Summary: The Resolution Trust Corporation (RTC) is required to work with the private sector in disposing of the assets of failed savings and loans. GAO testified, however, that RTC had undervalued contracting in acquiring needed services. This mindset contributed to problems with the Western Storm Project, in which RTC paid about $24 million for an improperly issued sole-source contract to reconcile the assets of 92 failed thrifts in western states to financial records. In addition, a contractor representative spent three days in preaward discussions with RTC officials on the upcoming project's scope and duration. Senior RTC officials knew of these irregularities but did nothing. RTC needs to take strong action to ensure that its employees are complying with policies and that contractors are providing the best possible services. Unfortunately, RTC efforts to strengthen internal control over contracts have not kept pace with RTC's burgeoning responsibilities. If RTC is to assure Congress and the taxpayers that it is minimizing the cost of the savings and loan bailout, it should act promptly to install appropriate controls over its contracting program.
