly intervened in the award and extension of MAS 

contracts, three of which are highlighted in this report. This intervention resulted in 

MAS contracts with inflated pricing and/or unfavorable contract terms and extensions 

where contracting staff had determined such a decision was not in the best interests of 

the United States. In addition, FAS management intervention undermined the authority 

and morale of GSA contracting officers. FAS management (1) allowed contractors to 

circumvent contracting officers when the contractors disagreed with contracting staff 

determinations, and (2) supported the contractors’ positions, including reassigning 

contracts to different contracting officers. In each reassignment case, the new 

contracting officer awarded or extended contracts without properly addressing 

significant issues identified by previous contracting officers.

Although we have noted instances of improper management interference across several 

MAS Schedules, the three examples included in this report relate to FAS Schedule 70 

Information Technology contracts. We will primarily focus on the actions of the Deputy 

Director and a Division Director (directors) of the Schedule 70 program.

Oracle Contract Number GS-35F-0009T

FAS directors’ interference in the Oracle contract included undocumented discussions 

with Oracle representatives without the knowledge or participation of contracting staff, 

directives to the contracting officer to take actions contrary to the contracting officer’s 

determinations, and reassignment of the contract to another contracting officer. The 

evidence shows that Oracle officials went over the heads of the contracting staff to FAS 

management to have contracting staff replaced and to obtain decisions favorable to the 

company. This intervention usurped the contracting officer’s authority and resulted in 

the extension of the contract with questionable pricing, terms, and conditions.

The Division Director twice intervened by directing the extension of the contract, despite 

contracting officers’ determinations that extensions were not in the best interests of the 

United States. The directors’ explanation for extending the contract was that the 

volume of sales under Oracle’s contract demonstrated a need by federal agencies. 

However, no examples were provided to demonstrate how government agencies would 

be negatively impacted if the contract were allowed to expire.

Initially, the Oracle contract was to expire on September 30, 2011. However, in early 

2011, two GSA contracting officers assigned to the Oracle contract noted significant 

problems, and one of the contracting officers requested an audit by the OIG. In April 

2011, the contracting staff informed FAS management of the problems with the Oracle 

contract including inappropriate exceptions to GSA contract terms and conditions. In an 

 1 For this report, FAS management refers to Central Office FAS officials. 
A120161/Q/6/P13003 4

April 11, 2011, e-mail, the Division Director agreed that the issues regarding the 

exceptions were “of particular importance if we are considering an Option.”

The OIG initiated an audit in April 2011 and on May 13, 2011, sent Oracle a data 

request. By letter dated May 20, 2011, Oracle stated it would not provide the requested 

information because it had not yet submitted an offer for the next contract option. On 

May 31, 2011, Oracle requested a modification to withdraw all of its products from the 

subject MAS contract. The modification was effective July 1, 2011. This action left only 

consulting services on Oracle’s contract and eliminated over 60 percent of Oracle’s 

reported contract sales, even though Oracle’s contract stated that the remaining 

consulting services could only be sold in conjunction with (the removed) Oracle software 

products. On June 6, 2011, the contracting officer sent Oracle a letter stating that the 

company was required to comply with the OIG data request.

On June 29, 2011, the contracting officer sent a letter2 to Oracle stating that Oracle’s 

contract would not be extended and would expire on September 30, 2011. In the same 

letter, the contracting officer informed Oracle that many of its contract labor categories 

appeared to be outside the scope of the schedule and that its labor rates were 

“extremely high.”

On August 22, 2011, Oracle’s Senior Director of Government Affairs sent an e-mail to 

the Associate Administrator for GSA’s Office of Governmentwide Policy that stated, 

“Regarding GSA. We’re having a miserable time with our contracting officer on ge! tting 

[sic] our schedule contract modified. How would we go about getting a new one?” The 

GSA official asked Oracle if it was referring to a FAS contracting officer and Oracle 

responded that it was. Oracle also provided the June 29 letter and stated, “We find it a 

bit difficult when a CO is telling us which of our job titles do not qualify to be on a 

schedule. Can fill you in on the rest.” On August 22, this e-mail chain was forwarded to 

FAS management.

