Last year, the General Services Administration provided the U.S. Army with 20 new steel filing cabinets for use in areas where classified documents are stored. Upon opening the cartons, the Army found that 11 of the cabinets had come with locks that stuck, drawers that did not open properly and finishes that were peeling and exposing rusting metal underneath.
But what really concerned the security-conscious agency was the fact that some of the file cabinets occasionally came open even though they had been locked with the built-in combination locks.
When a GSA investigator looked into the Army's complaints, it was found that the only cabinets having these problems were those made by Art Metal-U.S.A. Inc.
For more than two decades, Art Metal, a Newark, N.J., metal furniture maker that specializes in sales to GSA, has supplied the vast majority of steel desks, file cabinets and bookcases purchased by GSA for use by other agencies. Last year, Art Metal's sales to the government exceeded $25 million.
Just as consistently, GSA has received complaints about Art Metal products from the agencies where they are sent.
"We have been receiving inferior equipment from them (Art Metal) for years," noted a 1973 memo from the Social Security Administration, which said more than 80 percent of the 680 cabinets received at one time in 1973 from Art Metal required extensive repairs.
Art Metal acknowledges it had problems until five or 10 years ago with its manufacturing process, but it says most complaints today stem from damage caused during shipping, often because GSA does not specify that proper shipping containers should be used. The firm says it stands ready to replace any piece of office furniture that is not acceptable.
GSA officials say they have considered at various times over the years barring Art Metal from doing business with the government because of the high level of complaints and failure to meet specifications. But they say they concluded they are powerless to do anything as long as the firm submits the lowest bid.
Investigators looking into alleged GSA abuses and contracts recently seized all of GSA's files on Art Metal.
Art Metal's dealings with GSA provide insight into how the agency buys office supplies and furnishings for government workers and how political influence sometimes is brought to bear on the agency.
Each year, GSA spends more than $1 billion to buy everything from paper clips to wastebaskets. When making these purchases, GSA normally advertises its needs and mails notices to large suppliers. The companies are asked to submit bids on items meeting certain specifications.
In the case of steel desks, which typically cost $170 each, GSA specifications run to 20 to 25 typewritten single-spaced pages. The specifications state the desired thickness of the steel, the location of screws and bolts and the size and type of bolts. They also specify the type of container the desks are to be shipped in.
To comply with the specifications, a manufacturer must make a desk especially for GSA, because no commerically available desk fits the item described in the specifications. Because each contract may be worth $5 million or $10 million, a single award may add considerably to a firm's profits.
Over the years, Art Metal in most instances has submitted the lowest bid on steel office equipment. In many cases, it is the only bidder. In others, it has competition from only two or three other manufacturers.
Despite this, Art Metal's profits last year were only $75,187 on sales of $31.5 million. Although Art Metal's stock is publicly traded, nearly all of it is owned by its two top officers, Philip J. Kurens, president, and Irving Cooperstein, executive vice president. The firm started as Hillside Furniture Co. in a 4,000-square-foot garage on Hillside Avenue in Queens.
Robert E. Hughes, director of GSA's National Furniture Center, which buys steel office equipment, said recently many of Art Metal's competitor's do not offer their products to GSA because they cannot match Art Metal's prices.
"I can't force the industry to bid, of course, he said.
At the same time, he said, Art Metal continues to generate a higher percentage of complaints, item for item, than other companies. "They have a sloppy manufacturing process," he said.
"We could never prove any wrongdoing, so we could not debar them (from bidding)," Hughes said. "Every time we put out a bid, they come in favorably. A contracting officer has to make an award to the lowest bidder." Generally speaking, Hughes said, the government would have to obtain evidence of fraud - a criminal violation - in order to reject bids.
A retired GSA official, Bernard H. Martin, who was in charge of writing specifications for furniture purchases, said Art Metal was often able to win awards because it "would bid low and then get the specifications changed" after the contract had been signed.
The result, he said, was that the firm supplied a product that did not meet the specifications the other manufacturers had bid on.
Martin said the changes in specifications were approved by higher GSA officials, who claimed the changes would not substantially alter the quality of the product.
Hughes, the GSA official currently in charge of furniture purchases, said other firms besides Art Metal also are granted changes after awards are made.
Arthur S. Lowell, who represents Art Metal in its dealings with GSA, said, "The reason companies don't bid (against Metal) is they don't want to be in a rat race (dealing with the government). Dealing in government procurement is very treacherous because of the complexity of the specifications and conditions."
Referring to complaints about Art Metal's product, Lowell said, "Art Metal had quality problems for many years.Part of it was from damage in shipping because of GSA packing specifications."
Hughes said the packing instructions apply to all manufacturers, yet Art Metal generates a higher proportion of complaints.
"In the last five to 10 years," Lowell said, "the quality has improved tremendously."
A review of complaints in GSA files shows Art Metal frequently declines to fix or replace its equipment on the grounds it was damaged during shipment.
GSA told Art Metal last October that a desk shipped to the Naval Air Station in San Diego had spots of glue and damaged drawers and panels. "There is no evidence of intransit damage" GSA wrote.
"From the contents of your letter," Art Metal wrote back in awkward syntax, "it appears this desk was a case of hidden damage in transit. This desk was struck with a dull object causing the damage, however, the air pressure built up in the closed carton forces the carton back to its natural state."
GSA subsequently concluded that "asking the contractor for voluntary adjustment does not appear warranted."
In the past, an agency official wrote, Art Metal has "blanketly refused to honor requests for voluntary repair or replacement when a small quantity is involved, or the probable cost of repair is small, considering these as 'nuisance' requests."
Lowell, a Tenafly, N.J., lawyer who has been general counsel of Art Metal for 30 years, suggested many of the complaints stem from resentment among GSA employes about relationships he has had with administrators of GSA, such as Arthur F. Sampson, who headed the agency under President Nixon.
"I meet with (GSA Administrator Jay) Solomon and (Federal Supply Service Commissioner Robert P.) Graham, and people under them get concerned," he said. Lowell said he has been a valuable source of information to GSA administrators over the years.
"I tell them who's knifing them in the back or what their (employe's) history is. I have no ax to grind. I know if he (the employe) is competent. I know who he is friends with. I've been there (representing firms before GSA) for 25 years."
Lowell said he does not ask for favors from administrators or other high officials whom he has befriended. "All I want is the opportunity to be heard," he said.
Hughes said Art Metal, like other firms, has sometimes attempted to obtain political intervention in its dealings with GSA.
In one instance, Newark Mayor Kenneth A. Gibson complained to Solomon that GSA was considering rejecting a bid of Art Metal to supply a chair because the firm had never made one before. Lowell said Gibson learned of the problem from Art Metal.
"Under no condition should they be disqualified until I have had the opportunity to confer with you," Gibson said in a telegram to Solomon. Lowell said the mayor was concerned because of the possibility that jobs at the Art Metal plant might be in jeopardy.
Hughes said GSA ultimately decided Art Metal could make a chair, and awarded it a $5.5 million contract.
Last fall, Gibson complained to President Carter that GSA was holding up another Art Metal contract, and Carter asked Solomon about the matter. However, GSA's decision to turn down Art Metal's bid on the grounds it was "excessive" remained firm.