The General Services Administration yesterday estimated that its own employes, through a variety of criminal schemes, are stealing more than $66 million a year from the government agency for themselves and the private companies that do business with GSA.
The estimate, made by Vincent R. Alto, GSA's special counsel in charge of investigating the widening circle of abuses being uncovered at the government agency, is the first public indication of the possible scope of the scandals since they were first publicized in March.
Alto told the Senate Governmental Affairs Subcommittee on Federal Spending Practices that the total waste of taxpayers' money exceeds $100 million a year when noncriminal negligence is taken into account.
Alto, a former federal prosecutor, said the criminal activities include "sweetheart" contracts negotiated with certain companies, certification that work or services were provided by companies when they were not, receipt by GSA employes of bribes or other cash payments from companies doing business with GSA and splitting the proceeds of charges for goods never provided to GSA with private companies.
"Very frankly," said Alto, who was appointed less than two months ago by GSA Administrator Jay Solomon, "prior to these investigations, there were no checks and balances (to guard against stealing)."
Testimony at the first of two days of hearings on GSA included details of the organized crime dealings of a company paid by GSA to install security systems in government buildings, tales of charges made to government credit cards for having the same government vehicle washed four times in one day and an account of the installation by GSA of a $40,000, teak-pancled office for a government worker in Boston's John F. Kennedy Building.
Despite well-publicized investigations by federal prosecutors in Washington, Baltimore and elsewhere, many of the practices continue, Sen. Lawton Chiles (D-Fla.), chairman of the subcommittee, charged.
" . . . This morning, as we sit here, some of them (GSA employes) out there are stealing right now," Chiles said.
"I am astonished that recent GSA surveys show clear indications that, right in the middle of a whole series of nationwide criminal investigations, there are some employes who are so arrogant or so relaxed, that they are carrying on under the noses of the FBI," he said.
Chiles said that what is involved is not a few employes who are embarrassing their colleagues. "Instead, we are talking about a situation which has occurred during a time in which taxpayers have essentially mutinied and told public officials that they have had quite enough waste and overspending . . . "
He added, "We are also talking about tens and dozens of GSA and other federal employes who are nothing better than common thieves, and who have systematically looted the public treasury of millions of dollars."
GSA spends nearly $5 billion a year to provide government workers with office space and supplies. It also operates motor vehicles for government use, runs a communications network, purchases computers and maintains $8.6 billion in stockpiles of strategic materials needed in time of war.
Robert Lowry, a painting contractor who told The Washington Post in March that he had provided some GSA employes with cash, prostitutes and free trips so that he could obtain contracts to paint federal buildings, testified that the situation steadily worsened as GSA changed its procedures to permit even larger maintenance work contracts.
"By mid-1974, it was impossible to submit a successful bid without first having knowledge of what the involved building manager wished to take by way of cash, gifts, favors, trips and female companionship," said Lowry, who has been granted immunity from prosecution by the U.S. attorney's office in Washington for his cooperation.
Lowry testified that GSA building managers routinely certified that far more painting work had been done by painting contractors than was actually performed.
"For example, in 1973, I painted the third-floor corridor of the Pentagon, which at that time contained 500,000 square feet of paintable surface. A year later, in 1974, the very same third floor corridor was painted by a contracting establishment owned by Charles Bainbridge."
Lowry said GSA documents, which he provided to the subcommittee staff, say that the Bainbridge firm painted 70 percent of the corridor.
"However, the forms reveal an astonishing fact: in 1974, 70 percent of this corridor contained 1,065,000 square feet" he said.
Bainbridge said yesterday, "He seems to know all about it. I can't remember the figures."
Alto said he has been investigating GSA's plan to sell 80 million pounds of surplus lithium hydroxide at less than half the market price to two firms selected without competitive bidding. The plan has been halted while GSA studies the findings of its auditors, who said the sale would mean a loss to taxpayers of $45 million.
Alto said he has been working with GSA officials to establish checking systems to reduce corrupt practices. Already, he said, maintenance and repair work is inspected by several layers of employes to make sure the government gets what it pays for.