- The Washington Times - Monday, July 11, 2011

When Pepco, the newly crowned most-despised company in the nation, tries to give a raw deal to Metro, the transit agency Washingtonians love to hate, residents might consider themselves — the ones stuck with both — the only victims.

That’s what appears to have happened when Metro sought a noncompetitive, no-bid contract to outfit seven subway stations or sites with 16 energy-saving improvements, internal documents show.

First, Pepco’s bid came in at $16 million. Then it said the costs had gone up to $22 million. But after skeptical Metro officials notified Pepco that it planned to conduct an audit, the power company revised its estimate again, saying that figure was more than four times too high and that the work would cost only $5 million, internal Metro documents show.

Metro was so suspicious that it backed out of the deal.

In the meantime, Metro stations continued to guzzle power at the existing quantities — power the system purchases from Pepco.

Pepco Energy Services Vice President Pat Sweeney said he did not recall a $5 million figure and that his company is “firewalled” from the division that sells power.

“I believe the discussion about bigger work was that they could use those [energy] savings to then do a bigger project,” he said, adding that he recalls the project sputtering amid turnover in Metro’s ranks. “There was no consistency,” he said.

The volatile pricing, which Metro said Pepco could not explain clearly, highlights the challenges of soliciting contracts when only a single company is eligible and compounds scrutiny of a utility that already enjoys a monopoly in the District and parts of Maryland despite frequent power outages.

If Metro’s account is accurate, it would not be the only questionable behavior by contractors the transit agency has confronted. The system approved more than 13 cost increases on a contract for a fare card customer service center as defense contractor Northrop Grumman repeatedly hiked costs.

A Metro audit of the contract, which began at $20 million over five years, identified “serious irregularities” and determined that both the contractor and the transit system staff providing oversight of the contract were out of compliance.

The contractor, EGR Transit Systems, repeatedly exceeded maximum allowable costs and resubmitted separate invoices for the excess cost if flagged, which Metro then approved and paid. Northrop Grumman Information Technology provided staffing as a subcontractor.

“These payments were not only all outside of the authorized period and scope; they also did not have documented justifications,” Metro’s inspector general wrote in a March 2010 memo.

Metro officials approved the payments by moving the costs to other line items, including billing to money set aside for the future.

“Instead of de-obligating the funds at the end of the performing period as required, the [contracting officer] subsequently authorized payments beyond the ‘not to exceed’ amount,” the inspector general wrote.

Despite a contract requiring detailed daily time sheets, and though the contractor repeatedly was raising its staffing costs, EGR provided only “lump sum” invoices, and the contract officer did not ask for breakdowns, Metro’s Office of SmarTrip, which administered the contract, acknowledged in response to the audit.

The documents were requested under Metro’s public records policy and posted Monday to GovernmentAttic.org, a watchdog website.

A 2008 audit flagged other problems with the EGR contract, including provisions that locked Metro into a propriety product and made any changes necessary potentially expensive.

A similar situation on a sibling fare card contract with Cubic Transportation Systems, which stopped manufacturing cards compatible with the SmarTrip system, has left it facing a ticking clock as it exhausts its current supply of cards, which will last about a year.

Northrop Grumman IT contracts with local public and quasi-public agencies also have a checkered history. After winning the largest contract ever awarded by Virginia, state agencies were repeatedly rendered unable to perform basic functions as computer systems crashed for days.

• Luke Rosiak can be reached at lrosiak@washingtontimes.com.

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