GSA unit slammed on IT funds

FTS Alert Report

An arm of the General Services Administration misdirected $37 million in funds meant for information technology to construct an office building and perform building renovation work, according to an audit by the GSA Inspector General.

The Federal Technology Service's Client Support Center (CSC), serving the Northwest and based in Bremerton, Wash., hired companies using FTS' IT fund. The companies then subcontracted construction, architectural and engineering work, which the IT fund should not have paid for, the IG's report states.

In addition, the office issued task orders to the companies for specialized custom IT services, even though they were only supposed to perform noncomplex systems integration under the terms of their contracts, according to the IG report.

FTS discovered the problems before bringing in the IG's office to audit the Bremerton center, said Bob Suda, assistant commissioner for IT solutions for FTS. In response, FTS closed the Bremerton office and moved its employees to an office in Auburn, Wash., which is about an hour away, he said. The staff is receiving additional training, and the office now has an acquisition chief to oversee the procurement process, he said. Additional actions are being considered, but Suda declined to elaborate. FTS officials are waiting for a more complete IG report, which they expect to have shortly.

The renovations were for various sites of the Army's Total Army Distance Learning Program from 1998 through 2002. Work included building standardized classrooms for participants in the distance-learning programs.

Center officials also awarded contracts for the construction of an office building to house about 30 employees for the Washington Army National Guard costing about $950,000. The building was completed in November 2001.

Task orders that the IG reviewed did not include construction clauses required by the Federal Acquisition Regulation and did not follow FAR provisions for architectural and engineering services. The CSC has already paid an undisclosed amount for violations of the Davis-Bacon Act, which requires that contracts for renovations must include a clause with minimum wage specifications for various classes of workers involved in the project.

Such abuses happen "because you have people who want to serve their customers and are eager to grow their business," said Larry Allen, executive vice president of the Coalition for Government Procurement. "On the one hand, it is a very entrepreneurial business, but these people were entrepreneurial outside the boundaries of what they were supposed to be doing. The way you buy construction is very clearly laid out in the FAR."

The IG report lists several other improper practices it uncovered, including using technical direction letters to change task orders to allow the construction of the office building without contract modifications and splitting procurements into amounts small enough to allow sole-source procurements.

The CSC's revenues increased almost tenfold, from $53 million to $522 million, between 1998 and 2002, the IG report stated. "Key employees were rewarded for this increase," the report stated. "We believe that the emphasis on revenue enhancement may have contributed to the CSC's willingness to provide the client with any product to obtain a 2 percent fee."