Implementing an internal GSA compliance system within your company is the only foolproof way to protect against adverse audit consequences. An effective GSA compliance system is not difficult to establish. Simply follow basic management principles-designate clear lines of authority and accountability, and measure performance against a specific standard.
A compliance system will protect you if it (1) begins with your initial proposal and (2) uses full disclosure as a basis for compliance over the term of the contract. Although not ideal, a compliance system implemented after contract award can bring a contract into compliance, although sometimes at the expense of profits.
The basic premises behind an effective GSA Compliance System are:
- Disclose discounting practices completely and accurately in your initial proposal. If you are implementing a system in the middle of a contract period, correct any inaccuracies that turn up with your contracting officer.
- Appoint a senior person in your financial organization as the GSA Compliance Officer.
- Communicate any possible compliance violation issues in writing with the GSA contracting officer immediately upon detection. Propose swift and practical corrective actions and request guidance and approval of your actions from the contracting officer.
Desire to Comply
This may sound obvious, but an effective compliance system begins with a company's desire to comply. Some companies don't really want to be utterly straightforward about their discounting policies because of the loss of flexibility in discounting to non-GSA customers. (Yes, compliance can affect sales in some cases.) Yet you cannot afford to be anything but absolutely scrupulous in adhering to the conditions of your GSA contract because of the dangers of invoking the Price Reduction Clause. In many cases, discounting discipline can actually be a good thing. Sales might go down slightly but profits go up. Play the discounting game loosely and you may win or you may lose. If you lose, you will usually lose big.
