General Services Administration

Although the General Services Administration (GSA) awards the majority of its supply contracts to vendors whose products meet quality and delivery requirements, the agency continues to do business with a number of vendors with poor performance histories. Between fiscal years 1988 and 1992, for example, GSA awarded contracts worth more than $1 billion to at least 285 vendors whose products repeatedly failed to meet contractor specification and delivery schedule requirements. This situation exists for two main reasons. First, GSA lacks complete and readily usable data on vendors' past contract performance. Second, GSA has not consistently stressed or considered product quality, on-time delivery, or vendor capability and performance in awarding and administering its supply contracts. GSA has taken actions against poor-performing vendors over the years and recently began several new initiatives aimed at more fully protecting its supply operations from such losses and inefficiencies. It is too soon to tell, however, what impact these initiatives will have on reducing GSA's vulnerability.

GAO found that: (1) most GSA vendors met responsibility requirements, but between 1988 and 1991, GSA awarded contracts to 285 vendors with poor performance histories; (2) the poorly performing vendors adversely affected GSA operations by requiring excessive contract monitoring, which impeded GSA ability to adequately monitor other supply contracts, comprising over 50 percent of the testing laboratory's workload but only 7 percent of the supply contracts subject to testing, and forcing customer agencies to purchase supplies on the open market at higher prices; (3) 5 of the 9 vendors sampled committed improper or illegal acts, such as falsifying quality certifications and product substitution; (4) GSA continued to use poorly performing vendors because it lacked complete and readily usable data on vendors' past and current performances, and a database for contract administration and decisionmaking; (5) GSA did not consistently emphasize or consider vendor capability, past product quality, or delivery terms in contract awards; (6) GSA used a flawed formula for determining vendors' delivery performance ratings, and did not provide adequate guidance to contracting officers for judging and considering past poor vendor performance; (7) GSA procurement practices and employee performance appraisal and rewards systems created disincentives for contracting offices to deny contracts to poor-performing vendors; (8) contracting officers were also averse to denying or terminating supply contracts due to poor contractor performance because such actions could lead to time-consuming administrative and legal procedures, thus delaying the procurement; and (9) GSA initiated a number of corrective actions, such as improving guidance and implementing a vendor rating system and a new procurement data system.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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