The directors stated that they had numerous discussions with Oracle officials about the 

contract extension. However, the directors did not document these conversations and 

could not recall many specifics. E-mails indicate that one such teleconference was held 

on August 29, 2011. The contracting officer and contracting staff were not copied on 

this email or present for the teleconference.

Interviews and e-mails show that, after they were contacted by Oracle officials, the 

directors began questioning the contracting staff about the Oracle contract and the 

contracting officer’s determinations. The contracting staff provided information to 

support their determinations. However, on September 20, 2011, the contract was 

reassigned to another contracting officer. The directors did not provide justification for 

transferring the contract to another contracting officer. In addition, the contracting 

officer who was replaced stated that the Division Director said, “Oracle is done with you 

as a CO.”

 2 The OIG is not aware of any written response from Oracle to the GSA contracting officer regarding the 

June 29 letter.
A120161/Q/6/P13003 5

On September 21, 2011, the OIG participated in a teleconference with the contracting 

staff and the directors. During the teleconference, the directors were informed of the 

many problems with the Oracle contract, including that Oracle: (1) refused to provide 

information requested by the OIG and the contracting staff, (2) had withdrawn all of its 

products from the contract as of July 1, 2011, and (3) does not sell its consulting 

services independent of its products. These issues were in addition to the concerns 

raised by the previous contracting officer related to unacceptable contract terms, very 

high labor rates, and labor categories not within the scope of the contract.

After this teleconference, the contracting staff told the OIG that the directors continued 

to pressure them to award a contract extension to Oracle. On September 29, 2011, the 

contracting staff informed the OIG that extending the contract for 6 months was not in 

the best interests of the United States but that the Division Director instructed that the 

contract be extended anyway. The contracting staff also notified the Division Director 

that they would not sign a modification to extend the contract. The Division Director

instructed the contracting staff to prepare the modification and a determinations and 

findings (D&F)3 to support the directors’ decision to extend the contract. The Division 

Director signed the D&F and instructed the contracting staff to execute4 the contract 

extension modification on September 30, 2011.

The directors ignored the concerns raised by the contracting staff. The directors stated 

that the contract was extended to continue service for government customers, but failed 

to explain how the extension continued service when Oracle had removed all of its 

product offerings and could not sell services without software products. The stated 

purpose of the extension was to allow time for Oracle to submit a new offer for 

evaluation and potential award. The document further stated that Oracle will cooperate 

with any requested OIG audit and that if the company failed to cooperate, the contract 

would expire on March 28, 2012.

The September 29, 2011, D&F did not adequately support the extension of the contract. 

For example, the D&F did not address the fact that Oracle removed all of its products 

from the contract and these products accounted for over 60 percent of sales. Oracle’s 

removal of these products significantly diminished the directors’ explanation that the 

large contract sales volume justified the extension. Also, the D&F did not address how 

Oracle would provide any services because its contract stated that services are only 

provided in conjunction with product sales. Further, the D&F stated, “On 09-23-2011 & 

09-29-2011 by e-mail, [Division Director] received correspondence from Oracle 

indicating that Oracle would cooperate with a Pre Award and Post Award Audit." 

However, the D&F did not indicate how or when this cooperation would occur or the fact 

that Oracle had not yet provided data requested by the OIG in May 2011. Finally, the 

 3 A D&F is required for special contracting situations such as sole source awards and temporary contract 

extensions. This document is required to demonstrate that the special contracting action is in the best 

interests of the Government.

4 The Division Director stated that he could not execute the modification due to “technical issues” and 

directed regional contracting staff to execute the modification on management’s behalf.
A120161/Q/6/P13003 6

D&F did not address contracting officer concerns involving excessive labor rates and 

incorrect contract terms.

Problems with the Oracle contract continued during the extension. Oracle did not 

submit a new offer in October 2011, as company officials had previously agreed. In 

addition, Oracle failed to cooperate with the contracting staff and OIG to provide the 

data previously requested. By e-mail dated January 24, 2012, the Division Director 

informed the contracting staff that:

There will be no direction coming from Crystal City regarding 

consideration of a subsequent Temporary Extension for this contract. This 

decision will need to come from you. You are the Branch Chief, and 

therefore, you will be making this decision. It seems probable that there 

may have to be another Temporary Extension, given that a new offer has 

not been received in our office to date.

