Once the lookout cries out "shoals ahead", you do not continue full speed on course towards the rocks. You heed the warning, check the charts and look out yourself. I called out the warning; it was ignored and the ship went on the rocks. The Department of Defense Inspector General (IG) found that all of the orders, not just the earlier ones, but also the ones done after the warning were done improperly.
The Navy response has been "we didn't know better", but that ignores the fact that senior contracting personnel had been warned in the strongest terms and proceeded anyway. The IG and Assistant Secretary of the Navy(ASN) have accepted the "we didn't know better, but now we have been trained" response. I do not, now retired Senator Pryor did not, and you should not.
There still is no avenue for someone to raise concerns like I had. If I had to do it over, I would warn the competitors and let them protest to the General Accounting Office which would have stopped both the Puget Sound and Mare Island orders and saved a million dollars. I didn't do that because I thought my warning the competitors was unethical; I did consider submitting a protest to the General Accounting Office (GAO), but knew of no precedent and was not sure if a "contracting officer" had "standing". I raised this "what should the next person do" question to retired Rear Admiral William Hauenstein, Navy Director of Acquisition Career Management, but he replied with the party line "wait until DOD-IG reports". I am not aware of any change to the training of acquisition professionals which helps them do the right thing.
The Naval Supply Systems Command in its Appendix A (to the audit report) letter states that proper contract negotiation and documentation of price reasonableness did not occur. Given this failing, the IG should have determined by some unbiased source (ie. Naval Audit Service, IG internal price analysts, or GAO) whether
The IG does not examine the primary bases of cost
The contract requires the issuance of firm fixed-price orders; it is not a time and material contract. The contractor is paid on work accomplished, not on hours of work provided; Coopers and Lybrand's bills were submitted on this hours of work provided basis which provided them illegal progress payments. Further, the Navy activities (Norfolk for one) could not revise their orders to make them time and material orders in order to pay for the increased travel and miscellaneous costs noted as overpaid by the IG. The IG, however, accepted that revision without question.
Finally, there is the issue of favoritism or criminality. The IG did not assign this case to Departmental Inquiries, its investigative arm. It should have; allegations were made that members of the Senior Executive Service deliberately violated the rules to benefit at least two retired senior naval officers; these allegations fall within their purview. Instead, the IG by some means tasked the Naval Criminal Investigative Service (NCIS) in Norfolk to make some sort of investigation. NCIS lost the report I made to its Mare Island agent in March or April 1993 after Hopper had reported back to me that the criminal investigators were not coming from his side. From what little I have been able to learn, the Norfolk closed investigation was not directly related to my allegations, but this became the basis for the IG's saying that the "favoritism allegation was unfounded".
Return to Coopers & Lybrand, Navy and TQM - Fraud or Mistake
Send mail to me at rhelbig@california.com