The Treasury Department's Inspector General is investigating how the Office of the Comptroller of the Currency buys products and contracts for services.
According to a 14-page interim investigation report obtained by American Banker, OCC managers violated federal procedures for, among other things, computer purchases, printing contracts, and reserving hotel rooms.
"To date, the investigation has disclosed that the OCC does not follow federal procurement regulations, as required," according to the Feb. 27 draft, which did not tally the violations' cost. A final report is expected by yearend, sources close to the investigation said.
Responding Monday, the Treasury released a short written statement that said: "To draw any conclusions based on this interim report would be premature."
The interim Inspector General report also alleges that the Comptroller's Office violated Small Business Administration rules governing minority contractors.
The OCC allegedly gave these vendors, under SBA's 8(a) program, detailed instructions on which computer products to purchase and where. However, the OCC still paid the vendors as much as 7% above cost, the report said.
"This investigation determined that the OCC used the 8(a) vendors as brokers to make purchases of computer equipment that the OCC acquisitions staff could have easily made," the document said.
Leonora S. Cross, deputy comptroller for public affairs, said that the agency had "very specific computer needs." She defended the agency by saying a Coopers & Lybrand audit of one 8(a) contract targeted by the investigation found no evidence of overpayment.
The interim report does not indicate how many 8(a) contracts are being investigated.
Whether the Comptroller's Office is subject to federal procurement rules has been debated for years, Ms. Cross said. The agency has argued that because it does not rely on taxpayer money - it is funded by fees paid by national banks - the procurement rules do not apply.
However, a Jan. 15, 1993, legal opinion by the Treasury's general counsel found that the Comptroller's Office is subject to these rules, according to the report.
That 1993 finding, Ms. Cross said, was the first hard-and- fast guidance the agency received. However, the legal opinion came days before President Clinton was inaugurated, and the OCC was told the new administration would be streamlining federal procurement rules, Ms. Cross said.
"We didn't want to go to a lot of time and expense to comply with rules that were going to change," Ms. Cross said in an interview Friday.
In 1993 the agency began to work with the Treasury's procurement office to comply with the rules, many of which were streamlined under the administration's efforts to "reinvent" government.
Today the Comptroller's Office is "98% in compliance with procurement rules and will be completely within a few weeks," Ms. Cross said.
Rep. Spencer Bachus, chairman of House Banking's general oversight and investigations subcommittee, asked the Treasury for a copy of the 1993 general counsel opinion by Oct. 10. An aide to Rep. Bachus said that on Monday the Treasury still had not produced the document.
The OCC has caught flak from Congress for its procurement policies before. In 1992 then-Rep. Frank Annunzio, D-Ill., accused the OCC of breaking the law by spending $30,000 to furnish the executive suite and an adjacent conference room at its headquarters. The law in question places a $5,000 annual limit on furniture purchases and office improvements by agency heads appointed by the President.