The Carter administration's top manager summoned Cabinet officials to the White House yesterday and told them he would freeze further use of outside consultants by government agencies unless they adopt specified measures within the next month to control abuses.
"The president has directed that immediate action be taken to correct . . . various abuse in federal contracting activities," Office of Management and Budget Director James T. McIntyre Jr. wrote in a memo to the officials before yesterday's 55-minute closed meeting.
Some of the officials -- who included Energy Secretary Charles M. Duncan Jr., Environmental Protection Agency Administrator Douglas Costle, Interior Secretary Cecil D. Andrus and General Services Administrator Rowland G. Freeman III -- were alerted to the meeting by telephone at 3 a.m. yesterday.
McIntyre told the officials that he met with Carter on Wednesday and the president said he was seriously concerned about abuses in the government's $100 billion-a-year procurement of goods and services from the private sector.
McIntyre said the problems are typified by abuses outlined in recent Congressional hearings and news reports about the government's use of outside consultants.
The hearings and news reports documented conflicts or interest, favoritism, waste and flagrant violations of regulations in the government's use of these consultants.
McIntyre told the cabinet members to:
Propose new management controls and evaluate existing controls over contracting by Aug. 1.
Alert senior government executives to the "the seriousness of this situation and the importance of the corrective actions to be taken."
Ensure that consulting contracts of more than $50,000 be approved at the undersecretary level, which is usually five to 10 management levels above the official requesting the consultant. Such final approval typically is given now by an official about two levels above the requesting official.
Strengthen efforts to ensure that contract are competively bid. Sixty-eight percent of the research and consulting contracts advertised by the federal government last year were awarded without competition.
Generally intestify efforts to evaluate the performance of contractors and consultants.
There was some skepticism on Capitol Hill yesterday as to whether the new OMB efforts would work.
"This is certainly not the first OMB . . . directive aimed at tightening up the consultant practices of the federal government," said Sen. David Pryor (D-Ark.). "Too many times in the past we have seen federal agencies ignore the attempts of OMB and the White House to control the chaos and abuse chracteristic of (federal contracting)."
Pryor and Rep. Herbert E. Harris II (D-Va.) introduced joint legislation in Congress on June 26 to tighten control on the government's use of consultants.
Harris said yesterday: "I am not stisfied with the issuance of additional memos . . . I think Congress has got to chisel this in stone."
Harris and Pryor will hold hearings later this month focusing on noncompetitive awards of federal consulting contracts. A separate set of Congressional hearings on consultants also will be held later this month by Sen. Max Baucus (D-Mont.), chairman of the subcommittee on limitations of contracted and delegated authority.
McIntyre's memo said that the Executive Group to Combat Fraud and Waste in Government, a special task force set up by Carter early in 1979, will meet next week to coordinate the efforts of the inspectors general in the federal agencies to combat contracting abuses.
The agency inspectors general, set up by act of Congress in 1978, have full subpoena and investigatory powers. Investigations of consulting and contracting practices by them could be referred to the Justice Department for criminal prosecution.
"The inspector general . . . and his audit and investigation staff are vital to the success of the management control system you establish," McIntyre wrote in his memo to the cabinet officials.
The Pryor-Harris legislation does not contain any stronger penalties for consulting abuses than already exist in law. It seeks to force government officials and contractors to adhere to the existing laws and standards by requiring broader disclosure to the public of contracts documents and circumstances.
Under current practices , most details of consulting contracts are kept secret by federal agencies.
An OMB official, Herman Shipley, told the Washington Post in an interview last week that the government does not know how many outside consulting contracts it has or how much it is spending on them.
Officials said yesterday the amount is thought to be $1 billion this year and perhaps $1.4 billion next year of the total $100 billion government procurement budget. OMB is pressuring the federal agencies for an accurate accounting.
OMB already has ordered a 15 percent cut in the use of outside consultants next year, but this will be difficult to enforce until OMB determines the total from which the 15 percent is to be cut.
Also present at yesterday's meeting were Veterans Administration chief Max Cleland, Housing and Urban Development Secretary Moon Landrieu, Acting Secretary of Education Steven Minter, and representatives from the departments of State, Commerce, Defense and Health and Human Services, and from the National Aeronautics and Space Administration.