Former high-ranking General Services Administration officials lied to Congress and the White House in 1970 in an effort to cover up the waste of $100 million a year in taxpayer money, Sen. Lawton Chiles (D-Fla.) said yesterday in Senate hearings.
Raising his voice at times and pounding his desk, Chiles said GSA suppressed an audit report that found the agency could save $100 million a year by obtaining competitive bids when buying office products.
The two auditors who prepared the suppressed report, Lowell Fox and Steven Pettko, told Chiles' Senate Governmental Affairs Spending Practices Subcommittee that they resigned as GSA auditors after GSA refused to issue the audit.
"If I had to rate their [GSA officials] concern about saving taxpayer money on a scale of 10 to 1, it would be 10," Pettko said. "[It was] the last thing they were concerned with," he testified.
In fact, Pettko said, it was GSA practice to judge employes' performance by the volume of their "sales" to federal agencies.
"To them," Chiles said, "it [spending taxpayers' money] is a 'sale' out of their [GSA] catalogue; this was the mentality there." Later, he added: "It's pretty clear that the taxpayers' patience with this is pretty well at its limit."
Chiles said Rep. Jack Brooks (D-Tex.), then Rep. Jerome R. Waldie (D-Calif.), and then Nixon aide Peter M. Flanigan questioned GSA in 1970 about its system of buying without competitive bids when a trade journal quoted California officials as saying they were buying the same products GSA bought at prices 10 percent to 40 percent lower.
In a reply to Flanigan, then GSA administrator Robert L. Kunzig wrote, "Our preliminary review has shown that, except for typewriters, GSA prices are generally equal to or lower than California prices."
Similarly, Rep. Brooks was told, "Our review has shown that, except for typewriters and envelopes, GSA prices are generally equal to or lower than California prices." Other letters claimed California officials had used "outdated" prices to make their program look better.
Asked by Chiles yesterday to explain these statements, John Vogt, the GSA employe who drafted several of the letters, testified he was reflecting GSA policy and did not "intentionally make a misstatement."
"To the best of my recollection, the feeling was it wouldn't be practical [to use competitive bids]," Vogt said.
Chiles attributed statements in the letter to Flanigan to "an artful draftsman," whom he identified as Peter M. Mollica. Mollica, who recently retired from GSA after serving as the chief aide to deposed deputy GSA administrator Robert T. Griffin, said yesterday, "I'd like to see him (Sen. Chiles) make that statement outside the immunity (from slander suits) of Congress."
"Now we have four elements of a cover-up," Chiles said. "First, a critical audit report is suppressed and never issued. Second, lies are told to Congressman Waldie. Third, the White House gets lied to. Fourth, the chairman of the House Government Operations Committee (Rep. Brooks) receives his share of the cover-up material," Chiles said.
A draft of the suppressed audit lay unnoticed in GSA files until news reports last year disclosed that GSA was paying higher prices for typewriters, calculators, cameras, and television sets than prices charged by W. Bell & Co. and other retail outlets to ordinary customers.
Howard R. Davia, the current director of GSA's audit staff, told the subcommittee yesterday that he feels the suppressed audit report was properly done. "Further, I am convinced that its message is as valid today, except that the $100 million (annual) savings is probably three to four times greater than it was estimated to be in 1970," he said.
Davia said GSA now spends $2 billion a year to buy office products without competitive bids. Instead of obtaining sealed bids, he said, the agency relies on suppliers to certify that they are offering GSA the lowest prices.
In one case, Davia said, a supplier gave GSA a discount of 6 percent below the list price of an office product when the firm was discounting the item by more than 50 percent to other customers. The same product sold in a retail store 17 percent off the list price, he said.
Since the audit report was suppressed, many differences between California and GSA prices have widened, auditor Fox said. While GSA previously paid 30 percent more than California for an Olympia typewriter, the same item now costs GSA $404 and California $218, Fox testified.
Dale R. Babione, who was appointed last month by GSA Administrator Jay Solomon to control purchasing policies, said yesterday he is not sure if competitive bidding is always the best purchasing method, or whether the General Accounting Office, the audit arm of Congress, would allow it.
Babione said, "I'd still like to test it... There is a problem with competitive bids...I can't certify to how accurate the figures (in the suppressed audit report) are. That would need some review."