Unauthorized spending exceeds $1M

The West Refrigeration Plant expansion project at the Capitol Power Plant has received more than $1 million in services as a result of unauthorized procurements, according to an internal memo obtained by The Hill.

According to the July 20 letter, three directive letters approving seven different projects were issued by individuals other than the designated official, a move forbidden by Architect of the Capitol’s Office (AoC) procurement codes.

“The matter is undergoing review,” said Eva Malecki, a spokesman for Architect of the Capitol Alan Hantman. “The architect of the Capitol finds the practice of making unauthorized commitments unacceptable and is taking steps to address the issue.”

She described one of the steps as the issuance of “a new directive establishing a review board to determine the appropriateness of ratifications and a course of action to be taken with respect to any individual who makes an unauthorized commitment.”

According to the letter written to the AoC deputy director of procurement from the director of procurement, the lack of the authorizing official makes the contract nonbinding and officially the AoC is not responsible for payment.

“Whoever makes such a commitment enters into it at his/her own financial risk,” the letter said.
The unauthorized services included $35,000 for direct buried chilled water lines, $340,000 for condenser water filtration, $359,000 for a water line to the boiler house and several hundred thousand dollars for various upgrades on the project.  

The letter notes that a copy of the memo would be sent to the AoC inspector general for a review.

The procurement was allocated to Hitt Contracting, the prime contractor on the West Refrigeration Plant site, which began work on several parts of the power-plant project in March 2004.

Brett Hitt, president of Hitt Contracting, said that the news of the investigation came as a shock to his company and that Hitt was currently not part of any active investigation. He said the dispute mainly had to with who at the plant had internal signature power and little to do with how the work had been awarded.

“The work took place and to our knowledge nothing was done wrong,” Hitt said. He said he was confident his company would be paid fully for the work.

Bernie Ungar, director of physical infrastructure issues for the Government Accountability Office (GAO), said, “We are aware of allegations concerning unauthorized procurement at the power plant, and we have some work under way that relates to that, but it’s ongoing so we can’t say much about it.”

Ungar added that, in general, if the GAO receives a credible allegation about some improper procurement, it will either look into the issue or refer it to the appropriate agency. According to the letter, the GAO has delegated the responsibility to approve “unauthorized commitments” under a set of strict limitations, allowing agencies to pay for services improperly authorized. Those limitations oblige the agency to take steps to avoid a recurrence and lay down that payment may be made only if the contracting officer gives the go ahead.

The West Refrigeration Plant expansion project broke ground in spring 2003. It will expand the Capitol Power Plant, which heats and cools the Capitol complex, by 16,500 square feet. The project is designed to increase the plant’s efficiency and its ability to meet the cooling requirements of the Capitol complex until 2025. The facility, which is scheduled to start operations in March 2006, was originally scheduled to open by May 2005.

The project’s price tag has doubled from its May 2000 cost of $40 million in fiscal 2003 to the October 2001 cost of $81.8 million, according to a list of project estimates. The cost increase was attributed to changes in the scope of the project, security upgrades, landscape improvements and added maintenance shops.