GSA inspector general reports on improper contracting activities

The General Services Administration's inspector general will release a report Friday that is expected to show contracting abuses and mismanagement at three regional offices of the agency's Federal Technology Service.

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

In a draft of the report the agency's inspector general said abuses similar to those in Bremerton were found in the Kansas City, Mo. and Atlanta regional offices. While an official with the office wouldn't disclose the specific findings, sources who have seen the document suggest that the report will show improper activities were more widespread than previously documented.

In November 2003, while gathering information to review GSA's annual financial statements, auditing firm PricewaterhouseCoopers met with Bob Suda, FTS' assistant commissioner for IT solutions. They discussed issues pertaining to "contracting irregularities identified by GSA management," which also were included in a draft of the inspector general's report, according to Mary Alice Johnson, a GSA spokeswoman.

Two days after the meeting, employees from the auditing firm sent a memo to Suda in which they referenced a number of findings in the inspector general's report. Specifically, the auditors said they needed to "evaluate the effect of the $133 million [in] non-IT orders reported" so they could "determine the financial impact…on the financial statements of FTS and GSA…" The auditors said they couldn't "sign off" on those financial statements until the issues were resolved.

The Bremerton office improperly spent millions of dollars set aside for technology purchases to buy building and construction services. The office was shut down as a result of the activities. While the PricewaterhouseCoopers memo makes no further mention of the $133 million in nontechnology orders they said the inspector general found, the auditors did ask for "a breakdown of the small business contracting" at FTS. The Bremerton employees were using small businesses' technology contracts to shield their building and construction services.

GSA's Johnson said that Suda "provided input on all questions" PricewaterhouseCoopers' auditors raised. The agency, however, did not release any correspondence between the two parties. The auditors were "satisfied and did not request additional information," Johnson said. They recommended that FTS management "complete their action plans to strengthen internal controls" and "to resolve the detailed findings in the [inspector general] report," she said.

A spokesperson for PricewaterhouseCoopers did not respond to repeated phone calls requesting a comment.

The full copy of the inspector general's report was scheduled to be released Friday morning.