Contractors Overbilled As Much As $44 Million

It's a tale as old as bureaucracy itself... a contracting program intended to make the Federal Aviation Administration a more efficient operation, has instead resulted in millions of dollars in overruns, according to a report by the Transportation Department inspector general's office.

The program -- first implemented in 2002, and intended to speed certain FAA programs and processes by allowing the agency to select services from 142 approved vendors -- has since been disbanded, after the report found many of those programs were poorly supervised.

According to the report -- set to be released Monday, but obtained ahead of time by The Washington Post -- as many as half of all contracted services were awarded without being put out to bid, resulting in a scenario that allowed the agency to be overcharged by several contractors.

Iowa Senator Charles E. Grassley requested the investigation into the program when an FAA contracting officer approached auditors last year with questions about overbilling by DC-based Crown Consulting Inc. An investigation revealed more than $56,000 in overcharging by that contractor alone... a sign of news to come.

Predictably, Grassley was not happy with the findings of the report.

"It's just outrageous how the FAA was not looking out for the taxpayers' dollars," Grassley said. "Three words would sum this up: absolutely no accountability.

In one example of wasteful spending cited by the Post, one contractor charged the FAA $35 per hour for an administrative assistant position. If that sounds high, just wait... one month later, the contractor called the same worker an 'analyst,' and raised her hourly pay to $71 an hour -- without offering proof of her qualifications.

On more than one occasion, former FAA employees were also hired by contractors. That's not against the law... but the report says it may have impacted the "FAA's ability to maintain arms-length relationships with its contractors when negotiating contract terms or overseeing contractor performance."

The inspector general estimates labor costs alone may have resulted in as much as $44 million in cost overruns -- had the agency not pulled the plug on the program, which it (finally?) did in March 2006, after taking steps to address issues raised by the IG over a year earlier.

Today, the FAA says, all but five of the suspect contracts have been put out to bid... and rules have been set for dealing with former agency employees now working for FAA contractors.

"We have dissolved this entire program," said FAA spokeswoman Laura Brown. "We have already taken many of the steps that the IG recommended, and as the IG noted, we have agreed to most of the recommendations and we are taking further actions in response" to the report.

No mention is made in the report of additional contractors involved in the suspect dealings... nor are the identities of FAA officials involved revealed.

FMI: http://grassley.senate.gov/, www.faa.gov