The Treasury Department's inspector general is under fire from members of Congress for awarding contracts without competitve bidding and for conducting a criminal investigation of two Secret Service agents in connection with the White House FBI files controversy.
Treasury IG Valerie Lau told members of the Senate Governmental Affairs Committee's investigations subcommittee last Friday that she awarded a $90,000 contract to a longtime associate because of an urgent and compelling need to complete the study quickly.
Lau said she contracted out a management study to Sato & Associates in 1994 shortly after she took office to get vital advice on managing and staffing practices. Sato & Associates is owned by Lau's longtime friend, Frank S. Sato, who recommended her to the White House for the IG post.
General Accounting Office Auditor Robert P. Murphy testified that the 20-page study was not urgent and should have cost far less. "The facts do not establish that her ability to perform her duties would have been seriously impaired had the procurement been delayed by a few months in order to obtain full and open competition," he said.
He added that the $90,776 study was "virtually identical" to one performed for the Interior Department for $28,920.
"Its contents do not appear to justify its high price tag," said Sen. Susan Collins, R-Maine, chairman of the subcommittee.
Lau said she again bypassed the bidding process when awarding a $345,000 contract to KLS, a consulting firm, to improve the morale of employees in her office because she wanted the contractor to attend a managers' briefing in Sept. 1995. The KLS study did not begin until mid-October.
At least part of the contract paid for 1,000 six-inch rulers with inspirational phrases declaring the purpose of Lau's office was to "prevent and detect fraud and abuse," the Associated Press reported Friday.
In addition, GAO found that Lau approved $19,000 in travel and other expenses without collecting receipts from KLS.
Collins called the findings "troubling, not only because they involve the waste of government resources and management of a federal office, but also because they involve an inspector general, the very person charged with protecting the public from waste, fraud and abuse."
On Monday, Lau again appeared before the subcommittee and apologized to two Secret Service agents for conducting a brief criminal investigation of them last year. The agents had contradicted a White House statement that the Secret Service had provided lists of former White House employees that were used as the basis for requests for FBI files on former officials.
Sen. Charles E. Grassley, R-Iowa, said Lau's ability to run her office "has been compromised" and called for her resignation.
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