A review of Metro’s management of billions of dollars in federal grant money paints a troubling picture of the agency, saying it awarded millions in no-bid contracts, skirted contracting rules and appeared to steer work to a preferred vendor who lacked the proper expertise.
A 50-page draft report obtained by The Washington Post also found other examples of questionable management, including instances where Metro may have overbilled the federal government and at least one instance in which an employee continued to be paid even after the employee left the job.
The report commissioned by the Federal Transit Administration does not allege criminal wrongdoing. It does, however, identify myriad weaknesses in Metro’s handling of federal dollars. And it includes 10 pages of recommendations — with specific timelines for implementation — designed to tighten up the authority’s handling of federal dollars.
The report examines the period from April 2012 to March 2013. In one case, it notes that Metro awarded a no-bid contract for $14 million — a violation of federal rules that required a least three bids. The award of that contract, at least half of which was paid for with federal dollars, created the appearance of an organizational “conflict of interest” because it was given to a vendor that had been awarded the previous contract.
The authors of the report concluded that as part of that earlier contract, the contractor was given “access to nonpublic information that put other potential bidders at a disadvantage.”
See the draft audit commissioned by the Federal Transit Administration. Read it.
When Metro’s own inspector general investigated, the report’s authors said, Metro officials ignored the recommendations and closed out the contract.
Metro spokeswoman Lynn Bowersox said that the IG’s recommendations weren’t ignored but that management simply disagreed with the findings.
No contractors are named in the report.
Because the report is a draft, Metro officials have 30 days to submit an official response before it is finalized.
The draft already has prompted the FTA to place limits on Metro’s use of federal dollars. On Thursday, the FTA placed Metro on restricted draw down, limiting Metro’s ability to spend federal grant money.
“I trust you share our mutual concern and responsibility that taxpayer dollars are managed with the utmost scrutiny and care,” FTA Deputy Administrator Therese W. McMillan wrote in a letter to Metro General Manager Richard Sarles advising him of the change of status. “FTA stands ready to work with WMATA [the Washington Metropolitan Area Transit Authority] to redress the financial management deficiencies noted.”
An FTA spokesman said Friday that the agency would have no additional comment.
For their part, Metro officials said they welcomed the scrutiny.
“Our board and management are fully committed to complying with all federal rules and procedures,” Bowersox said. “We are in the process of drafting a response. This is a very helpful process to [Metro]. ”
The revelations come as Metro leaders have embarked on an ambitious campaign spearheaded by Sarles to persuade political leaders and the public to invest $26 billion over the next three decades to rebuild the aging system. How the new information may affect the push for additional funding is unclear.
It also comes as Metro prepares to take control of the Silver Line, its first rail extension in more than two decades. Construction of the first phase of the $5.6 billion project — one of the largest projects of its kind in the United States — is being overseen by the Metropolitan Washington Airports Authority, but the line will be operated by Metro.
“I’m disappointed and surprised to learn today that the Federal Transportation Administration (FTA), in one of its regularly scheduled audits, may have uncovered problems with the Washington Metro’s accounting and procurement of federal funding,’’ Sen. Barbara A. Mikulski (D-Md.) said in an e-mailed statement. Mikulski has been both a critic and booster of the transit system. “American taxpayers expect value and accountability for every dollar. And so do I.”
Bowersox said she was aware that the oversight review, which is done every five years by the FTA, might raise concerns among funders but added that Metro had addressed some of the issues in the report and was committed to addressing other problems. She said that Metro updated it procurement manual in July to resolve some of the issues.
The report found at least two occasions when Metro officials overcharged the government. In one instance, when the federal share of the project was $451,812, Metro billed the FTA double the amount. In another case, it overbilled the FTA by nearly $800,000. Metro officials said the discrepancies were found and the money was returned.
Metro officials also appeared to favor certain contractors over others — even when the contractor lacked the know-how needed to complete the job. In one example, Metro awarded a $6.2 million contract for track fastener replacement to an inexperienced vendor who subcontracted out 99 percent of the work, the report said.
“We noted no documentation to support why this procurement was not competitively bid or why the task was awarded” to a contractor who apparently was “not qualified to perform the task itself,” the report noted.
The report’s authors also found instances where Metro officials improperly split some contracts into smaller amounts, even though they were given to the same vendors. Had the contracts not been split, the dollar amounts would have triggered additional examination of the purchases.
Metro officials also failed to include proper paperwork in some cases. The report detailed one in which a required checklist was signed and dated the same day the report’s authors requested it, rather than when the actual procurement was begun.
Metro also continued to pay at least one employee after that person had been terminated, the report found. That employee has been asked to pay back the estimated $3,500, Metro officials said.
The contracting and procurement issues identified in the review are similar to issues uncovered by two federal inspector general audits of the Metropolitan Washington Airports Authority. Those audits, issued in 2012 and 2014, identified numerous problems with the authority’s contracting and procurement practices and its handling of $975 million in federal money for the Silver Line rail project.
But unlike the MWAA audits, the Metro report did not find issues with hiring and ethics policies.
The audits led to widespread reforms at the MWAA and resulted in the establishment of a mechanism for permanent federal oversight of the MWAA’s operations.