Procurement and contractor fraud are two of the most costly types of government fraud. An example of procurement fraud is a company using bribes to win a contract even when it did not make the lowest or best bid. Other examples of contractor fraud include billing the government for incomplete work, inflating the cost of labor or supplies, and issuing kickbacks.
False Claims Act cases may result from knowing violations of Federal Supply Schedule contracts. The GSA FSS enables government agencies, to purchase a variety of products and services from commercial vendors without having to engage in an open bidding process every time. Moreover, the GSA FSS is designed to offer purchasers the “best price” for the listed goods and services.
Defective Pricing Requirements
Before entering into contract negotiations, companies that participate in the GSA FSS must certify that their products and services are being provided to the GSA at the same or a better price as is offered to their commercial customers. A vendor may be liable under the False Claims Act for defective pricing when it either misrepresents or fails to disclose the information relating to commercial customers.
Price Reduction Clause
Federal Supply Schedule contracts include a provision called a price reduction clause. This provision requires the vendor to inform the Government if, during the contracting period, they provide any price reductions to other commercial customers. If such a reduction has occurred, the Government must also be given the same relative discount.
U.S. Trade Agreements Act Compliance
In addition to the defective pricing requirements and price reduction clause, Federal Supply Schedule contracts also require vendors to verify that they are compliant with the terms of the U.S. Trade Agreements Act. Under this law, vendors are only permitted to sell products to the Government that were produced in countries with reciprocal trade agreements with the United States. Eligible countries include, but are not limited to:
Ineligible countries include, but are not limited to: