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Federal personnel agency steered contracts to favored company, watchdog says

High-ranking officials at the federal government’s personnel agency steered business to one company in violation of procurement and ethics rules, misusing their positions and wasting taxpayer money, an inspector general investigation released Thursday found.

The officials circumvented competitive bidding at the Office of Personnel Management, directing a company already under contract with the government to award at least three jobs to Stewart Liff, a prominent human resources and management consultant, the report said.

The government could have obtained the services for much less money through open competition, Inspector General Patrick E. McFarland found.

“We are seriously concerned by the lack of stewardship of taxpayer funds revealed in this case, McFarland wrote in an interim report. “No one appeared to have considered whether the Government was receiving the best value for its money.”

“Economy, efficiency and merit were not meaningful factors” in the contract awards, the report said.

It was made public on the day personnel chief John Berry announced his departure after four years.

Berry was the one who requested the probe in 2011, and there is no evidence that he was aware of the violations, McFarland wrote.

Susan Ruge, a spokeswoman for the inspector general, said release dates are determined “entirely by the investigative process. . . . Our office does not manipulate these dates.”

Berry has installed new leaders in the program at the center of the case and taken “aggressive actions” to address management there. Human Resources Solutions oversees $600 million to $800 million a year in contracts for 150 federal agencies, hiring personnel consultants on their behalf to help them manage better.

“Any mismanagement within HRS has a government-wide effect,” the report said.

Berry, in a letter to McFarland, said he has reorganized the department and increased oversight of its contracting practices. No further contracts with Liff will be awarded.

Three of the executives under investigation are no longer working at OPM. With the report’s release, Berry said he placed another senior executive on leave without pay pending the completion of McFarland’s investigation.

“OPM employees are expected to adhere to the highest standards of conduct, particularly when it comes to protecting taxpayer dollars and ensuring that proper contracting protocol is followed,” Berry wrote.

But the leaders of Human Resources Solutions did the opposite, the inspector general found — developing a fawning relationship with Liff and doing everything possible to ensure that he received preferential treatment.

Liff is president and chief executive of Stewart Liff and Associates, a California-based consulting firm. A former federal personnel executive, he has written several books on government personnel issues and had a booming federal business.

Three contracts drew particular scrutiny. One was a training program for human resources employees, another consulting for a veterans program at the Labor Department and the third a review of OPM’s financial and personnel staffs and its troubled retirement program.

Liff said in an interview that he “had no personal relationship with anybody at OPM.”

Liff said that in each instance, “I was under the impression the work was done through a competitive process.” He said he has no federal contracts and has lost several bids for government work.

But e-mails and documents discovered by investigators reveal a different relationship. Getting Liff work became a “high priority,” the report said, after an executive at the Labor Department introduced him to OPM executives. They apparently were taken with his expertise.

To make sure he got more work, the officials approached Information Experts, a Reston-based company already on the payroll, and arranged for Liff to be hired under a set-aside program for small businesses. Information Experts was told it would get the extra business as long as Liff was hired for the projects, the report said. There were no competitive bids.

Liff said there was purely a “business relationship” with Information Experts.

The company did not return a request for comment.

The Labor official who introduced Liff to OPM leaders was Raymond Jefferson, appointed by President Obama to oversee a job-training program for veterans. Jefferson and Liff were former colleagues and had developed a friendship, investigators found.

But Liff’s contracts with the Labor Department came under scrutiny in 2011 from that agency’s inspector general. Jefferson was forced to resign after an investigation found that he had violated procurement rules and ethics principles.

Berry told investigators that he thought hiring a consultant was a good idea to address performance issues at the agency. He had reacted favorably to one of Liff’s books.

But he was not aware of the improprieties surrounding his hiring, the report said.

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Lisa Rein covers the federal workforce and issues that concern the management of government.

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