Subject: [NEXTEL-1] Congress Probes Government Agency Scam

From: [email-masked]
Date: Fri, 03 Oct 2003 00:30:20 -0400

Congress Probes Government Agency Scam

By LARRY MARGASAK
Associated Press Writer

October 2, 2003

WASHINGTON

A federal agency that was given unusual permission to operate as a
telecommunications business expanded without permission to construction jobs
and used its soaring profits to pay inappropriate bonuses to some workers, a
preliminary investigation has found.

The General Services Administration's inspector general says an
investigation of the Federal Technology Service (FTS) is expanding, while
GSA officials said several workers who received bonuses face discipline.
Congress also is scrutinizing the agency.

FTS was begun as a self-financed office designed to save the government
money by negotiating discounts with telecommunications contractors. The
service earns money by charging agencies service fees of between 2 percent
and 4 percent of contract values.

The amount of revenue the office won in the northwestern United States alone
ballooned tenfold in just four years because of the improper construction
business, according to an investigation by the GSA's inspector general.

But the inspector general, the agency's internal watchdog, found that the
marked rise in revenues was driven by an unauthorized expansion of the
agency's mission from providing telecommunications services to constructing
and renovating government buildings.

In some cases, the agency even used small businesses as front companies to
award contracts without competition. And it began rewarding its employees
with bonuses from the profits, officials said.

The preliminary findings provide "a laundry list of inappropriate ...
purchases" with taxpayer money, Sen. Charles Grassley, R-Iowa, wrote to
Inspector General Daniel Levinson in a recent letter.

Grassley and the House Government Reform Committee, headed by Rep. Tom
Davis, R-Va., are investigating the agency.

Mary Alice Johnson, a spokeswoman for the GSA, said 13 employees in the
Northwest region who had received bonuses face possible disciplinary action.
She would not say how much the 13 received, but added GSA has frozen all
bonuses throughout the agency.

Johnson blamed the problems on a lack of supervision and training. FTS
employees violated policy "to gain customer acceptance and satisfaction, to
generate new business and retain current business," she said.

The inspector general's investigation began in the agency's Northwest
region, based in Bremerton, Wash. Jack Lebo, a spokesman for the inspector
general, said the investigation has now spread from the Northwest to the
agency's Southeast and Midwest regions.

The FTS pre-negotiates discounted contracts for telecommunications products
and services needed by government agencies, and then provides fee-based
expertise to help agencies place their orders.

>From 1998 through 2002, the service's revenue from the Northwest grew from
$53 million to $523 million. The tenfold increase, the inspector general
reported, meant that "key employees were rewarded for this increase. We
believe that the emphasis on revenue enhancement may have contributed to the
... willingness to provide the client with any product to obtain a 2 percent
fee."

Johnson said GSA officials are now exercising closer control over the
technology service, "consistent with our commitment to integrity of the
contracting process and personal ethics."

David Marin, a spokesman for the House Government Reform Committee, said:
"It's too early to say that employees purposefully misspent funds solely for
the purpose of lining their own pockets. One thing we can say for sure is
that the employees in question were trained to procure IT (information
technology) goods and services, not buildings, and that's troublesome."

The inspector general has already concluded that FTS employees in the
Northwest:

* Spent information technology money to construct a modern office building
and perform more than $36 million in building renovation work for an Army
education program.

* Bought products and services from a large business they chose without
seeking competitive bids. Employees avoided competition by working through a
government-designated small disadvantaged business that was eligible to
receive sole-source orders.

* Divided large orders into smaller ones, thereby staying under the amount
that would have triggered competitive bidding. This also allowed the region
to award sole-source contracts to hand-picked firms.

* Issued work orders to contractors that bore no relationship to the
contracts cited as authority for the projects.

* Paid a contractor who submitted a billing that claimed 10,000 hours of
information technology technician time, when the real job was to turn the
Ministry of Defense Conference Center in Moldova into a modern facility.

http://www.newsday.com/news/politics/wire/sns-ap-government-contracting,0,7728050.story?coll=sns-ap-politics-headlines

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