Oracle submitted an offer on March 13, 2012. This offer was not significantly different 

from Oracle’s existing contract and did not address the issues previously raised by the 

contracting staff. In addition, Oracle failed to submit requested information to the OIG.

On March 23, 2012, the OIG informed the contracting staff that Oracle had not 

addressed any of the previous contract problems and that Oracle, in fact, now had 

additional problems. The new issues since the contract extension included Oracle’s 

continued sales of its software products after July 1, 2011, failure to timely provide a 

new offer, and refusal to provide previously requested records (resulting in the OIG 

issuing a subpoena on February 2, 2012). On March 23, 2012, a member of the 

contracting staff signed a D&F that concluded another extension of Oracle’s contract 

was not in the best interests of the Government.

The directors again intervened despite the January 24, 2012, e-mail statement to the 

contrary. The directors confirmed that they had conversations with Oracle officials in 

March 2012, but again could not recall specific dates of the conversations or the details 

of the discussions. On March 28, 2012, the Division Director instructed a contracting 

officer in another region to extend Oracle’s contract. This contracting officer had no 

experience with, or knowledge of, the Oracle contract, and executed this extension at 

the Division Director’s instruction because the Division Director had informed the 

contracting officer that technical issues prevented him from executing the modification. 

The Division Director stated that he extended the contract to continue service to GSA 

customers and because the previous contracting officer’s decision not to extend the 

contract had left too little time to resolve all open issues before the contract was to 

expire.

After the March 28, 2012, extension, the Division Director instructed the contracting 

officer (from the other region) to prepare a D&F. This D&F was not prepared until 6 

days after the modification to extend the contract was executed and was backdated to 
A120161/Q/6/P13003 7

March 28, 2012. The D&F did not adequately support the extension by failing to 

address:

1. Oracle's settlement of a False Claims Act case for $199.5 million;

2. Oracle's failure to submit a new proposal by the first week of October 2011;

3. The contracting officer's concerns about Oracle's existing contract; or

4. Oracle's failure to comply with requests for documents by the contracting officer 

and the OIG.

The Division Director acknowledged that the D&F was not prepared on March 28 but 

could not explain why it was backdated.

After the second extension, FAS management decided that the Oracle contract should 

be cancelled. On April 17, 2012, contracting staff issued a cancellation notice for 

Oracle’s contract. In response to this cancellation notice, Oracle withdrew its offer for a 

new contract. The contract cancellation date was June 8, 2012.

Carahsoft Contract Number GS-35F-0131R

FAS management intervention in the Carahsoft contract included undocumented 

discussions with Carahsoft representatives without the knowledge or participation of 

contracting staff, directives to the contracting officer to take actions contrary to the 

contracting officer’s determinations, and reassignment of the contract to another 

contracting officer. This intervention usurped contracting officer authority and resulted 

in the lengthy extension of a contract with inflated pricing and other terms and 

conditions unfavorable to the Government.

Carahsoft’s MAS Contract Number GS-35F-0131R was scheduled to expire on 

November 18, 2009, but has been repeatedly extended on a temporary basis and is still 

currently under temporary extension. The OIG conducted a preaward audit of 

Carahsoft’s proposal for the execution of a 5-year option on its current contract. The 

audit, issued March 10, 2011, identified that Carahsoft failed to grant GSA its best 

pricing.

On February 15, 2011, Carahsoft submitted an offer for a new contract to replace its 

current MAS contract (as opposed to extending the current contract). The contracting 

officer requested supporting information for the new offer and attempted to address the 

pricing issues raised by the preaward audit. Carahsoft officials failed to provide the 

requested information but instead contacted FAS management directly. On March 30, 

2011, the contracting officer sent an e-mail to the OIG that stated:

The pressure is coming from my boss who has told me he doesn't want 

Carahsoft to call their Congressman. They have already called their 

Congressman before, so . . . my Division Director, said if we don't work 

with them (which means bend the rules that we have in place and make 

other vendors follow) that they will call the Congressman, and he doesn't 
A120161/Q/6/P13003 8

want that. I just feel stuck between a rock and a hard place. I don't feel 

like Carahsoft wants to negotiate . . . they want to dictate. When I try to 

negotiate, or ask for information, they don't want to provide it, and [the 

Division Director] has told me they are going to call their Congressman, 

and it will come right back down to [their] or my lap to fix.

