Price Reduction Clause Violations lead to Penalties

Deloitte to Pay $11M for Alleged False Claims/Price Reduction Clause Violation:

 Another example of the importance of compliance under the GSA Schedule contract. The GSA OIG (Office of Inspector General) issued a press release stating the Deloitte Consulting, LLP. Has agreed to pay $11.38 million for alleged false claims/price reduction clause violations.

The Department of Justice and GSA OIG handled the case and alleged that Deloitte failed to disclose more favorable pricing offered to a commercial customers and then did not reduce prices to Federal customer through their GSA schedule commensurately during the term of its GSA contract. Deloitte’s alleged failure to disclose and reduce GSA rates essentially resulted $11M in overcharges to Federal customers over the 6 years under suspicion.

Everyone in business wants to win work, and the Federal Government has been a consistent business partner and revenue source, but it comes with additional compliance costs. For government contractors, compliance and success in the Federal market go hand-in-hand. It is important to invest the resources into systems and processes that help ensure that compliance. Deloitte’s case is just one more in a long string False Claims or Price Reduction Act violations – most are too small to report. Here are some examples of the bigger ones:

• Oracle did not fully disclose commercial sales practices and discounts and paid back $199.5 million in over charges.
• An Office Furniture and products company did not monitor price/discount relationship and overcharged the government, paid back $9 million in over charges

Understanding the Price Reduction Clause Compliance to Avoid Fines

GSA, FAR, and ColeyGCS have training and service resources that can help your company understand the compliance concerns and systems required to remain compliant in Federal Contracting.

In our post How to Monitor Your Price Reduction Clause, we list out how to report deviations that disrupt discount relationships.

Get your GSA Schedule Pricing Relationship Right from the Start

If you’re considering a GSA schedule it is imperative that you get it right from the start. Take a deep dive into your current pricing practices and understand what mechanisms must be developed to ensure you remain agile and competitive commercially and compliant Federally.

At ColeyGCS, we perform an internal audit of our customers’ commercial practices before submission to identify standard practices and system to improve compliance.

If you have concerns about your compliance or simply are not sure one way or the other, please contact your GSA PCO, the VSC or contact ColeyGCS at 210-402-6766. We would be happy to help.