Sen. Max Baucus (D-Mont.) announced yesterday a new congressional investigation into widespread abuses in the federal government's use of outside consultants.
"It's obvious the problems of fraud in consulting contracts are epidemic," Baucus said. His subcommittee on limitations of contracted and delegated authority will open new public hearings on consultants July 23, he said.
At the same time, there were these developments yesterday in the wake of news reports documenting conflicts of interest, favoritism, waste and flagrant violations of regulations in the government's use of private consultants:
Sen. David Pryor (D-Ark.) and Rep. Herbert E. Harris (D-Va.) introduced legislation in both houses of Congress designed to greatly expand public access to consulting contracts and to curb abuses.
A top administration official in charge of monitoring consulting contracts said in an interview that the federal government doesn't know how many outside consulting contracts it has or how much it is spending on them.
The official also said the federal agencies were ordered two months ago to cut their spending on consultant contracts by 15 percent in 1981.
The inspector general offices of several federal agencies -- including the General Services Administration, the Department of Commerce and the Community Services Administration -- continued investigations of consulting abuses.
A federal grand jury continued its investigation of some of the expenses of Mariscal and Co., a private consulting firm named in news reports as having paid for a $500-a-night prostitute for GSA officials who was negotiating on a contract with Mariscal and Co.
There are strong moves both on Capitol Hill and within the administration to help solve the problems of consultant abuse through across-the-board limitations on the use of outside consultants by federal agencies.
Sen. Warren G. Magnuson (D-Wash.), chairman of the Senate Appropriations Committee, proposed earlier this week that government consultant spending be cut 20 percent in all agencies in 1981.
The Carter administration's Office of Management and Budget has already ordered the agencies to trim 15 percent from their consulting budgets in 1981, according to Herman Shipley, a deputy in OMB's office on federal procurement policy.
But Shipley said there are problems carrying out the mandate because OMB has not been able to find out how many outside consultants the government is using or what they are being paid.
"We don't know how many contracts there are," he said.
Shortly after President Carter took office he expressed concern about consulting abuses and ordered a crackdown that resulted in an 11 percent reduction in the use of outside consultants between 1977 and 1978, Shipley said. The crackdown saved the government $197 million, he said.
But since then OMB lost track of consultant expenses, mainly because of faulty reporting by the big federal agencies, he said.
Shipley said the departments of defense, education and labor are all nearly two months late in meeting a new OMB deadline for reporting the amount and number of their consulting contracts.
The federal government spends $100 billion a year on contracts to buy goods and services from the private sector, according to Shipley, but less than 1 percent of that -- $454 million in 1978, for example -- goes for outside consultant services.
The new bill introduced jointly yesterday by Pryor and Harris would require agencies to make public their intentions to award consulting contracts. rThe contract would then be made available to public scrutiny and would require consultants to disclose the roles they played in preparing reports for use by federal officials.
A series of articles this week in The Washington Post disclosed that 63 percent of federal consulting contracts are awarded noncompetitively -- one abuse that Pryor and Harris seek to stop.
Under current practices, most details of consulting contracts are kept secret by federal agencies and are not publicly disclosed on the theory that such details are the private business of the consulting firms -- a practice that the new bill would limit if not stop entirely.
The bill would stop a practice in which consultants prepare reports and testimony to be given by federal officials to Congress never knows that the consultants were the real authors.
The bill would also require fuller disclosure of possible conflicts of interest by consultants, many of whom work for private industry at the same time they are working for federal agencies that regulate the industry.
Finally, the bill would prohibit agencies from spending more than 20 percent of their consulting dollars during the last two months of the fiscal year, an effort to prevent awards of unneeded contracts by officials who fear they will have their budgets trimmed if they don't spend enough.
Pryor and Harris held hearings early this week on consulting abuses and plan to continue them next week if Congress is in session.
Sen. Baucus said he was a cosponsor of the Pryor-Harris bill but that he thinks even stronger measures may be needed, a subject that he will explore at his July hearings.
"I think the Justice Department has not adequately pursued civil or criminal remedies [against consultant abuses]," Baucus said. "We may have to tighten up [laws] or add some criminal provisions."
A Department of Justice spokesman said yesterday: "The department will get into it only if allegations of breaking the law [are made]. We are not in the business of monitoring contractors."