A top contracting officer of the D.C. Department of Human Services said yesterday a subordinate told him that David E. Rivers, a high-ranking city official, requested that the agency award a $108,000 contract to a consulting firm that is now a focus of the federal investigation of city contracting. Rivers had no authority over the agency at the time.
The contract to perform an energy audit of St. Elizabeths Hospital was awarded in March without the approval of the agency's contract review committee, in violation of agency regulations, sources familiar with the award said yesterday. In addition, the contract was not submitted for review by the Department of Administrative Services, which is required to approve all contracts over $25,000 awarded without competitive bidding, according to Ray Lambert, the agency's director.
None of the officials involved in the contract award knew at the time that the firm, B&C Management Consultants Inc., was run in part by FBI agents conducting a sting operation. Sources have said that investigators believe Rivers, who is on leave from his post as secretary of the District of Columbia, steered Human Services contracts to B&C in return for three pairs of expensive boots, two of which were confiscated in an FBI search of his home on May 22.
Grady C. Williams, chief of the agency's office of administration, said in an interview yesterday that he approved the energy audit contract to B&C after Frank E. Dollison, who is in charge of DHS facilities, justified the need for the work and found a funding source outside the agency.
Asked if Dollison told him that Rivers wanted the contract funded, Williams said: "Dollison indicated that the request was made to him by David Rivers."
Williams said he did not consider Rivers' wishes in deciding whether to approve the contract, which was designed to improve heating and cooling systems at St. Elizabeths.
The contract was awarded without the required signature of Byron Marshall, the department's acting director, sources said.
The St. Elizabeths energy audit contract and a second contract to B&C to perform an energy audit of the District's Forest Haven facility for the mentally retarded are under investigation by the U.S. attorney's office, along with numerous other contracts from DHS and other city agencies. No charges have been filed in the case.
An undercover FBI agent formed B&C with Warren E. Barge Jr., a businessman from the Detroit area. Prosecutors are investigating allegations that Barge tried to solicit payments to middlemen for two city asbestos contracts. In an interview yesterday with The Washington Post, Barge denied any wrongdoing.
Rivers declined yesterday to comment on the B&C contracts. His attorney, John F. Mercer, said, "My client has not been accused of anything" and will not respond to "mythological allegations" that "play into a scenario that the U.S. attorney's office may be trying to set up."
Dollison said he could not comment on the B&C contracts because of the ongoing investigation. He added, "I do not have the authority to award or approve any contracts." Dollison submitted his resignation last week; a department spokesman said the resignation was not related to the investigation.
Sources said yesterday that B&C received the Forest Haven contract last October after Rivers introduced Dollison to the undercover agent and Barge in Rivers' office, describing them as his friends. Search warrants indicate that a firm headed by John B. Clyburn, a close friend of Rivers', was a subcontractor on the $24,990 Forest Haven contract.
Numerous other DHS contracts have been sought by a federal grand jury probing city contracting, and DHS' Marshall has been subpoenaed to appear before the panel tomorrow with records of the contracts, which were awarded before and after Rivers left the agency in December.
The grand jury has asked for contracts awarded to two firms headed by Clyburn, as well as A.L. Nellum & Associates and Urban Shelters and Health Care Systems Corp. Sources familiar with the subpoena said the grand jury has also asked for contracts to Waters-Fox-Save-More. It could not be learned which aspects of the contracts are under investigation.
Urban Shelters won a $5 million contract to run the agency's J.B. Johnson Nursing Center in 1984, over the objection of three DHS officials who argued that the contract included unneccessary fees to subcontractors.
One DHS official estimated that the city could save $327,000 a year if the department eliminated some of the services provided by the subcontractors and permitted Urban Shelters, which is headed by businessman Roy Littlejohn, to handle the rest. The contract has been extended several times since then.
A.L. Nellum & Associates holds a $2.1 million contract to run a drug treatment program on the grounds of St. Elizabeths. The contract was awarded to the firm in March 1984, although another firm submitted a bid that was $600,000 lower. An evaluation panel rated Nellum higher in such areas as corporate experience. One of the subcontractors for the contract is Decisions Information Systems Corp., a firm headed by Clyburn.
An internal agency report prepared in November 1985 found that the Nellum program cost 22 percent more than a similar program run by the agency, yet was only one-third as effective.
The joint venture of Waters-Fox-Save-More, in which Littlejohn is a partner, has held a $771,000 contract to provide food services to the agency's drug and alcohol treatment facilities since 1983.
A contract monitor for the agency has repeatedly recommended an audit of the joint venture's expenses and criticized its performance, saying in a 1985 report, "Contractor does not appear to regard the contract as a serious document." In a 1984 report, the contract monitor described the services as "an insult."