On April 6, 2011, the Inspector General informed the GSA Administrator, Deputy 

Administrator, and FAS Commissioner of the pressure that Carahsoft was exerting and 

stated:

I am alerting you to this situation because it has serious implications for 

the contracting process. I know that you are firmly committed to 

acquisition integrity, and to ensuring that GSA fulfills its role as the premier 

procurement agency for the United States. Accordingly, I am calling this 

matter to your attention to ensure that no inappropriate pressure affects 

the process and that Carahsoft does not receive more favorable treatment 

than other similarly situated contractors.

However, the Division Director continued his pattern of intervention. On April 11, 2011, 

the Division Director provided Carahsoft officials incorrect information that contradicted 

some of the contracting officer’s requests for information. For example, the contracting 

officer requested information from Carahsoft regarding sales practices for Carahsoft 

manufacturers and requested that the company remove the term “commercial end 

users” from its information because it does not sell to commercial customers. Carahsoft 

contacted the Division Director and in an April 11, 2011, response, the Division Director 

wrote, “I received a call from [Carahsoft] regarding the Carasoft [sic] clarification letter. 

[Carahsoft] stated that there were five issues of concern. I have addressed each.” The 

Division Director then proceeded to directly address Carahsoft’s concerns rather than 

instruct Carahsoft to comply with the contracting officer’s instructions. The Division 

Director’s response to Carahsoft sometimes contradicted the contracting officer, even 

though the Division Director did not have the full background regarding the negotiations.

After reviewing the Division Director’s e-mail to Carahsoft, the contracting officer wrote, 

“I have a reason for all of the guidance I have provided to Carahsoft, and it’s based on 

my extensive knowledge of their current contract and all that I have been through with 

this company.” In two separate e-mails to the Division Director on April 12, 2011, the 

contracting officer requested:

In the future, will you please send [Carahsoft representatives] to me, and 

not answer their questions?

Carahsoft wants us to make allowances for them. When I don't make 

allowances, they come to you.... If they don’t get their way, they get upset 

– they run to you and it’s become a pattern...and it’s causing my authority 

as a CO to be circumvented...it looks as if they are succeeding at “dividing 

and conquering”.
A120161/Q/6/P13003 9

On April 12, 2011, the Division Director told the contracting officer:

This is getting ridiculous. . . As a manager, it is your job to keep 

issues/problems self-contained and not have them constantly rise to my 

level. . . However, you need to take into consideration that Carasoft [sic] is 

not the average offer in-house. There is considerable industry influence 

when it comes to them, and quite frankly, I do not think that you realize 

that when their issues/problems rise to the Division/Center level and have 

to be explained.

The directors continued to directly speak with Carahsoft representatives. On July 27, 

2011, the Division Director wrote to the contracting officer stating, “I know you are owed 

a response from Carahsoft by tomorrow. Whether it is the response you are requesting 

or not, under no circumstances will the offer be rejected at this time.” On August 24, 

2011, in response to Carahsoft discussions with the directors, the Division Director 

transferred the Carahsoft contract to another contracting officer.

The new contract specialist encountered the same problems with Carahsoft as those 

encountered by the previous contracting officer. On October 4, 2011, the contract 

specialist told the directors:

The vendor's strong sales performance is a factor to contend with, but I 

am beginning to feel that [Carahsoft's] demands for special treatment of 

[this] company's offer are bordering on unethical because we are expected 

to circumvent the solicitation requirements such as TAA compliance and 

accurate representation of a vendor's sales practices. Until [Carahsoft] is 

ready to have an adult, 2-way communication about [this] company's offer 

with me, instead of acting like a spoiled child, my efforts to bring this case 

to closure will be futile.

