Private audit found contracting problems in D.C.-area GSA unit

On the heels of an investigation that found violations of contracting laws and regulations in a regional office of the General Services Administration, another office undertook its own, private audit and found many similar problems.

In October 2002, the Washington, D.C. office of the Federal Technology Service, a GSA unit that buys technology for the government, hired a consulting firm to review more than 250 contracts and orders it had awarded. The move was prompted by a GSA inspector general's investigation that showed more than $37 million in procurement abuses in the Bremerton, Wash., office of FTS.

The regional administrator overseeing the Washington office, Donald Williams, asked private experts to go through the contract files "with a fine-tooth comb," said Mary Alice Johnson, a GSA spokeswoman. They found potential abuses and irregularities that mirror those the inspector general documented in the Bremerton, Atlanta and Kansas City, Mo., offices.

The issues, which included misuse of funds and improper contracting actions, put the office at risk for a negative finding by the inspector general's office, which plans to review the files later this year, and in some cases could result in charges that the office had broken the law.

Government Executive obtained a draft copy of the report, prepared by Acquisition Solutions Inc., a consulting firm based in Oakton, Va. The company found the Washington office might have misused a fund set aside for FTS to buy technology for its clients. The GSA inspector general documented misuse of that fund in other offices.

Ten percent of contracts in the Washington office were considered to have used the fund inappropriately, because employees used the money to buy labor unrelated to technology, including the services of firearms instructors, paramedics, executive assistants and financial specialists.

The reviewers noted, however, that the definition of what constitutes technology under the IT Fund "may be ambiguous in its interpretation. Even the reviewers debated the interpretation."

The private reviewers also found evidence that Washington hadn't performed market research or other planning in advance of some awards, possibly limiting competition. The inspector general found anti-competitive behavior in the other offices.

The reviewers also discovered that, in some instances, the cost estimates the government used in advance of awarding a contract were identical to the costs proposed by contractors. In other cases, contractors wrote the estimates or estimates were changed to conform to contractors' proposals.

The GSA inspector general has chided FTS for ceding contracting authority to the companies vying for its business. FTS sometimes circumvented the competitive process to award contracts to favored companies or to companies its customers selected, the inspector general found.

Other findings of the Washington review included:

• Nearly 70 percent of contracts and awards contained no source selection plan, which establishes evaluation criteria and processes;
• Forty percent lacked required justification for making sole source (not competed) awards or for using time and materials contracts, which allow awards when the full scope of work is unknown;
• Ten contracts contained potential split orders, which meant officials might have broken a procurement into several smaller ones to keep them below certain price thresholds, above which extra procurement requirements kick in.

Perhaps the most serious finding concerned the Washington office's use of appropriated funds. Under the Antideficiency Act, the government cannot spend funds in excess of a given appropriation.

The review found about 15 percent of the Washington orders lacked appropriate records as to the availability of funds for the work performed. "While these numbers are relatively low," the review said, "availability of funds cannot be overstressed. This is not just a regulatory requirement, but a requirement required by law." Breaking the anti-deficiency law can result in a fine, a prison sentence or both.

Johnson, the GSA spokeswoman, said the Washington office is reviewing the findings, which were delivered in December. She said senior FTS managers are aware of the draft report and that GSA administrator Stephen Perry takes the findings, as well as the IG's reports, very seriously. Perry supported the Washington office's proactive move of reviewing their records, she said.

Acquisition Solutions, which prepared the report, had no comment. FTS hired the company to review management and organization in it other offices. The agency stopped the work on Jan. 30, however, after officials discovered that it was improperly awarded under a contract for technology services. The error was spotted during a review process put in place after the Bremerton findings, Johnson said.

FTS "will re-compete the work as quickly and efficiently as possible," she said, and indicated that a contract for management and business services could be used.