Labor Department officials, rushing to hand out lucrative contracts in the final days of the Carter administration, awarded millions of dollars for projects they knew little or nothing about, federal auditors have concluded.
The officials pushed through dozens of last-minute contracts -- many of them for unions and companies in the Washington area -- even though some of these groups had performed poorly, according to an unreleased report by the General Accounting Office, Congress' watchdog agency.
The report, requested by Sen. Orrin G. Hatch (R-Utah), chairman of the Senate Labor and Human Resources Committee, said the Carter officials did not follow good management procedures in awarding 287 training grants and contracts worth more than $115 million during their last four months in office. Some of these so-called "midnight specials," awarded under the Comprehensive Training and Employment Act (CETA), already have been canceled by the Reagan administration.
Many of the contracts went to unions and other groups that had actively supported Jimmy Carter's reelection drive. Glenn Northup, an official with the National Retired Teachers Association here, which received some of the last-minute grants, said he believed that the Carter appointees "wanted to continue to help their friends. That's politics, the way it's been ever since I've been in Washington. Only this was absurdly blatant. It would appear to me to be quite unethical, but not illegal."
The Labor Department's inspector general is investigating the way the money was awarded to determine whether there were any criminal violations. Hatch also plans to hold hearings on the matter.
Ernest Green, who directed the 11th-hour flurry of awards as assistant secretary of labor for employment and training, said he could not respond to the allegations because he hasn't seen the GAO report. "Nothing was done that was illegal or improper," he said. "We did everything within the rules and procedures of the law."
Green, now a private consultant, said he knew nothing of a GAO contention that his office would have overspent its CETA budget by at least $42 million, which would be a violation of law. "This is an issue that is before GAO, the inspector general and the Justice Department," he said.
Green returned to the Labor Department last November after a seven-week stint as a paid consultant to the Carter-Mondale campaign committee. During their last four months in office, Green or his aides sent 70 telegrams to potential contractors, telling them to go ahead and start spending money on CETA contracts that would be negotiated later. This compares with only 20 such telegrams sent during all of fiscal 1979, GAO said.
On Jan. 15, 1981, for example, Green's office notified Dr. Benson E. Penick, a Washington researcher, that he could spend an initial $20,000 on a proposal to study the job prospects of disadvantaged teen-aged mothers. But the Labor Department's own contracting officer had recommended against the award, GAO said, because the proposal was deemed too vague and the objectives found to be "a mishmash . . . of services." GAO also said that Penick had submitted bills to Labor that were "highly questionable."
Reagan officials canceled the contract in April, but they had to pay Penick $27,953 for the work he had done. Penick did not return a reporter's calls.
Soon after the election, Green's office gave a $200,000 job-development contract to the private Rosslyn Foundation in Virginia. But the auditors said that Labor officials had never seen the study on which the award was based and that they "could not determine what the contractor was to do." A company official declined to comment.
Similarly, on Jan. 5 Green personally ordered a $150,000 contract renewal for the National Association for the Southern Poor in Roanoke, GAO said. Green's subordinates had reported that the job training program was having a negligible impact on youth unemployment and could not properly supervise its young trainees in Virginia and North Carolina.
Donald Anderson, the group's director, said Green pushed the contract extension because "the Carter administration counted our program as a very successful one." But he said Reagan officials "canceled our contract in March with just two weeks' notice."
Some recipients say it is the Reagan administration that is playing politics with CETA. Lin Atkins, director of Virginia Cares Inc., a Roanoke-based group that works with prison inmates, said Labor is now trying to cut back her $300,000 CETA grant. "I doubt we'll get any more money under this administration," she said.
The group got the money on President Carter's last day in office, although GAO said that the counseling program is too expensive and cannot easily be copied in other states. Atkins insisted the award "was not a midnight special" and that her group has reduced the prison recidivism rate.
Jack Hashian, a Labor Department spokesman, said that "we are not pulling back these contracts and grants because some of the people involved had been supporters of Carter. Our budget was oversubscribed by $42 million, and we resolved that in a matter of weeks. These last-minute contracts were exactly that, and they shouldn't have gone out."
The investigations began in March after The Washington Post reported that Green's office had made the last-minute CETA awards from a special discretionary fund, including several that went to Green's former firm, RTP Inc. Other contracts were given to such prominent Carter supporters as the AFL-CIO, the Rev. Jesse Jackson's PUSH for Excellence and the United Auto Workers.
GAO, saying that Labor officials rarely monitored the financial performance of these contractors, called for more inspections and written assessments. Labor also handed out noncompetitive contracts without justification in nearly half the cases they surveyed, GAO said.
One such contract, for $199,000, went to Southern Vocational College in Tuskegee, Ala., on Jan. 19, even though Labor auditors had accused the college of improperly spending $550,000. Larry Hagood, a college official, denied that any federal money had been misspent.
Right up until Jan. 19, Green's office told a number of other Washington-area groups that they could start spending money on new or extended contracts. These included the National Retired Teachers Association ($535,000), National Urban Coalition ($650,000), Human Resources Development Institute ($1.9 million), National Council of Negro Women ($304,000), Center for Community Change ($400,000), Graphic Arts International Union ($48,000), Southern Railway System ($250,000), Aetna Casualty Co. ($298,000), Epilepsy Foundation of America ($656,000) and Delta Sigma Theta Sorority ($99,000). Officials at some of these groups said the extensions helped them to avoid layoffs.