On November 3, 2011, the contract specialist wrote:

[T]here had been too many concessions given to this vendor even before 

the offer and the contract were assigned to me, so the vendor is 

emboldened to the point that he feels that it’s either his way or the 

highway, regardless of what the data may indicate. Please let me know if 

the plan is to reject this offer in ORS, or if it is going to be transferred to 

another CO/CS. I also would like to request that the contract is also 

transferred to another CO/CS because any goodwill that I had left for the 

relationship with Carahsoft had been exhausted.
A120161/Q/6/P13003 10

On November 4, 2011, the contract specialist reiterated, “The offer cycle time5

continues to accrue on my account, and there is nothing further I can contribute to this 

case, therefore this offer needs to either be transferred to someone else or rejected.”

However, on December 19, 2011, the contract specialist accepted Carahsoft’s offer and 

awarded Carahsoft Contract Number GS-35F-0119Y. The contract specialist stated 

that the offer was accepted because the company agreed to change the basis of award 

customer. The contract specialist did not provide any further explanation of the change 

in position.

On December 22, 2011, the contracting specialist emailed Carahsoft with the following 

request:

If you don't mind, could you please send a note to IT70 management to let 

them know you were pleased with my handling of your firm's offer? That 

would be really appreciated.

My workload keeps growing and I've been asking for a contracting officer 

warrant for a while now because it would help me process contract actions 

faster. Your positive feedback on my performance would help speed up 

the process.

A Carahsoft official replied, “I would be glad to.”

In January 2012, the contract specialist6 received an unlimited contracting officer 

warrant.

Deloitte Contract Number GS-35F-0060L

FAS management intervention in the Deloitte contracts included undocumented director 

discussions with Deloitte representatives without the knowledge or participation of 

contracting staff, directives to the contracting officer to take actions contrary to the 

contracting officer’s determinations, and reassignment of the contract to another 

contracting officer. This intervention usurped contracting officer authority and resulted 

in the award of a contract with inflated pricing and other terms and conditions 

unfavorable to the Government.

Deloitte Contract Number GS-35F-0060L was set to expire on November 5, 2010. Due 

to concerns about the contract the contracting officer requested an OIG audit of Deloitte 

 5 Offer cycle time represents the period from offer receipt to contract award. Offer cycle time is a 

performance metric and is one of several factors considered during a contracting officer’s performance 

evaluation.

6 As of April 11, 2011, the contract specialist met education, training, and experience requirements to 

achieve a certified Federal Acquisition Certification in Contracting (FAC-C) Level III. GSA requires a 

Level III certification to obtain an unlimited warrant.
A120161/Q/6/P13003 11

on October 14, 2010. The contract was temporarily extended several times and 

ultimately expired on October 23, 2012.

Deloitte submitted an offer for a new contract on September 26, 2011. Deloitte officials 

were dissatisfied with the negotiations of its offer for a new contract and with 

restrictions7 placed on its existing contract. In addition, Deloitte objected to providing 

information relating to specific customers. On May 29, 2012, Deloitte officials met with 

FAS management to express the company’s concerns. On June 8, 2012, a meeting 

was held with contracting officials, OIG audit staff, and Deloitte officials. During this 

meeting, Deloitte requested the contracting officer remove the restrictions on its existing 

contract; however, the contracting officer declined the request. On June 12, 2012, the 

Division Director instructed the contracting staff to transfer Deloitte’s contract and offer 

to FAS Central Office so that these could be managed “closer to DC.” On June 18, 

2012, the Division Director assigned the Deloitte contract and offer to the same 

contracting official to whom the Carahsoft contract had been transferred.

In response to an OIG inquiry relating to why the contract was transferred, the Division 

Director wrote in a June 13, 2012, e-mail:

In summation, the transfer of the contract and offer has no bearing on the 

Contracting Officer or Branch Chief whatsoever. As mentioned, a number 

of factors were taken into consideration regarding the transfer; however, 

the overarching priority is to ensure that, as we move forward, there is an 

equitable distribution of workload Center-wide.

The contracting officer who received the Deloitte offer wrote an e-mail dated June 18, 

2012, “Is this another one like Carahsoft?” The supervisor responded, “Yes. There are 

issues and it needed to be assigned to someone else.”

