- The Washington Times - Tuesday, August 29, 2000

A recent federal audit shows Metro violated more than half of the federal procurement regulations reviewed, including failing to set terms of contracts and establishing prices for more than $40 million in consultant contracts, documents obtained by The Washington Times show.
The audit, which was begun March 8 in the wake of an investigation of Metro's procurement practices by The Times, reviewed 101 contracts issued by Metro. Among those contracts, auditors found required documents were missing from 19 of the files, independent costs estimates were not found in 28 major purchases, and bid openings were not documented in four files. In addition, cost justifications were not found in eight of Metro's 13 sole-source contracts.
The audit, conducted by Harris Consulting for the Federal Transit Administration, had been characterized by the FTA as finding Metro deficient in only nine of 51 procurement procedures. But it actually showed procurement violations in 31 of the 51 categories.
The auditors ruled a category "deficient" only if they found major violations by Metro of FTA procurement requirements. But the same criteria, such as missing paperwork and cost information, showed violations in far more contracts.
Gladys Mack, Metro board chairman, said yesterday that she has received a briefing but did not know the complete findings of the audit. She said the board was told that nine of the 51 categories had deficiencies but could not remember if she was told there were contracting violations in other categories.
"Of course, it does sound like a lot," Mrs. Mack said. "I was satisfied it was accurate."
She said she did not remember if she had reviewed the entire audit.
"I'd have to see it to understand it. We were briefed in advance of receipt of the document," Mrs. Mack said.
The auditors also faulted Metro's contract administration for the problems because there were:
Many purchase orders "too vague to enforce."
No justification for sole-source procurement.
Unsustained costs paid to contractors.
Failure to assess the capabilities of contractors.
Missing or inadequate documentation of purchases.
In 10 of 50 contracts, Metro did not determine whether the contractors could do the work including the builder of 192 new subway cars for $220 million. Metro awarded the contract to CAF of Madrid, which formed a joint venture with AAI Corp. in Hunt Valley, Md.
"In most files that were deficient, there were no documentation of responsibility determination found in the file, or as in the case of the 5000 series railcar procurement, no pre-award survey was performed to assess the capabilities of the contractor who was a joint venture entity," the auditors said.
The audit found violations in large purchases including new buses, bus engines and transmission and new rail cars, as well as in small procurements of less than $100,000.
Washington Metropolitan Area Transit Authority procurement officials did not use the same criteria in selecting a contractor in purchasing buses, according to the audit, and evaluations were questioned by the FTA auditors.
"The [FTA auditors] noted that in the file for the procurement of diesel and CNG buses, evaluations were performed, but questioned the results of a perfect score for the successful supplier," the audit said.
Also, in the file for the "procurement of heavy-duty buses that was found deficient, some of the criteria that were established in the request for proposal were not used in evaluating the proposal," the FTA said.
The audit was especially critical of the way Metro acquired consulting services and "on-call" engineering and architectural services through a program devised by Metro General Manager Richard White and Panagiotis P. "Takis" Salpeas, Metro's assistant general manager for transit systems development.
The program, called the Integrated Annual Work Program or IAWP, was set up through a series of transactions in which four consulting companies were hired to do most of Metro's engineering and consultant work on an hourly basis.
The FTA audit said Metro could be spending more money because of its failure to properly negotiate the contracts with consultants and monitor their work.
The companies that are consultants under the IAWP Daniel, Mann, Johnson and Mendenhall/ DeLeuw Cather Joint Venture; Parsons Brinkerhoff Quade and Douglass; Ratheon; and Booz-Allen & Hamilton formed Capitol Transit Consultants (CTC).
The auditors questioned the organization structure of Capitol Transit Consultants because it is not a formal entity and Metro assigned tasks to the CTC rather than to individual consultants. It appears that CTC members charge on a cost-plus basis than for a fixed price as required by federal law, the audit says.
"[The CTC agreement] should be analyzed. WMATA should ensure that the task order contracts are not in fact cost-plus-a-percentage-of cost contracts," the auditors said.
The auditors also said that Metro failed to explain in contracting documents the rationale for establishing the consortium of consultants.
Although the consultants had been on board for more than a year, Metro had not finalized hourly rates or tried to negotiate better hourly rates when it extended their contracts. The contracts were extended to 2004 for all of the consultants under IAWP.
"Some of the IAWP contractor rates have not been finalized, nor has WMATA attempted to negotiate improved rates due to the extension of some of the contracts' period of performance," the auditor said. "This is especially true of the Booz-Allen & Hamilton contract that was extended for an additional five years."
The auditors also faulted Metro officials for giving Booz-Allen & Hamilton a contract modification the auditors said was actually a no-bid contract of $6.5 million, not a contract modification. The auditors said the contract modification was out of the scope of the original contract for engineering of rehabilitation of older subway cars. The additional contract was to review the purchase of new subway cars.
The auditors found that the Metro Board did not approve the additional $6.5 million of work to Booz-Allen & Hamilton.
"[W]e consider that the work is out-of-scope from the originally intended work and should be treated as a sole source procurement from a documentation and justification prospective," the auditors said.
The release of the audit comes at a time when three members of the local congressional delegation are considering whether to ask the General Accounting Office to investigate Metro management, operations and procurement problems. Rep. Thomas M. Davis III, Virginia Republican; Rep. Constance A. Morella, Maryland Republican; and Delegate Eleanor Holmes Norton, a Democrat and D.C.'s nonvoting congressional representative, are considering the investigation because of operational and management problems Metro has experienced this year.

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