Washington D.C. area procurement misses the train

Metro agrees to pay nearly $5 million for role in no-bid contract

Metro has agreed to pay nearly $5 million to settle a whistleblower lawsuit after a former employee alleged that the transit agency violated federal rules by awarding a $14 million contract without seeking competitive bids, government officials and attorneys in the case said Wednesday. Metro also has agreed to pay $390,000 to the former worker to settle his claim that he was fired in retaliation for speaking out about the no-bid contract. Metro also is on the hook for nearly $190,000 in legal fees for the plaintiff, meaning that the settlements will cost the transit authority about $5.6 million, attorneys in the case said.

“The government would not have recovered these funds . . . without Mr. Khwaja stepping forward,” Colapinto said in a statement, calling the settlements a “testament to Mr. Khwaja’s courage . . . in the face of resistance and hostility from his superiors.”

Although Metro officials admitted no wrongdoing in settling the contracting matter and the wrongful-termination claim, the multimillion-dollar payments are another financial black eye for the transit agency — one of several embarrassments in recent years involving allegations of misspending and mismanagement of federal grant money.

“Our office has targeted government contractors who fail to meet their obligations,” Machen declared, “and this settlement shows that we expect agencies that receive federal funding to honor the integrity of the contracting process as well.”

The awarding of that no-bid contract appears symptomatic of a broader problem detailed this year in an FTA-commissioned audit. The report, covering April 2012 to March 2013, paints a troubling picture of Metro’s procurement practices, saying the agency awarded millions of dollars in no-bid contracts and appeared to steer work to preferred vendors even though they lacked adequate qualifications. The report did not name any vendors.

The audit also found other examples of questionable management, including instances in which Metro might have overbilled the federal government and, in at least one case, an employee continuing to be paid after leaving the agency.

As a result, Metro’s use of federal grant money has been restricted until federal transit officials are satisfied that Metro has implemented procedures to ensure that U.S. funds are properly managed. In the meantime, according to an internal Metro report, the agency has been forced to increase borrowing to cover expenses and might have to postpone or scrap some projects.

Metro spokesman Dan Stessel said any improper contracting procedures involving Metaformers resulted from poor financial systems that were in place before General Manager Richard Sarles took charge of the Washington Metropolitan Area Transit Authority in 2010. He added that the agency’s “financial management has been strengthened with an improved procurement manual” and that “hundreds” of employees have been trained in new procedures “to tighten grants management compliance.”