In interviews, the directors continued to assert that the transfer was made for workload 

management issues. However, upon questioning, the directors confirmed that no other 

contracts were transferred and that no workload management study existed that 

recommended the transfer of this particular contract. The contracting officer who 

received the Deloitte contract told the OIG that their supervisor had to reassign several 

of their current contracts because the contracting officer was already over-obligated. 

Eventually, the Division Director acknowledged that the Deloitte contract was not 

transferred due to workload management issues.

On July 19, 2012, the new contracting officer executed a modification to extend 

Deloitte’s contract. This modification also eliminated the requirement for Deloitte to 

remove all BPAs under the contract within 90 days. The new contracting officer 

awarded Contract Number GS-35F-0617Y to Deloitte on September 7, 2012. The new 

contract had higher labor rates than the rates Deloitte previously offered to the prior 

contracting officer.

 7 These conditions required Deloitte to (1) transition all blanket purchase agreements (BPAs) off of the 

contract before the new expiration date, and (2) not award any additional BPAs under the contract.
A120161/Q/6/P13003 12

The labor rates previously offered and subsequently awarded differed as follows:

Labor category Increase

Principal/Director 14.4%

Senior Manager 7.8%

Manager 15.4%

Senior Consultant 18.5%

Consultant 5.6%

Analyst 11.4%

When asked by the OIG why the awarded labor rates were higher, the contracting 

officer had no support or explanation. In addition, when the OIG asked why some 

standard GSA contract language was changed in Deloitte’s contract, the contracting 

officer stated that Deloitte would not agree to a contract without the revised language.

The contracting officer presented the OIG concerns regarding contract language to 

Deloitte officials. By contract modification dated December 5, 2012, Deloitte and the 

contracting officer agreed to change the contract to eliminate the unacceptable 

language. To date, there has been no change in Deloitte’s contract labor rates.

As a result of the Division Director’s directed transfer of this contract, the contract award 

was made at prices and terms less favorable to the Government than those offered to 

the previous contracting officer. The previous contracting officer’s concerns were not 

addressed by the new contracting officer and the awarded pricing and terms did not fully 

protect the Government’s interests.

Adverse Effect on Morale

FAS management’s interventions in MAS contracts have an adverse effect on 

contracting officer morale, such as:

A contracting official involved with both the Oracle and Deloitte contracts suffered 

a decrease in performance rating from a 5 in 2010, to a 4 in 2011, to a 3 in 

2012.8

 The narrative of this employee’s rating in 2012 was transcribed almost 

verbatim from the narrative for 2011 and, thus, did not support a decrease in 

rating from a 4 to a 3. When a FAS senior executive was made aware of this 

rating, FAS directors changed the rating to a 4.

Several contracting staff stated that they feared for their jobs because they were 

trying to do the right thing and protect the taxpayers’ interests. One employee 

working on a contract where FAS management intervened on behalf of a 

contractor stated, “This is one of those situations that can be career altering.”

 8 The rating scale: 5 – consistently exceeds expectations; 4- often exceeds expectations; 3 – meets 

expectations; 2- partially meets expectations; 1 – does not meet expectations.
A120161/Q/6/P13003 13

Contracting staff emails support that staff were unhappy with management’s 

interventions and also indicated that the contracting staff preferred to have 

contracts taken from them rather than compromise government requirements.

In numerous discussions between FAS contracting staff and the OIG, FAS 

contracting staff have stated that GSA contractors know they can get whatever 

they want by going to FAS management. FAS contracting staff have further 

stated that they believe they have to award large contracts because the contracts 

generate a lot of revenue and management will not allow the contracts to expire 

or be cancelled.

FAS Procurement Management Review Reports Improper Management 

Intervention

The findings in this report are supported by an internal GSA acquisition review 

performed by the Office of Governmentwide Policy, known as a procurement 

management review (PMR). During our review, we obtained a copy of a PMR that 

identified significant and similar problems in the FAS MAS IT 70 program. In a PMR 

report dated July 26, 2012, PMR interviews with IT 70 staff revealed that FAS 

management “frequently overrules” contracting officers’ determinations and assessed 

the impact of this finding:

This results in a lack of alignment of authority with 

accountability. Such lack of alignment can result in poor 

morale, poor performance by acquisition personnel, and 

individual contracting actions that do not reflect the values and 

commitments of regional management...

