A Metro board committee has approved a plan to tighten contract negotiation procedures that U.S. officials had criticized as leaving the transit system vulnerable to fraud.
The new rules would improve Metro's access to contractors' records, limit closed, one-on-one sessions for negotiating changes in existing contracts, and improve documentation and speed of negotiations, according to Metro.
The steps, which must go before the full Metro board, grew out of a report last spring by U.S. Transportation Department Inspector General Joseph P. Welsch. Welsch said that examination of selected Metro contracts had turned up loose auditing and cases of employes taking meals and other gratuities from contractors.
Since its formation in 1967, Metro has received about $4.5 billion in federal grants for subway construction. Welsch's report did not give any examples of fraud in those contracts or allege that any had occurred, but said that control procedures were insufficient to guard against it.
Much of Welsch's criticism was directed at Metro procedures for negotiating changes in on-going contracts. Such changes are routine in major building jobs that take years to complete.
The new procedures, drafted by one of three in-house committees Metro set up to investigate Welsch's allegations, would give Metro greater access to contractors' records in order to assure costs contractors are quoting for work done are valid. The new approach would require that Metro and the contractor agree on a price for modifications before actual work began, provided that would not delay the project as a whole or raise its cost.
The steps also seek to limit closed sessions in which single Metro and contractor representatives sit down to work out pricing disputes. Metro has said such sessions can be useful tools for breaking deadlocks. Auditors have suggested the practice created a potential for fraud because there was no record of what transpired.
Another Metro committee, set up to investigate allegations of gratuities, said some cases cited by Welsch could not be substantiated. It called the problem worthy of concern and proposed amending Metro personnel rules, another step that must go before the full board.
After releasing his report last spring, Welsch said his office had informed the U.S. Justice Department of some of the gratuity cases, due to the possibility of criminal violations. Yesterday, a department spokesman said Justice's fraud section was not pursuing any of the allegations.