Early stimulus contracts face scrutiny

On the eve of a hearing aimed at preventing waste in federal stimulus spending, Vice President Joe Biden's office acknowledged possible flaws in several of the first contracts awarded under the 2009 American Recovery and Reinvestment Act.

Several of the 11 contracts issued using stimulus funds by late Wednesday afternoon were marked by paperwork errors, while others apparently were let without competition.

Some of the contracts now will be reviewed by stimulus watchdog Earl Devaney, according to Biden press secretary Elizabeth Alexander. The vice president is managing Recovery Act spending.

While the General Services Administration has encouraged agencies to piggyback their stimulus spending on its pre-competed contracts or multiple award schedules, such vehicles do not maximize the use of competition that the Obama administration has encouraged for Recovery Act spending. GSA contracts or other existing procurement vehicles do, however, offer agencies the advantage of spending stimulus funds quickly -- also a directive of the administration.

Stimulus contracts are under intense scrutiny, from lawmakers and others. The House Oversight and Government Reform Committee hearing on Thursday will examine the role of government and state watchdogs in tracking stimulus activities. Devaney, who serves as chairman of the Recovery Act Accountability and Transparency Board, will testify.

In comments to state and local officials on Wednesday, Devaney said reporters were paying close attention to how the funds are being spent.

"That's going to generate for all of us, you included, inquiries -- 'Hey, why did this toilet cost whatever,'" Devaney said, according to a pool report from Washington Times reporter Stephen Dinan.

One of the initial stimulus awards was in fact a contract for a toilet facility. The Forest Service hired CXT Inc. of Spokane, Wash., to install 22 precast concrete toilet buildings in Missouri's Mark Twain National Forest. Forest Service officials used an existing GSA blanket purchase agreement for the $460,000 March 13 contract and therefore did not solicit any other bids. The award notice stated that CXT will "replace non-accessible structures and structures that do not meet Forest Service condition standards. These toilets will be installed at recreation sites located on the national forest."

According to GSA's contract with CXT, the model purchased is the Gunnison Single Vault restroom that generally sells to the government for $9,851 each. The bulk of the remaining spending on the contract -- which would amount to more than $243,000 -- is for personnel to install the buildings, said Chris Mather, director of communications for the Agriculture Department, the Forest Service's parent agency.

Mather noted that pre-constructed restrooms are cheaper and easier to maintain than facilities built from scratch.

CXT's sales office did not respond to a request for comment on Tuesday. But the company's Web site describes the Gunnison as "our standard ADA compliant, Sweet Smelling Technology single vault toilet building. The single vault toilet buildings are designed to meet or exceed the effects of a Zone-4 earthquake, a 120-mph wind load and a 350-pound per square foot snow load."

Also on March 13, the Forest Service paid D.J. Group Inc. of Beverly, Ohio, nearly $400,000 to "furnish and install solar panels" on the supervisor's office of the Wayne National Forest in Nelsonville, Ohio. Mather said the contract would include the installation of 250 solar panels.

The Roanoke, Va., office that let the contract did not solicit any other bids and the award notice indicated that the agreement was not a small business set-aside. But a search for the contract in the Federal Procurement Data System, the government's online contracts database, shows that it is a sole-source award to a service-disabled veteran-owned small business.

The government has a goal of awarding at least 3 percent of its contracts annually to service-disabled veteran-owned small businesses. That goal has never been met.

Meanwhile, a search of Federal Business Opportunities, a Web site where agencies are required to post procurement solicitations and award notices, shows other examples of paperwork errors in posting Recovery Act contracts.

For example, on March 12 GSA awarded a $125,000 "lighting" contract to Hudnut Company Inc. of Portland, Ore. The notice, which includes no other details about the time, location or necessity of the project, was included among those for other contracts that had been awarded using Recovery Act funds.

But, Shala Geer-Smith, spokeswoman for GSA's Greater Southwest Region, where the contract was issued, said the award was posted erroneously as using stimulus funds.

"This is a standard notice posted on all Multiple Award Schedule [indefinite delivery indefinite quantity] contracts awarded and is not an award made using stimulus funds," Geer-Smith said. "The recovery block is a newly added feature to FedBizOpps and we will research how the posting error occurred and a correction will made to remove the recovery block to preclude this from happening again."

In an e-mail to Government Executive on Tuesday, Biden's spokeswoman acknowledged that several of these early stimulus contracts may have included errors.

"While these examples appear to be isolated -- and Recovery Act funds generally appear to be moving into the economy with speed and success -- we take any questions about misspent funds seriously," Alexander said. "The Vice President's Office has asked Mr. Devaney for an immediate review and a prompt report back. If these contracts do not meet standards for transparency and cost effectiveness, we will seek appropriate action. The American people have a right to see their tax dollars well spent, and if they are not, we will do everything we can to rectify it."

In a February memorandum, Office of Management and Budget Director Peter Orszag said the use of all Recovery Act funds should be "transparent to the public" and that contracts should be subject to competition "to the maximum extent practicable."

"The critical importance of the Recovery Act, and the funds it will make available to stimulate the American economy, require heightened management attention on acquisition planning," Orszag wrote.

Some early Recovery Act contracts do appear to meet the goals of transparency and competition.

Last week, GSA awarded a $100 million contract for acquisition management support services to Integrity Management Consulting Inc. of McLean, Va., and Acquisition Solutions Inc. of Arlington, Va. The contract notice included bids from five interested vendors, details on the length of the contract and information on the government's specific needs.

The contract "will be used to support specific projects related to the American Recovery and Reinvestment Act of 2009 and help achieve discounts through agency-wide economies of scale," the notice stated.

As of Wednesday afternoon, agencies had posted more than 200 stimulus opportunities but had awarded only 11 contracts. Most of those contracts were awarded either through an agency-issued indefinite delivery indefinite quantity contract or an existing GSA acquisition vehicle.

A handful of other Recovery Act contracts appear to have been subject to competition months earlier. In those instances the agency may have been waiting on funding to issue the contract formally.