shared bid information prior to submitting their proposals. The companies also shared the same individuals in key officer positions, making it difficult to understand how their proposals could have been truly independent. In addition, some of the key personnel at both companies misrepresented their job titles and functions in the final offers submitted to FEMA, a potential violation of the False Statements Act, 18 U.S.C. §1001. In response to our referral, Justice has decided to open an investigation of this matter.
We also found that one of FEMA’s contracting officers may have improperly awarded the UFAS contract to lay asphalt to make 150 units accessible to individuals with disabilities, leading to over $3 million in unnecessary expenses. Unlike the MD and GSM contracts, FEMA awarded this UFAS contract as a set-aside for sole source negotiation with a local 8(a)8 firm. According to the Federal Acquisition Regulations, an 8(a) contract may not be awarded if the cost to the agency exceeds a fair market price. FEMA’s records show that the government estimate to complete the work was just under the $3 million threshold for awarding this type of noncompetitive contract.9 The company that received the award initially bid over $3 million to perform the work, but the contracting officer, who allegedly had a previous personal relationship with the 8(a) company’s subcontractor, dropped four of the bid items so that the award amount was under $3 million. During the next 3 months, the contracting officer added back two of the dropped bid items and further modified the award several times, ultimately making the total value of the contract about $4 million. The contracting officer refused to speak with our investigators about the circumstances surrounding this award, and FEMA said that it was not able locate any documentation to support how the original government estimate was derived. Therefore, we asked licensed GAO engineers with over 30 years experience to provide an estimate of the costs associated with laying asphalt at the sites in order determine whether FEMA received a fair market price for the work performed. Using the limited information available from the
8A firm owned and operated by socially and economically disadvantaged individuals and eligible to receive federal contracts under the Small Business Administration’s 8(a) Business Development Program. An 8(a) firm must be a small business unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of the United States, and must demonstrate potential for success.
9Shortly around the time of the contract award, this threshold was raised to $3.5 million. FAR 19.805-1(2).
GAO-08-106 Hurricane Katrina