IG report says executives bent under pressure from software giants.
This story has been updated.
Acquisition managers at the General Services Administration “undermined the integrity of the procurement process” when they overruled underlings and altered the administration of $900 million in multiple award schedule contracts with major software firms, an audit found.
The managers' “improper intervention” in response to complaints from Oracle, Deloitte and Carahsoft -- in the form of extending flawed contracts and reassigning contracting officers -- resulted in contracts with "inflated pricing and/or unfavorable contract terms and extensions where contracting staff had determined such a decision was not in the best interests of the United States," according to a report from the GSA inspector general’s office.
The moves also “compromised the authority of contracting officers and adversely affected morale,” said the report written by regional auditor John Walsh. The report documents the IG office’s efforts to alert top GSA managers to the situation as early as April 2011.
As an instance of ill-advised intervention, the report described a Federal Acquisition Service division director who “provided Carahsoft officials incorrect information that contradicted some of the contracting officer’s requests for information. For example, the contracting officer requested information from Carahsoft regarding sales practices for Carahsoft manufacturers and requested that the company remove the term ‘commercial end users’ from its information because it does not sell to commercial customers.” But the division director bypassed the contracting officer and told the company to proceed as planned.
The IG recommended that the FAS forbid managers from intervening in contracting actions except in cases of misconduct or serious administrative issues. It recommended that communications between managers and contracting officers be fully documented; that FAS issue a memo in support of contracting officers’ independence; that FAS renegotiate or cancel the Carahsoft and Deloitte contracts and take “appropriate administrative action” against managers involved in the interventions.
Responding to a draft of the report, newly installed FAS Commissioner Tom Sharpe informed the IG that his team had already required a review of the Deloitte and Carahsoft contracts; placed the supervisor identified in the report on administrative leave pending further review; and conducted a top-to-bottom review of management controls in the Multiple Award Schedule program.
GSA spokeswoman Mafara Hobson said that since the arrival of acting GSA Administrator Dan Tangherlini 14 months ago, “GSA has refocused on its mission of delivering the best value in real estate, acquisition and technology services to government and the American people. The integrity of the FAS procurement process is critical to the work GSA does every day. The OIG report raises serious concerns, [and GSA] will continue working to ensure the integrity of the procurement process."
Sen. Claire McCaskill, D-Mo., urged continued vigilance.
“This report details a shocking abuse of authority by a senior government official -- at a potentially significant cost to taxpayers,” she said in a statement. “The General Services Administration must ensure that anyone found to have aided in these abuses is held fully accountable.”
Deloitte sent Government Executive a statement saying it had “just become aware of this IG report and [we] are trying to understand those conclusions that pertain to our contract. We believe our negotiations with GSA were at all times appropriate and conducted in good faith. In fact, the final negotiated rate structure is significantly lower than in the previous contract and provides substantial savings to taxpayers.”