Audit confirms contract improprieties in GSA office

An office of the General Services Administration that awards contracts for information technology may have run afoul of federal regulations and the agency's own contracting guidelines, according to an audit of the office's records. The findings fit a pattern of contracting abuse and improper use of federal funds being documented in a nationwide audit by the GSA inspector general.

The National Capital Region office of GSA's Federal Technology Service undertook an extensive review of its contracts, anticipating the inspector general audit, which is currently being conducted. Already, the inspector general has found numerous violations of federal laws and regulations by employees of FTS, a subsidiary of GSA that buys technology goods and services on behalf of other government agencies.

Some of FTS' 11 offices across the country have taken steps to limit legally required competition, sometimes in order to drive work to companies that FTS or its government customers favored, audits and other investigations have found. Almost half the offices have been implicated in some kind of improper activity. In some cases, FTS employees essentially let their customers pick which companies they wanted to win business, the inspector general has shown. FTS employees, sometimes contradicting federal regulations, awarded contracts directly to a single company without written justification for doing so.

In the capital region office, which hired a consulting firm to audit its contract files, a number of activities were found that fit the pattern seen elsewhere. GSA released the final version of the audit Thursday. Its findings are consistent with a draft copy obtained in February by Government Executive from a source not affiliated with the firm. The audit was prepared by Acquisition Solutions Inc., whose research services Government Executive has employed in matters unrelated to the company's audit work.

One important difference between the final audit and the draft version is likely to bode well for the capital region office when the inspector general's office eventually issues its audit. The draft raised the possibility that employees had violated the Anti-Deficiency Act, which prohibits the government from spending funds in excess of a given appropriation. A violation is punishable by a fine, a prison sentence or both. Upon further review of documents FTS provided, however, auditors determined there was no violation. Other offices have raised that specter, however, because employees may have inappropriately tapped funds in a special account FTS maintains to conduct its operations.

The capital region auditors did find a number of troubling activities that FTS officials have already said they are taking steps to correct.

Mirroring the pattern of limited competition, 40 percent of files were missing a required justification for awarding sole source contracts or for using time and materials contracts, which are acceptable when the final cost of a project cannot be determined, auditors found. "In the case of sole source justifications," the auditors wrote, "no discussion was provided as to what research efforts had been taken" by the staff to support the decision. Similarly, when a time and materials contract was used, some files contained no "rationale to justify its utilization," the auditors wrote.

Records also showed that employees conducted no market research prior to award on more than 80 percent of contracts. Market research is used to help an agency understand the variety of companies that offer services the government needs. Also, more than half of the contracts contained no independent government estimate of what a reasonable proposal would look like. Those estimates are encouraged by FTS' own guidelines. And more than one-third of contracts reviewed contained little to no evaluation criteria that would dictate how a bidder's proposal should be scored or weighted against others, the report found.

The regional office's employees also declined to negotiate prices on some proposals after they were received from bidding companies. "Many files we reviewed included the statement 'Proposal acceptable as submitted and further negotiations were not in the best interest of the government,' " the auditors wrote. But those statements had no accompanying rationale for ending negotiation. The auditors noted that negotiations are necessary to achieve the best value for the government, as required under regulations, particularly if limiting further negotiation might result in the government being charged a higher price.

Overall, contracting officers had "nonexistent or limited" involvement crafting statements of work, documents that specify what a contractor is supposed to do and that help the government determine a reasonable price for the work, the auditors found. While most of the statements of work "were clear and not overly broad," the lack of contracting officer involvement in such a fundamental step could prove troublesome. It will likely beg the question by the inspector general that if the contracting officer wasn't crafting the statements of work, who was? In one instance, an FTS office in Denver was shown to have awarded a contract for which the statement of work was written, at least in part, by an employee for the contractor. The inspector general is investigating that contract.

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