Summary: Shortly after Valerie Lau's confirmation as Inspector General at the Treasury Department in November 1994, the agency awarded a sole-source management contract for $90,000 to Sato & Associates on the basis of unusual and compelling urgency. Ms. Lau said that competition for the contract was limited because she urgently needed the management study to help her make reassignments in her senior executive ranks and to marshal the resources needed to conduct financial audits required by the Government Management Reform Act of 1994 and the Chief Financial Officer Act of 1990. GAO contends that there was insufficient urgency to limit competition. Even assuming that a limited competition was warranted, it is clear that the agency violated the applicable statute and regulation by failing to request offers from as many potential sources as was practical under the circumstances. In February 1995, Mr. Sato submitted an unsolicited proposal for $91,000 to the Interior Department's Office of Inspector General (OIG) for work similar to that being done at Treasury. Interior, however, conducted a full and open competition and, in June 1995, awarded a contract to Sato & Associates for $28,920--suggesting that the price of Sato & Associates' sole-source contract with the Treasury OIG was artificially high. In September 1995, Treasury awarded a contract for consulting services to Kathie M. Libby, doing business as KLS. Under this contract, KLS prepared a report on morale and diversity problems in the Treasury OIG. The contract was awarded on the basis of unusual and compelling urgency following limited competition. Again, GAO concludes that the justifications for limiting the competition were not reasonable. GAO also identified a pattern of careless management in the procurement process and in oversight of performance under the contract. GAO summarized this report in testimony before Congress; see: Inspectors General: Concerns About Advisory and Assistance Service Contracts, by Robert P. Murphy, General Counsel, before the Permanent Subcommittee on Investigations, Senate Committee on Appropriations. T-OSI/AIMD-98-28, October 31, 1997.
