IG faults Treasury’s management of major telecom procurement

The Treasury Department should consider canceling its solo effort to procure telecommunications services, the department's inspector general recommended in a new report.

According to the redacted report, Treasury never adequately analyzed potentially cheaper alternatives to the Treasury Communications Enterprise procurement. It failed to do so when it first issued its request for proposals in May 2004, and when it re-opened the contract after canceling AT&T's winning bid a year later, following a critical Government Accountability Office bid protest ruling, the IG said.

Re-bids for the controversial procurement were due last Dec. 8, but Treasury should now consider all options, "including the option of canceling the solicitation," the report stated.

A Treasury spokeswoman said the department is "taking appropriate corrective actions" for problems outlined in the report. In particular, the report said Treasury did not fully evaluate procuring telecommunications services provided through General Services Administration contract vehicles.

In the run-up to the first request for proposals, Treasury rejected GSA because of timing concerns surrounding the expiration of GSA contracts and the agency's overhead costs, but without sufficient cost-benefit analysis, the report stated. Also, Treasury said GSA could not provide a full set of services, but did not fully investigate GSA vehicles and did not contemplate "whether Treasury could do without these services in the short term," the report said.

A former Treasury official who would speak only on condition of anonymity rejected the inspector general's statements, however. A consulting firm "was paid a lot of money by Treasury and the IRS to do a significant study in which those questions were addressed and answered," the former official said.

The inspector general's report "may say more about Treasury's records management and archiving than it does about any analysis," the former official said, adding that TCE has become a political issue, "because Treasury has tried to buck the Hill."

Rep. Tom Davis, R-Va., has been a vocal critic of TCE, urging that Treasury instead buy telecommunications through GSA's upcoming Networx procurement. Davis recently said he might attempt to cut off funds for TCE through the appropriations process, although he does not sit on any appropriations subcommittee.

A Davis spokesman said the lawmaker would work with appropriators to zero out TCE funding, but could not say whether Davis has met with colleagues over the matter. In a statement released Monday, Davis said the report "reveals exactly what I have been saying consistently for the last year: TCE is a disaster and ought to be abandoned before Treasury wastes even more precious taxpayer funds."

When Treasury decided to resurrect TCE after appearing to kill it following the May 2005 GAO bid protest, it again failed to do an extensive cost-benefit analysis, the report stated. The inspector general also found that, on the whole, Treasury lacks adequate TCE documentation. In one section of the report, auditors detailed how a series of officials referred investigators each time to another official in order to gain certain documentation -- an ultimately unsuccessful quest.

The report recommended Treasury consider all options for telecommunications procurement, and should it award a contract under the TCE solicitation, conduct rigorous market analysis before exercising any of the contract's options. The department should also maintain better records "for management reference and review as well as for audit," the report stated.

In a response letter, Treasury said it concurs with all three recommendations.