Federal grand juries are expected in the next several months to indict 50 General Services Administration employes, contractors and suppliers on charges of bribery and fraud, GSA Administration Jay Solomon said yesterday.
The grand juries, under direction of federal prosecutors here and in Baltimore, have been told that some GSA employes were bribed by firms who repair federal buildings and provide office supplies for federal agencies, according to sources close to the investigations.
In return for the alleged bribes, the firms were paid by GSA for repair work that was never done and supplies that were never delivered, according to the sources.
"We expect 50 indictments in the next few months," Solomon said at a press conference he called yesterday to discuss the latest developments in the broadening scandal that has enveloped the $5-billion-a-year federal agency.
Vincent R. Alto, a former Justice Department organized crime prosecutor hired by Solomon to help clean up GSA, told reporters that "similar situations" involving payments for repair or maintenance work never done are being uncovered by GSA's internal investigators in federal buildings in Boston, Texas, New York City, New Jersey and Southern California.
In other developments in the GSA probes yesterday, it was learned that:
At least four of five repair and maintenance contractors have agreed to plead guilty to lesser charges of defrauding the government in return for providing federal prosecutors here with evidence against GSA officials who received payoffs from the contractors, according to sources.
The new leadership of GSA, headed by Carter appointee Solomon, is preparing to fire a number of GSA employes who approved payments for repair work never done. Although many of the employes are expected to be the same ones who are targets of criminal investigations, the number and identities of the employes have yet to be decided.
GSA yesterday canceled all contracts to buy electronis calculators from Government Marketing Services Inc., a Rockville firm described in a Washington Post story last Fridat as supplying GSA with products at higher prices than those available at local retail sales stores.
The chief lawyers for each of GSA's 10 regional offices met in Washington to be briefed on how to fire, discipline or suspend other employes who are involved in approving payments for work never done or violating regulations meant to keep contract awards honest.
Although Solomon was not more specific yesterday, sources familiar with the grand jury investigations said that at least 12 indictments are expected in Washington and two groups of 20 indictments each are expected in Baltimore.
Until recently, none of the GSA building managers, who allegedly approved payments for work never done had shown signs of wanting to confess and implicate higher-ups in return for some leniency in the severity of the charges placed against them.
"These are not typical crooks," a well-informed source said. "They've been doing it (stealing from the government) for a long time, and there's a lot of camaraderie among them. There's a lot of peer group pressure (not to confess)."
However, in recent weeks, that solid front appears to have begun to crumble. "They really believe now that this is not going away," the source said.
Asked yesterday if he could explain how GSA became involved in such scandals, Solomon, who was appointed by President Carter more than a year ago said:
"This agency was created to give (other government agencies) service regardless of rules and regulations . . . This agency was given a lot of reports and studies (pointing out illegal activity) that were never used. There was a delegation of power that allowed the loose practise to continue."
GSA provides government workers with office space and supplies, telephones, computers, record-keeping facilities, cars and the like. It is the government's landlord, real estate broker, purchasing agent, office manager and archivist rolled into one sprawking agency that employs 34,000.
Asked how many employes may be involved in the abuses, Solomon said, "The majority of the people out there are operating very well and doing a good job."
Solomon said he will hire 50 professional inspectors to review repair and maintenance work on a spot-check basis, as well as additional internal auditors and investigators. He said he is also establishing a separate office or complaints to handle criticisms from the General Accounting Office, Congress, contractors, GSA employes and the public.
"One of the problems with federal agencies is there's a lack of follow-up on reports from the GAO and other sources," Solomon said.
Solomon also announced that Paul E. Goulding, who was named acting deputy GSA administrator after Solomon fired Robert T. Griffin, has been given the position permanently. Before coming to GSA as director of congressional relations a year ago, Goulding was administrative assistant to Sen. Claiborne Pell (D-R.I.).
Yesterday, Sidney Freed, owner of Government Marketing Services Inc., which sells calculators, cameras and tape recorder almost exclusively to GSA, said he is about to go out of business because Solomon canceled his contracts.
Last year, the company sold GSA $2.9 million in goods through the multiple-award program, which GSA uses to buy goods without obtaining sealed competitive bids.
The Post reported Friday that GSA pays Freed's firm $1,040.25 for a Panasonic video cassette recorder that costs only $780 at Reliable Home Appliance Co. and $895 at Chafiz Electronis Speciality Center, both Washington-area retail stores.
GSA pays the firm $89.05 for a Texas Instruments calculator that costs the state of North Carolina $66.95 using sealed competitive bid procedures and $74.50 if purchased from W. Bell & Co., at catalog sales firm with outlets throughout the country.
After the story appeared, Solomon directed GSA to stop buying any items that could be obtained more cheaply at retail outlets.
"This puts us out of business," said Freed, who said he offered GSA a good deal because it was easy to order from the firm.