The General Services Administration suppressed a 1971 audit report that found the agency was wasting more than $100 million a year by buying office equipment for federal agencies and departments without obtaining competitive bids.
Rep. John L. Burton (D-Calif.), who plans to release the report tomorrow, said GSA has wasted a total of more than $1 billion over eight years because it has continued to buy office equipment without seeking competitive bids. Burton heads the House Government Operations's government activities subcommittee.
A draft of the 1971 report lay unnoticed in GSA files until recent news reports disclosed that the prices GSA was paying for typewriters, calculators, television sets, and cameras, were higher than those charged at W. Bell and Co. and other retail stores.
Howard R. Davia, who took over as chief of the GSA auditin gstaff nearly three years ago, said that GSA never issued the audit report in final form because of "strong objections" from GSA officials in 1971.
Bruce Gibson, who headed GSA's audit staff when the 1971 report was reported, said, "It doesn't come out loud and clear that that report was suppressed as such. I can't hohestly recall."
Robert L. Kunzig, who was GSA administrator at the time, has consistently declined to answer reporters questions about his actions while at GSA. Kunzig is now a U.S. Court of Claims judge in Washington and has said that judges souldn't make public comments.
Last summer, GSA Administrator Jay Solomon issued orders to stop buying certain items, such as television sets and hand-held calculators, and started a review of the entire purchasing program. Sen. Lawton Chiles (D-Fla.), chairman of the Senate Government Affairs' federal spending subcommittee, has scheduled hearings on the program for Feb. 9.
GSA, the Chiles subcommittee, and the Office of Management and Budget have each reported that business groups opposed to change in the present purchasing system have been lobbying against changes. These groups include several of America's giant corporations, such as Xerox Corp. and IBM Corp., and trade associations representing computer, office product, copying machine, and projector manufacturers.
"The companies are really strongly lobbying," Lester Fettig, administratior of OMB's office of federal procurement policy, said recently.
The 1971 audit report focuses on the methods used by GSA to buy everything from adding machine and nameplates to pool tables and aspirin tablets for federal agencies and military installations.
Under this system, GSA negotiates discounts with suppliers and offers a range of brands of the same product to government agencies. For example, GSA stocks Sony, General Electric, and Panasonic cassette tape recorders and allows units within each government department or agency to select brand they want.
During the negotiation process, suppliers are supposed to disclose to GSA all the prices they charge other major customers, so GSA can be assured of getting the lowest price. However, the suppliers may have no other customer besides GSA or may be wholesalers that markup prices over what they pay manufacturers.
In some instances, disclosed in other audit reports, suppliers have given false information on their prices.
On such instance -- resulting in an alleged overcharge to GSA of $1 million -- on an office product -- is being referred this week to the Justice Deparmtnet for possible prosecution by Burton.
The 1971 audit report compared the prices paid by GSA with those paid for the same products by the state of California, which has a competitive bidding system. Model for model, it found GSA was paying an average of 20 percent more for calculators, 30 percent more for typewriters, and 16 percent more for electric lamps. These purchases alone amounted to $52 million, the audit report says.
For example, GSA paid $294.65 for an Olympia typewriter purchased by California for $227.05. In many cases, California saved even more money bysubstituting cheaper brands of equal quality for the items GSA purchased.
Overall, GSA paid an average of 20 percnet more than California did, leading the auditors to conclude GSA could have saved more than $100 million in 1971.
Burton said yesterday that some of the abuses have occurred because of GSA's failure to adequately audit its contracts. Only 11 of 8,000 office product contracts have been audited in the past two years, he said.
GSA's audit chief has maintained in congressional hearings that GSA needs more than triple its present complement of 140 auditors to adequately cover the agency.
Recently, OMB turned down GSA's request for another 80 auditors in the agency's 1980 budget.
Criminal investigation by the U.S. attorney's offices in Washington and Baltimore have found evidence that GSA employes certified the agency had received goods or services never received in return for payoffs of cash, television sets, trips, and -- on one instance -- a custom made house.
A separate investigation by a special Justice Department task force is investigating large contract awards made by former GSA administrators.