Some contractors who repair federal buildings and some General Services Administration employes who award them contracts have offered to plead guilty to reduced criminal charges and testify about widespread GSA contracting fraud, Sen. Lawton CHiles (D-Fla.) said yesterday.
According to other well-placed sources, the testimony could detail how a number of GSA employes who manage federal buildings have demanded and received cash payments from contractors who are then allowed to bill the government for much more repair work than actually performed.
One lawyer, who requested that his name not be disclosed, said he was asked to act as intermediary with federal prosecutors for a GSA employe who said he could testify that some of the agency's building managers received $200,000 to $300,000 a year each in payments from contractors.
Sources said that the prosecutors have not decided whether to give many of the contractors or GSA employes the opportunity to plead guilty to lesser charges in return for their testimony against others.
However, one painting contractor, Robert J. Lowry of Hyattsville, has received immunity from prosecution from the U.S. attorney's office in return for his testimony. Lowry was quoted in The Washington Post as saying he had provided GSA building managers with cash. call girls, trips and free painting work in return for contracts to paint federal buildings.
Another Post story reported that when GSA hired Levcon Construction Co. to paint about half the offices in GSA headquarters at 18th and F Streets NW. it paid the Washington firm to paint 24 million square feet, although the building has only 1.9 million square feet of wall and ceiling area.
Levcon which listed its address on GSA contracts as being at the residence of Carmen O'Conner the sister of Michael O'Connor, the principal owner of Levcon subcontracted much of the painting work to a firm owned by Brian J. Field. Field's late father, Daniel F. J. Field, was the GSA building manager who certified that Levcon had performed the work it was paid for.
Chiles, who heads the Senate Governmental Affairs subcommittee on federal spending practices, said yesterday that he learned details of the federal investigation of GSA contracting through interviews conducted by his staff with Justice Department and GSA officials,.
In a statement released yesterday, Chiles said he also found that:
The "frauds, defalcations, and embezzlements run into the millions of dollars and involve contracts which over the years may have involved hundreds of millions of dollars."
The pattern of bribery and corruption stetches back in time for at least 1 years."
The FBI and GSA are conducting "vigorous" investigations of the "dozens of GSA officials and contracts" apparently involved.
Juctise Department officials are "well aware of the possibility that great sums of money may be involved and are in no way limiting the scope of their inquiries."
Chiles daid yesterday that he asked his staff to check on the GSA investigation after newspaper reports prompted Sen. William V. Roth Jr. (R-Del.), to request full hearings by Chiles' subcommittee.
Chiles said he is satisfied that the investigation is being pursued vigrously and that U.S Attorney Earl J. Silbert, whose office here is in charge of the case, "fully comprehends the potentially vast size and importance" of the matter.
"It would appear that things have come to their present sorry state because many GSA procurement officers ignore all relevant rules and procedures while their superiors choose to look the other way," Chiles added.
Since the GSA has revoked the authority of building managers to award contracts and has instructed each of its regional offices to review contracting procedures.