GSA conducts two types of audits: pre-award and post-award. The scope and thoroughness of the two audits varies with the amount of revenue generated by a contract, and the complexity of the contract's pricing structure.

Although rare, GSA can conduct a pre-award audit prior to the award of a new contract. The focus of a pre-award audit is to verify disclosures regarding commercial sales discounting practices and to determine whether a company's accounting systems can accurately track sales and compute the Industrial Funding Fee (IFF).

Pre-award audits are more typically conducted prior to GSA approval of a contract extension for an option period. If you hold a GSA contract that generates a large number of sales, you're likely to be audited before a 5-year option is exercised. Contracts with small sales may never be audited. Then again, you never know.

An audit conducted before a 5-year option renewal is approved will look at pricing and invoicing records for the current contract period as well as discounting disclosures and proposed pricing for the upcoming 5-year option period.

Although rare, post-award audits can occur at any time while a contract is active. They can be conducted to verify:

• Compliance with the Price Reductions Clause
• Correct payment of the Industrial Funding Fee
• Accuracy of billing
• Compliance with open market item designation requirements
• Proper invoicing of other direct charges
• Compliance with Trade Agreement Act regulations

A post-award audit could also be triggered by a current or former employee alleging a contract violation, in which case the audit would focus entirely on the current contract period and not the upcoming option period.