On January 21, 2022, the General Services Administration (“GSA”) Office of Inspector General (“OIG”) informed the Federal Acquisition Service (“FAS”) that ongoing monitoring by the OIG found that the FAS failed to properly monitor the sale of products for compliance with the Trade Agreements Act (“TAA”) during the COVID-19 response. Previously, in April 2020, GSA relaxed compliance with the TAA for a limited number of Federal Supply Classes (“FSCs”) to aid the government’s response to the COVID-19 pandemic. The applicable FSCs included those covering N95 masks, cleaners and disinfectants, disposable gloves, and hand sanitizers. After several extensions, the TAA exception policy expired on April 30, 2021.

The OIG identified two deficiencies in FAS’ implementation of the TAA exception policy. First, the OIG found that FAS failed to properly track the addition of non-compliant products to contracts. As a result, after expiration of the exception policy, there was no effective way for GSA to remove the non-compliant products from contracts. Second, the OIG found that GSA improperly permitted the addition of non-compliant products to GSA contracts. For example, some products that were added were unrelated to the government’s response to the pandemic; some products were added to GSA contracts prior to the effective date of the TAA exception policy; and, remarkably, in one case, a product was added to a contract that identified North Korea as its country of origin.

Takeaways

While the OIG’s review focused on FAS’ failures, GSA contract holders should act on the OIG’s findings.

• • • First, companies should review their GSA contracts to ensure (1) TAA non-compliant products were properly added, and (2) non-compliant products have been removed. If non-compliances are identified, a contractor should investigate the circumstances surrounding the non-compliance(s) and consider making a disclosure to its contracting officer and the OIG.
    • Second, companies should review their TAA compliance policies and procedures. In light of the OIG’s findings, contractors should expect closer scrutiny of TAA compliance of their products. Increased scrutiny could arise in several different contexts—a contracting officer’s review of existing products, a request to add to a contract via modification, allegations of non-compliance by a competitor, or the dreaded whistleblower complaint.

Responsible contractors should not sit back and wait for potential non-compliance issues to be raised by the government or third parties. Contractors should review their TAA compliance policies and procedures to ensure they remain sound. This includes periodic employee training and testing of the efficacy of the policies. If policies and procedures are out of date or weak, they should be strengthened. Regardless, a contractor should document its review so that, if compliance issues arise in the future, it can demonstrate the reasonableness of its actions.