After 4 straight years of reviewing this office, with little to no 

change, the IT Center may not be committed to making the 

necessary changes to achieve acquisition excellence.

Recommendations

The Commissioner, Federal Acquisition Service, should:

1. Ensure that the contracting process is independent and free from FAS 

management interference due to contractor pressure. These steps should 

include:

a. Requiring FAS management not to intervene in contracting actions in 

response to requests from contractors except for instances of misconduct or 

other serious administrative issues;
A120161/Q/6/P13003 14

b. Requiring FAS management to fully document all conversations and 

correspondence with contractor officials regarding specific contracts and 

offers, to include such information as date, time, participants, and specific 

details of information exchanged; and

c. Issuing a memorandum expressing support for contracting staff making 

independent determinations, including decisions to not award contracts or 

contract extensions.

2. Take appropriate action to either renegotiate or cancel the Carahsoft and Deloitte 

contracts.

3. Take appropriate administrative action to address the FAS management and 

contracting staff conduct identified in this report.

Management Response

The FAS Commissioner’s response to the report noted that the Commissioner was very

concerned with the report findings and that actions are already underway to address the 

report recommendations. Management’s comments are included in their entirety as

Appendix B.
A120161/Q/6/P13003 15

Conclusion

FAS management improper intervention in the award and extension of MAS contracts 

resulted in contracts with inflated pricing and/or unfavorable contract terms and 

extensions where contracting staff had determined such a decision was not in the best 

interests of the United States. By allowing contractors to circumvent contracting officers 

and supporting the contractors’ positions, including reassigning contracts to different 

contracting officers, FAS management undermined the integrity of the procurement 

process. FAS management actions also compromised the authority of contracting 

officers and adversely affected morale. An FAS procurement management review also

supports these findings. 
A120161/Q/6/P13003 A-1

Appendix A – Purpose, Scope, and Methodology

Purpose

We initiated this audit because we identified instances of FAS management intervention 

in the award of MAS contracts and contract extensions.

Scope

To accomplish the audit objective, we reviewed specific contracting actions (both new 

awards and extensions) that included some large Schedule 70 Information Technology 

contracts. These contracting actions generally included contracts that were either 

audited by the OIG or has some type of OIG involvement.

The objective of this audit was to review the circumstances related to FAS management 

intervention in contracting actions related to MAS contracts.

Methodology

To accomplish our objective, we:

Reviewed relevant criteria, including the Federal Acquisition Regulation and 

internal FAS guidance;

Reviewed contract file documentation;

Interviewed contracting staff and FAS management representatives;

Reviewed contracting staff and FAS management emails pertaining to the 

subject contracts;

Developed timelines associated with each contract; and

Incorporated the results of contract audits associated with the subject 

contractors.

We conducted the audit between July 2012 and February 2013 in accordance with 

generally accepted government auditing standards. Those standards require that we 

plan and perform the audit to obtain sufficient, appropriate evidence to provide a 

reasonable basis for our findings and conclusions based on our audit objectives. We 

believe that the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Internal Controls

The scope of our work was limited to addressing the objective of this audit. Thus, our 

assessment and evaluation of internal controls was restricted to those issues identified 

in the Results section of this report.
A120161/Q/6/P13003 B-1

Appendix B – Management Response
A120161/Q/6/P13003 B-2

Appendix B – Management Response (cont’d)
A120161/Q/6/P13003 B-3

Appendix B – Management Response (cont’d)
A120161/Q/6/P13003 B-4

Appendix B – Management Response (cont’d)
A120161/Q/6/P13003 C-1

Appendix C – Report Distribution

Acting Administrator (A)

FAS Commissioner (Q)

Acting FAS Deputy Commissioner (Q1)

Assistant Commissioner for Integrated Technology Services (QT)

Acting Director of IT Schedule Program (QTF)

FAS Chief of Staff (Q0A)

FAS Controller (BF)

Division Director, GAO/IG Audit Response Division (H1C)

Audit Liaison (QB0A)

Audit Liaison (QB0AB)

Assistant Inspector General for Auditing (JA)

Deputy Assistant Inspector General for Investigations (JID)

Director, Audit Planning, Policy, and Operations Staff (JAO)