Contracting abuses found in GSA Kansas City office

Contracting abuses similar to those committed by a General Services Administration regional office in Washington state have been found in another location and are being investigated by the agency's inspector general, according to a senior GSA official.

In March, the inspector general reported that employees in the Bremerton, Wash., office of GSA's Federal Technology Service had improperly used technology contracts to purchase building construction services, misusing almost $40 million in the process.

In a news conference Monday, FTS Commissioner Sandra Bates said, "It has become apparent that some of the improper contracting practices identified in the March [report] have occurred in at least one other region."

Bates declined to name the region. However, an official with the inspector general's office said the similar improper behavior was found in the FTS office in Kansas City, Mo.

Bates, in her first statements to the news media since news of the contracting abuses was reported in August, said the inspector general is currently investigating the improper use of funds set aside for technology purchases and the misuse of small business set-aside contracts by FTS, an organization that provides technology contracting services for other federal agencies on a fee-for-service basis.

The Kansas City office is the home to an FTS program known as FAST, which is designed to enable small, disadvantaged and minority-owned businesses to sell their goods and services to government agencies. FTS employees in the Bremerton office used at least two FAST contractors to procure building and construction services for the Army under the guise of technology purchases, the inspector general found.

Bates didn't elaborate on the nature of the investigation in Kansas City or an FTS office in Atlanta, other than to say it was, at the moment, focused on the kind of problems discovered in Bremerton. She also said that the inspector general decided to focus on the Kansas City and Atlanta offices "due to the high volume of contracting activities in these regions."

The inspector general's office confirmed that the misuse of contracts and funds was found in Kansas City.

An executive of Information Systems Support Inc. of Bethesda, Md., one of two FAST contractors named in the inspector general's report on Bremerton, said in an interview in August that his company was combing through task-order contracts issued by the Bremerton office to determine how construction and labor costs had been improperly rolled into a technology contract.

Eric Whittleton, the firm's chief operating officer, said last month he was specifically interested in a line item that appears on contract orders as "other direct costs." That designation appears on a number of orders issued to the company by FTS for work on behalf of the Washington National Guard.

For instance, on an order issued in December 2000, a line item for other direct costs amounted to $542,000. The total value of the order was about $2.3 million, so the other direct costs accounted for almost one-fourth of the work to be performed.

Employees of Information Systems Support also currently provide administrative and acquisition support services to FTS, according to Mary Alice Johnson, a GSA spokeswoman. The employees worked alongside FTS employees in the Bremerton office.

Johnson said that the corporate employees also "had access to upcoming or potential GSA procurements" contained in GSA databases. The company was recently awarded a new contract, which takes effect Oct. 1, to provide support services to FTS.

The corporate and FTS employees were moved to the GSA's regional headquarters in Auburn, Wash., in May 2003, following the inspector general's report. Two of the corporate workers, however, remained at the company's office in Bremerton, and they also had access to upcoming GSA procurements, Johnson said.

Bates said the FTS employees involved in the improprieties at Bremerton are still performing their jobs at the GSA office in Auburn. She added that they, along with all FTS employees, have received additional training in federal acquisition regulations and the proper use of contracts.

The inspector general, in his March report, noted that FTS has a tradition of rewarding its top-performing employees with bonuses, and that the agency adheres to a sales-driven culture, which many experts have long noted mirrors that of a business.

Bates sought to dispel any notion that FTS offices have competed against each other to see which can rack up the most sales, and she said the incidents in Bremerton and elsewhere were not reflective of FTS' overall business practices. She said the idea that FTS has tried to grow its business at any cost was "old-think," and that "we just are not there now."

Bates said the nationwide audit of all FTS offices in its 11 regions could take years.