The Treasury Department's inspector general is accusing the Office of the Comptroller of the Currency of repeatedly violating laws requiring competitive bidding for contracts, The Associated Press reported Wednesday.
In one $25 million computer contract, the agency may have racked up $600,000 in unnecessary expenses by using middlemen. The report's findings were summarized in a letter to Comptroller John D. Hawke Jr. from two Republican House subcommittee chairmen, Reps. Spencer Bachus of Alabama and Peter King of New York.
The inspector general studied computer contracts specifically but said the agency may have paid "higher than fair market value" for other purchases and services as well.
Rep. Bachus expressed concern that taxpayers ultimately would pay for the violations. "Every bank customer pays for OCC extravagance through higher fees," he said. The Comptroller's Office is funded by bank fees. In 1997, it had revenues of $390 million and spent more than $26 million on office equipment, software, and services. The Comptroller's Office was ordered by Treasury lawyers in 1993 to stop its contracting practices and comply with all procurement laws. But the practices continued for at least another four years.
Robert Garsson, a spokesman for the comptroller, said the agency discontinued the contracting practices in 1997 and does not believe it paid unnecessarily high prices. He said the agency often negotiated lower prices than could have been yielded by bidding or by existing federal purchasing arrangements.
"We think we saved money," Mr. Garsson said, without specifying the savings. Reps. Bachus and King have demanded Mr. Hawke determine how much money may have been misspent. The inspector general's report, completed in April, found numerous violations of federal procurement regulations, including:
Procurement managers used vendors as brokers to buy computer equipment instead of purchasing it directly. The vendors were minority firms, the report said. Mr. Garsson said the agency was trying to meet federal mandates encouraging agencies to award contracts to minority companies. He said the agency believed it was cheaper to buy through the vendors than pay prices negotiated by the General Services Administration.
Minority vendors were "illegally instructed" to purchase specific products by brand name, manufacturer, and distributor. In other cases, special "waivers" were used to award contracts to specific vendors.
Procurement officials split up orders to keep contract values below the level that would require Treasury Department authorization.