Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, January 27, 1994 TAG: 9401270111
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: NEW RIVER VALLEY
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The practice "abused and misused" the law, depriving taxpayers of competitive bidding that could have slashed the cost of some multimillion-dollar contracts by 50 percent, the report says.
The contracting practice, known as off-loading, occurs when one agency, faced with spending limitations or tough rules on competitive bidding, finds a second agency with much looser contracting rules. The first agency specifies a favored contractor who is then hired by the second agency.
A Senate Governmental Affairs subcommittee asserted that $260 million in improper or questionable contracting had been routed through the Tennessee Valley Authority, the Energy Department, NASA's Jet Propulsion Laboratory and the Transportation Department's Volpe Research Center.
But the report said there were billions of dollars in contracts routed through other agencies that had not been analyzed. "It is impossible to determine accurate totals, because there is no system in place to track the off-loads," the report said.
It said agencies also milked the system so they could quickly spend leftover money at the end of a fiscal year - funds that would have gone back to the Treasury if unspent.
One example the report cited of the contracting arrangements involved classified research in the Pentagon's Non-Acoustic Anti-Submarine Warfare Office.
The office contracted for classified research through the Tennessee Valley Authority. The Defense Department's inspector general found the anti-submarine office took this route, in part, to "obtain the support of a specific contractor without having to advertise or compete the program."
The TVA entered into an agreement with ESG Inc., described in the report as "a tiny company made up of just a few employees, who did none of the required research themselves."
ESG then subcontracted out 96 percent of the work, without competition, "to subcontractors selected by the Anti-Submarine Warfare office."
Ordered by Pentagon officials to end the TVA relationship, the agency rerouted the contract through the National Oceanic and Atmospheric Administration, which in turn contracted with TVA and ESG.
The anti-submarine office spent $21.9 million for the contract and paid the TVA a $1.1 million "brokering fee" for management services. And $2.8 million in expenditures were questionable, Senate report said, including "fees for corporate jet travel, in-room videos, liquor."
The report also found:
"Shoddy" contract management by federal agencies. The agencies were hired by other U.S. agencies as contract managers, raking in "excessive" fees that totaled more than 25 percent of the contract cost in some cases.
The U.S. Postal Service, the Environmental Protection Agency, the U.S. Geological Survey and other agencies used the TVA to buy an engineering support system, information management programs, scientific support services and rock analysis.
by CNB