The Office of Management and Budget has quietly asked the heads of federal agencies to crack down on change orders--a construction practice used to subvert competitive bidding and jack up the prices.
"High-level attention is needed within each agency and department that administers federal construction programs to assure that change orders to construction contracts are properly managed and controlled," Joseph R. Wright Jr., deputy OMB director, said in a memo to agency directors. "Change orders . . . are essentially sole-source procurements and now cost the government approximately $3 billion per year."
Representatives from five federal agencies worked with the inspector general of the Transportation Department to compile the report as a project for President Reagan's Council on Integrity and Efficiency.
The report's recommendations included:
* New emphasis on training contracting officers to minimize change orders.
* Evaluating contracting officers on the basis of the number and manner in which they processed change orders.
* Evaluating contract architecture and engineering firms that do inadequate work, often leading to change orders, to determine if costs can be recovered from the deficiencies.
* Better documentation of change contracts in official files.
* Independent cost estimates before change orders are issued.
Joseph P. Welsch, the DOT inspector general, said that the "governmentwide implementation of the recommendations contained in the report should help assure that changes to construction contracts are processed only when necessary and when the prices agreed upon are reasonable."
The auditors determined that 78 percent of the 2,016 change orders reviewed breached one or more internal controls.
"With considerable qualification, we estimated that, if the work for the change orders we reviewed had been procured by competitive rather than sole-source means, a savings of $93 million might have resulted," the auditors said. "The most prevalent reason for change orders , and one subject to tighter control through better review of bid packages, was design and specification deficiencies, including those attributable to archictectural-engineering firms."