Investigation uncovers further misuse of contracts at GSA unit

Improper contracting practices and misuse of funds occurred in three regional offices at the General Services Administration's Federal Technology Service, according to a draft report by the agency's inspector general. The report's findings are prompting lawmakers to question whether FTS may need to be overhauled.

The report builds on revelations of procurement abuse totaling nearly $40 million that the inspector general discovered earlier this year in the Bremerton, Wash., office of FTS, a subsidiary of GSA that buys and sells technology on behalf of other federal agencies.

The inspector general sent a draft report of the findings earlier this month to FTS commissioner Sandra Bates. The report shows that improprieties similar to those found in Bremerton occurred in regional offices in Kansas City and Atlanta, according to Eugene Waszily, GSA's assistant inspector general for auditing.

Waszily wouldn't discuss the specifics of questionable activities outlined in the report, other than to say they were similar in nature to those in the Bremerton case, where employees used contracts designed to buy technology to procure building and construction services. A source familiar with the findings who asked not to be identified said they were "scathing."

FTS is conducting a 30-day review of the findings, and barring any substantial objection to what was found, the inspector general plans to make the document public in mid-December, Waszily said.

The latest audit report on FTS will be released as Congress weighs how to address problems at the agency, and whether FTS itself should be reorganized.

The agency has been criticized for operating more like a business than a service organization. FTS buys and sells technology for other agencies in exchange for a fee, and employees are rewarded with financial bonuses for bringing in new business.

FTS sees itself as an entrepreneurial entity, but a senior congressional staffer took issue with that characterization.

"That's not their job, and unfortunately that's led to the problems they've had," said Melissa Wojciak, the lead congressional staffer for FTS oversight at the House Government Reform Committee.

The agency needs to focus on its "service role" to the government, and on providing those services on a "limited basis," Wojciak said. "I think they've lost sight of that mission."

In the months since the questionable procurement practices were uncovered, FTS has been merged with another GSA contracting organization, the Federal Supply Service. That agency took over writing and managing technology contracts and FTS now operates as a sales force, finding customers for those contracts.

Wojciak questioned, however, whether the reorganization had gone far enough, in light of the revelations of abuses at multiple offices. She said House Government Reform Committee chairman Tom Davis, R-Va., would take up the issue when Congress reconvenes after the holidays. "I think [there] needs to be a reorganization beyond what we've already seen," Wojciak said.

Waszily said that within the next four to six months his office hopes to have audits under way in each of FTS's 11 regional offices. He said auditors would examine the recent procurement of mental health and counseling services on behalf of the military that the FTS Denver office awarded using a technology contract.

That deal came under fire after it was revealed the companies that won the contract might have written significant portions of it. Senior GSA officials and the agency's general counsel reviewed the contract and allowed it to go forward after some of the bidders raised conflict of interest concerns.

FTS commissioner Bates and GSA Administrator Stephen Perry testified in October before Congress about the Bremerton activities, and pledged to root out problems at the agency.

Waszily said Bates and Perry requested the regional office audits and "are really taking the issues to heart."