Review of Office of the Special Trustee for American Indians Requisition

In May 2006, the Office of Inspector General (OIG) issued a Report of Investigation concerning allegations of improper relationships between senior Office of Special Trustee (OST) officials and the principals of Chavarria, Dunne & Lamey (CD&L), a contractor for OST (copy attached). What we found was that over a period of years, OST awarded and continued to extend and expand, without competition, a contract with CD&L for trust fund accounting and risk management services, while the three most senior ranking officials in OST engaged in extensive outside social activity with the executives of CD&L. This activity included the exchange of gifts of meals and drinks, taking out-of-town trips to a major golf event, playing golf together on almost a weekly basis, and exchanging hospitality at personal residences. We also found that OST contract personnel felt pressured by these senior OST officials to continue to award work to CD&L. The appearance of preferential treatment in this case was palpable. We directed the Report of Investigation to Chief of Staff, Brian Waidmann, for whatever administrative action was deemed appropriate. We also recommended a thorough review of both the performance of the CD&L contracts as well as any pending or future awards to CD&L. Almost immediately after your arrival as Secretary of the Interior, the Special Trustee issued letters of reprimand (to be retained in the officials' OPF for one year or less) and directed the three senior officials to take some additional ethics training, presumably, without your knowledge. Since we expected to see little, if any, further action by OST concerning the CD&L contracts, we launched an audit to determine the quality and timeliness of CD&L contract deliverables, and to review sole-source awards to CD&L. While we concluded this audit in April 2007, we suspended the issuance of a report until our investigation into several other allegations of impropriety concerning OST officials and review of CD&L contract awards and deliverables could be completed. With this memorandum, I am transmitting the Audit Report, Report of Investigation and our Management Advisory (stemming from our review) concerning these various concerns to you. In short, our audit found that CD&L has been the beneficiary of "time and material" contracts which are so poorly written and monitored that contracting officials were unable to substantiate that deliverables were received. We found one contract in which CD&L was fully paid without providing all deliverables, and we found pervasive irregularities in sole-source contracting. Our review of the pre-award process for a contract awarded to CD&L revealed that OST did not plan its contract requirements adequately or timely; the National Business Center made errors on the contract; and the contractor incorrectly billed improper labor categories. Our investigation determined that allegations received in 2006 concerning CD&L's failure to produce required deliverables were unsubstantiated. However, our investigation also revealed that one of the same three senior OST officials continued to improperly influence the award of contracts to CD&L, and a perpetuate pattern of preferential treatment toward CD&L that, if allowed to continue, will ensure that CD&L (and its acquiring company Clifton Gunderson) will continue to win even competitive OST contracts in perpetuity, as "past performance" (which applies only to CD&L) is being considered significantly more important than price. In the most recent award, the lower bidder recommended by an evaluation team lost the contract to CD&L (dba Clifton Gunderson) when the recused official urged the evaluation team to reconsider CD&L as a local company and as having experience. It appears that no amount of ethics training will bring about lessons learned when it comes to the relationship of OST officials to this particular contractor. Considered separately, these individual reports may not warrant severe administrative action. But considered together, the continuous awarding of contracts to CD&L perpetuates permanent preferential treatment and creates an air of impropriety that generates a stream of seemingly endless allegations. Absent meaningful corrective action, the OIG will be continuously called upon to investigate these issues. We cannot continue to dedicate our scarce resources to a problem that rebuffs solution. Frustrated by a lack of accountability in this regard, I bring these matters to your direct attention and urge you to ensure that appropriate action is taken to rectify the conduct of OST officials and restore the integrity of the OST contracting process. We would appreciate a written response from the appropriate officials to these reports outlining their intended action, particularly in response to the recommendations contained in the Audit Report, and the suggestions contained in the Management Advisory. We would also like to be advised of any corrective administrative action taken in response to these reports. If you have any questions regarding any of these reports, please do not hesitate to contact me at (202) 208-5745.