While the beleaguered Washington Metropolitan Transit Authority (“WMATA”) is often the subject of negative press about its service issues and mismanagement, the organization faced a new type of headline last week. On August 20th, the U.S. Attorney’s Office for the District of Columbia announced a $4.2 million settlement with Metro to resolve several alleged procurement law violations.
The settlement is so chock full of procurement law issues, I am actually considering using it as a hypo in my anti-corruption seminar. Let’s break down the allegations:
First, WMATA allegedly failed to comply with relevant procurement rules which require full and open competition. Instead of competing the contract per the relevant legal requirements, WMATA awarded a $14 million sole source (or, as the media loves to call it: “no bid”) contract to Metaformers, Inc., to integrate WMATA’s financial and business systems.
In addition, not only was the contract award non-competitive, WMATA also allegedly violated federal conflict of interest rules (specifically, organizational conflict of interest rules) when it awarded this contract to Metaformers, Inc. WMATA had previously awarded a $256,000 contract to Metaformers to “assess WMATA’s financial system.” The $14 million non-competitive, follow-on “integration” contract “was based, in part, on the work completed by Metaformers under the initial contract.”
While these alleged violations may not sound as bad as the bribery cases usually discussed on the FCPA Blog, they are actually incredibly problematic. We want government procurement to be competitive because as taxpayers, we want the best value for the government (i.e., best price, quality, etc.). And for obvious reasons, introducing a conflict of interest into a government procurement undermines the integrity of the procurement process and increases the likelihood that the resulting contract is not the best value for the government.
The U.S. Attorney’s Office press release explains the practical consequences of the alleged procurement law violations:
“By competitively awarding the smaller assessment contract and then non-competitively awarding the far more lucrative integration project both to the same contractor, WMATA violated federal procurement conflict of interest rules by giving one contractor an advantage over others who might have been interested in competing for the integration project.”
To make matters worse, when a WMATA employee expressed concerns about the “manner in which WMATA was financially and technically administering the integration project,” he was terminated. Thus, WMATA’s response to an employee’s legitimate concerns about the organization’s potential violations of the law was to retaliate.
After being terminated, the employee filed a qui tam (whistleblower) lawsuit on behalf of the government alleging that WMATA violated the False Claims Act (“FCA”). As a result, the former-WMATA employee will receive approximately $996,480 as his share of the FCA recovery.
The qui tam lawsuit “also includes allegations on behalf of Virginia and the District of Columbia (allegations not resolved by this settlement). Finally, the former-WMATA employee also filed a separate complaint with the U.S. Department of Transportation against WMATA for violating the American Recovery and Reinvestment Act’s (ARRA) provisions protecting whistleblowers. WMATA resolved this complaint by settling the wrongful termination claim for $390,000.
So what’s the lesson here? For starters, and most obviously, agencies need to follow procurement regulations. When they take shortcuts, deviate from their duties and put other interests before their commitment to the government and taxpayers, they will be publicly shamed via a lawsuit.
Equally embarrassing is WMATA’s treatment of its employees and whistleblowers. An employee that discloses concerns about potential violations of the law should be commended. By firing an employee that has attempted to remedy a wrong, WMATA is sending a message to its employees that legal violations are tolerated and whistleblowers will be silenced.
Companies committed to ethics and compliance know that the most successful path forward is one that includes a commitment to the law, an ethical culture and the fostering of employee disclosures. If we expect this from private companies, we should expect even more from our government organizations—particularly those tasked with spending taxpayer dollars. It is time for WMATA to clean up its culture and its commitment to ethics and compliance. And if a new culture happens to improve service as well, I certainly wouldn’t complain.
Jessica Tillipman is a Senior Editor of the FCPA Blog and Assistant Dean at The George Washington Univeristy Law School.