Error was found too late to rebid, agency chief says


Sabrina Eaton

Plain Dealer Bureau

Washington - The Defense Finance and Accounting Service this year renewed a contract that privatized more than 500 federal jobs in Cleveland because it didn't have time to rebid the work after it learned of a $31.8 million bidding error, the service's director told a House panel yesterday.

Director Thomas Bloom told a House Government Reform subcommittee that he renewed Affiliated Computer Services' year-old contract to process military retiree and annuitant payments after he learned last July that an outside company hired to evaluate bids had overstated in-house costs of doing the work.

Keeping the jobs in the federal government could have saved taxpayers millions of dollars, a Defense Department inspector general's investigation found last week.

But agency lawyers determined it would be illegal to have DFAS resume doing the work itself, Bloom said, and the agency didn't have time to rebid the contract, which took 2 years to award.

"There may be a need to rebid," Bloom said in response to questions from Cleveland Democratic Rep. Dennis Kucinich. "We are looking at that contract each and every year. If it is proven that the taxpayers would indeed be better off, we will do the correct thing."

Kucinich, who requested the inspector general's investigation that revealed the errors, called Bloom's position "indefensible." He blamed the situation on the Bush administration's drive to privatize as much as half of the federal civilian work force.

"There should always be time to save the taxpayers money," Kucinich said.

"I am going to pursue this until the taxpayers' money is saved."

Bloom was questioned at a hearing where the General Accounting Office accused the Defense Department of mismanaging more than $1 billion in four DFAS computer systems modernization programs.

It recommended the agency determine whether the projects' benefits will exceed their costs.

"You guys have frittered away as much money as the GDP of many countries," said Florida Republican Rep. Adam Putnam. GDP, or gross domestic product, is a measure of a country's economic output.

Bloom said his agency will implement the GAO's recommendations.

"Much needs to be done, and we believe we now have the right oversight structure to accomplish this," Bloom said.

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DOD Business Systems Modernization: Continued Investment in Key

Accounting Systems Need to Be Justified. GAO-03-465, March 28. Highlights