General Services Administration employes continue to pay private companies for work never done despite recent widespread publicity and criminal investigations about such abuses, according to an internal GSA audit to be made public today.
The GSA findings will be revealed in the second day of a Senate subcommittee hearing into the GSA scandals, which Comptroller General Elmer B. Staats described Monday as symptomatic of fraudulent practices that could be costing the government up to $25 billion a year.
Staats, who heads the General Accounting Office, the audit arm of Congress, quoted Justice Department officials as estimating that one to 10 percent of the $250 billion the government pays out each year in federal assistance programs is stolen through false claims for benefits or services, collusion among contractors, and bribery of officials.
In the report to be presented today to the Senate Governmental Affairs subcommittee on federal spending practices, headed by Sen. Lawton Chiles (D-Fla.), GSA auditors say that as recently as three weeks ago GSA was paying for two coats of paint when one was applied and for twice as much partitioning or doors than were actually installed. Those payments were made long after the first stories about such abusive practices were published and investigators began looking into the matter.
GSA corruption, which has been described by GSA Special Counsel Vincent R. Alto as representing the biggest money scandal in U.S. government history, was depicted at yesternight," says Newsweek manufacturing day's hearings as representing only a microcosm of the elvel of stealing going on throughout the government.
Staats, who termed the problem of fraud against the government as being of "critical proportions," criticized the Justice Department for allegedly being slow to assist, coordinate and monitor efforts by government agencies to combat stealing.
The agencies, in turn, are hampered because their own investigators do not have adequate training and experience to deal with sophisticated, white-collar crime, Staats testified.
Benjamin R. Civiletti, deputy attorney general, said Justice is taking steps to better coordinate investigations into government corruption. He said a newly established Justice Department strike force will act as an umbrella over GSA investigations now being pursued by 16 U.S. attorney's offices throughout the country.
He said the strike force will consist of a senior prosecutor as its chief, two assistant prosecutors, and a number of investigators to be assigned by GSA, the FBI, the Internal Revenue Service, and the Securities and Exchange Commission.
It will take allegations from GSA investigators and refer them, if warranted, to the various U.S. attorney's offices for full investigation and presentation to grand juries, he said.
In addition, Civiletti said, the strike force may present criminal allegations to grand juries on its own.
Although Civiletti did not say who would head the new task force, sources said William S. Lynch, who formerly headed the Justice Department's organized crime section, has been asked to take the job.
Lynch, who is understood to be considering the offer, was moved out of his position in 1976 by then Assistant Attorney General Richard L. Thornburgh. Since then, Lynch has headed the Justice Department's narcotics and dangerous drugs section. Lynch, whose name was suggested by Alto, declined to comment yesterday.
"The task force is being appointed because of the scope and diversity and geographic area involved (in the GSA investigations)," Civiletti said. "With regard to friction or lack of cooperation (in the GSA investigations), . . . (there) is a certain disagreement or friction between some GSA investigators and some FBI agents," he said.
Citing "close cooperation" among GSA investigators and FBI agents in Baltimore and Boston, Civiletti said friction has occurred only in Washington. He said, however, that he has directed that it be "eliminated," and he said FBI executives have indicated they are "dying" to commit substantial manpower to the various GSA cases.
Civiletti said he expects results from the two major GSA corruption investigations in Washington and Baltimore within eight weeks.
Comptroller General Staats, in his testimony, presented the results of a 106-page GAo report that cited extensive frauds within the departments of Health, Education, and Welfare: Transportation, Labor, and Housing and Urban Development; the Veterans Administration, and the Small Business Administration, in addition to GSA.
"Until recently," Staats said, "agencies have not made fraud detection a high priority." The Federal Highway Administration, he said, generally views violations of contract regulations as "honest mistakes," while the Labor Department looks at "questionable" cost reports submitted on expenditures of public funds to be matters that do not involve fraud.
"For the first time," Sen. Chiles said, "we're not talking about a scandal at GSA." The results of voting on Proposition 13 in California indicate that stealing is not stopped in the federal government "the people will take the money away, and they should," Chiles said.
The GSA audit report, requested by GSA Administrator Jay Solomon, shows inspectors found that some work had been paid for and never done in about a quarter of the 172 projects examined.
This proportion is about the same as the ratio found in an internal audit reported by The Washington Post on July 25.
The most recent report, covering reviews in 20 cities, found that many repairs were performed in a sloppy manner. In many other instances, the auditors said, they could not determine if the work had been done properly because GSA documents did not clearly describe what was to be done in about a third of the contracts.