- The Washington Times - Wednesday, April 23, 2014

The government watchdog that recently chided the State Department for losing track of billions of dollars in contracts has had its own troubles with procurement mismanagement.

A preliminary investigation into the State Department’s Office of Inspector General found contract violations, purchase-card abuse and excessive contractor salaries, according to records obtained by The Washington Times through the Freedom of Information Act.

The probe, focusing on an extensive office-renovation project at the State Department inspector general’s office in the Rosslyn neighborhood of Arlington, Va., was headed by the Department of Interior Inspector General.

One contracting official interviewed told investigators that State Department “OIG employees routinely attempted to perform impermissible contracting actions,” according to a redacted report of investigation, which blacked out the names of officials involved.

“He said that OIG employees seemed to be the biggest abusers of the rules they were supposed to enforce,” investigators wrote.

The Interior inspector general initially got the case because the State Department inspector general wanted an independent review. But after a preliminary report was issued in spring 2012, State officials brought the investigation back in-house.

A spokesman for the State Department inspector general said the office received the misconduct accusations in 2011 within its office of administrative operations.

“After receiving preliminary findings DOS OIG completed the investigation and referred it to the Department of Justice for possible prosecution,” spokesman Doug Welty wrote in an email to The Washington Times.

“DOJ declined prosecution,” he added. “Subsequently, DOS OIG took administrative action, as appropriate.”

Those initial findings revealed seven of eight contracts in the renovation project from January 2008 to September 2010 were awarded without competition.

Potential criminal violations included conflict of interest, disclosure of confidential information and conspiracy, according to the Interior inspector general’s initial report on the investigation. The findings detailed mismanagement that predated the tenure of the current State Department inspector general, Steve Linick, who started in September 2013.

Mr. Welty said the State Department inspector general took over the case because of time and resource limitations at the Interior Department’s inspector general, but declined to provide more specific information what sorts of administrative actions were taken against inspector general employees or contractors.

The investigation also revealed misuse of government purchase cards totaling more than $330,000 in payments to several contractors, according to documents.

One confidential source told investigators that administrative-operations employees overseeing the renovation projects received overtime on Friday nights and on weekends. On a Sunday morning, the source witnessed individuals, whose names and titles were redacted, eating pizza and drinking liquor while new office furniture was being installed.

Another unnamed official told investigators he recalled signing off on some contract awards without a required sole-source justification, but stated “he apparently forgot to follow up “

Investigators also found that the State Department inspector general’s administrative section wrote a justification to select a contractor after learning that the company was the highest bidder, a potentially “false, fictitious or fraudulent statement,” records show.

The Interior Department inspector general issued its preliminary findings after ten subpoenas, more than 20 interviews and reviews of internal emails accounts and State Department inspector general contract files.

Documents provided to the Times by the Interior inspector general were significantly redacted, and it’s unclear whether the office renovations were completed. However, some contractor employees still received executive salaries “not commensurate with the administrative duties they conducted,” according to a case memo. In the end, the contracts weren’t renewed.

The disclosures come weeks after the same watchdog chided the State Department for widespread contract oversight lapses.

The State Department inspector general issued a recent management alert warning that the State Department couldn’t properly account for about $6 billion in contract spending in recent years.

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