FAA Buying Procedures Face Scrutiny

A House committee investigating allegations of improper contracting practices by the Federal Aviation Administration has concluded the agency did nothing wrong, but the committee may hold hearings on the agency's unique acquisition system.

The House Transportation and Infrastructure Committee in July notified Jane Garvey, FAA administrator, that a person familiar with the agency's contracting procedures complained to the committee that
the FAA had awarded, without following the agency's rules, a $12 million contract to a company that had lost an earlier contract.

A source familiar with the matter told Washington Technology the committee found nothing improper or illegal was done by the FAA telecommunications support division, but the agency's actions gave the appearance of skirting the competitive process.

"You can do something that's completely legal that still doesn't look right," the source said.

As a result, the Transportation and Infrastructure Committee might re-examine the FAA's unique acquisition process, which Congress mandated in 1995 to streamline the agency's purchasing activities.

In a July 27 letter to Garvey notifying her of the investigation, committee Chairman Rep. Don Young, R-Alaska, said that while the FAA is exempt from a number of procurement laws generally applicable to other agencies, the goal of competition still applies.

"A key principle ... is that, with very express and limited exceptions, all contracts will be competitively awarded," Young said.

The investigation sprang from the FAA's decision in June 2000 to give more than $30 million of work to Universal Systems and Technology Inc. of Centreville, Va. The privately held company, a certified small, disadvantaged business, provides testing and simulation, information engineering and telecommunications services to government agencies such as the Defense Weapons Systems Agency, the departments of Transportation and Treasury and the General Services Administration.

Unitech, as the company is known, lost a $100 million telecommunications support services contract the FAA awarded to Stanford Telecommunications Inc. in May 1999. (Stanford's space and defense communications businesses were subsequently purchased by ITT Industries Inc., White Plains, N.Y., in December 1999.)

The FAA also planned to consolidate some of its engineering and other support requirements under the Stanford contract.

According to the allegations investigated by Young's committee, Unitech officials were unhappy about the lost work and complained to high-level FAA officials and congressional offices.

Unitech told the FAA the company would lose up to 25 percent of its
FAA business because of the plan to consolidate work under the Stanford contract.

After the complaints, the agency negotiated an agreement with Unitech to make up contract amounts the company would lose, including work that was not competitively bid, according to the allegations.

Unitech did not file a formal protest of the Stanford contract, according to Earl Stafford, president and chief executive officer of Unitech. Stafford, whose company has been working at the FAA since 1993, said he is not aware of any work Unitech has received that did not go through normal procurement channels.

The June 6, 2000, agreement signed by Unitech and the FAA included the provision that the company would withdraw a letter claiming entitlement to business.

In return, the agency gave Unitech orders totaling more than $31.6 million during fiscal 2000, 2001 and 2002, plus another $1.5 million to support the FAA's transition to FTS2001, the GSA's governmentwide long-distance contract.

The FAA also agreed that for 18 months, the agency would allow Unitech to review and comment on past performance evaluations prepared by FAA officials before the evaluations are sent to prospective Unitech customers, except when a customer requests that
an evaluation not be shared with Unitech.

The FAA told the committee that its agreement with Unitech complied with the agency's acquisition regulations. David Leitch, chief counsel for the FAA, said the agency agreed to use Unitech's services under two existing competitively awarded contracts, and that the work was conditioned on the FAA's need for the work, Unitech's satisfactory performance and sufficient funding from Congress.

"I believe that the FAA has complied with its Acquisition Management System and has not deviated from the competitive processes of the AMS with respect to the concerns of your letter," Leitch wrote in an Aug. 24 letter to Young.

A source familiar with the case said the Unitech agreement did not give the company anything the FAA wasn't already prepared to give under existing contracts, "but it made everybody feel better."

But while the agency has been cleared of specific wrongdoing, the source said, the investigation suggested the FAA may have too much leeway in awarding task orders when competition would be more appropriate.

Consequently, the House committee may delve further into the procedures.