- The Washington Times - Thursday, May 25, 2000

A federal investigation into Metro's hiring of contractors has found several violations in the transit system's purchasing departments and has recommended changes to tighten procurement procedures, federal and Metro sources said yesterday.

The Federal Transit Administration (FTA) began its audit March 8 after The Washington Times reported that Metro had paid $25 million to hire 108 high-priced contractors while laying off about 100 employees because of a lack of work for them.

The contractors, who include a $53-an-hour clerk and $168-an-hour engineers, have performed much the same work as the laid-off employees but at more than twice the cost.

One of the most severe problems noted in the audit is that Metro had not properly estimated the cost of contracted work and had exercised poor control over modifications that increased the cost of contracts, sources said.

"Before [Metro procurement officials] go to the [Metro] board, they just picked a number, then the board just rubber-stamps it," said a Metro worker familiar with the audit. "Many times they continue to [increase the value of contracts] without knowing the actual costs."

In all, the FTA audit notes nine deficiencies in 55 areas of Metro's purchasing departments and recommends 11 changes to improve the transit authority's procurement controls, said federal and Metro sources.

The Metro Board of Directors today will receive a briefing on a draft audit report from Harris Consulting, the company that conducted the FTA review. The briefing is scheduled to be held behind closed doors.

The FTA would not release a copy of the report until Metro responds to it, an agency spokeswoman said yesterday.

Metro spokesman Ray Feldmann said the transit authority will not receive a copy of the draft report until today.

"From what we know about the audit so far, we believe the FTA's findings deal with relatively minor process issues that are fairly common and routine with transit agencies as large as ours," Mr. Feldmann said.

"We intend to work with the FTA in the weeks and months ahead to respond positively to their recommendations."

Metro officials already have changed some of their procurement policies, following reports in The Times about a part-time consultant who received more than $275,000 in a contract without the Metro board's knowledge.

The new procurement policies, which were announced in February, require contractors to justify their fees or else be denied job opportunities with Metro.

Meanwhile, the Department of Transportation's inspector general is investigating Metro's hiring of consultant Wayman H. "Ray" Lytle, whose sole-source contract grew from $100,000 to $333,065 within a year.

The Times first reported that Mr. Lytle was hired under a $100,000 contract in October 1998 by Panagiotis P. "Takis" Salpeas, Metro's assistant general manager for transit systems development.

Mr. Salpeas previously had worked for Mr. Lytle as a consultant at the Bay Area Rapid Transit system in the San Francisco area.

Metro officials ignored recommendations by their own auditors not to hire Mr. Lytle for $165 an hour because the consultant could not justify his fees. A series of contract modifications increased the Lytle contract's value to $333,065.

Metro General Manager Richard White, who characterized the Lytle contract as an oversight, ended the contract in January after The Times inquired about it. By then, Mr. Lytle had been paid more than $275,000.

A Metro employee said that FTA auditors apparently have zeroed in on Metro's lack of contract estimates and that Metro has named about a dozen employees to a new contract-estimating team after preliminary meetings with the auditors.

The employee said the team was formed so that Metro officials can claim they have made reforms.

Metro officials ordinarily would guess or ask prospective contractors for cost estimates of proposed contracts instead of estimating costs for themselves, said the employee.

"They had no independent estimates," the employee said of Metro officials.

The employee said a common tactic was to hire consultants under noncompetitive contracts of less than $100,000, for which board approval is not necessary, and then increase the amount of the contracts as costs increase.

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