Report: Possible conflict not disclosed in contract award

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LANS > IG says consultant was spouse of a senior LANL manager

By The Staff

The Department of Energy Inspector General is investigating an allegation from the Los Alamos Field Office concerning a possible conflict of interest in a consultant agreement awarded to an individual who was the spouse of a senior manager at the Los Alamos National Laboratory.
According to documents obtained by the Los Alamos Monitor, in a memorandum to the acting manager of the Los Alamos Field Office from Sandra D. Bruce, the assistant Inspector General for Inspections, it was alleged that neither the consultant nor the senior manager disclosed their spousal relationship to LANL.
The document went onto to say that it was further alleged that work was performed before the consultant agreement was signed and also that hours were charged by the consultant for work that was not performed.
The inspection, meanwhile, substantiated all aspects of the allegation.
“We found that LANL inappropriately awarded a sole source consultant agreement to an individual who was the spouse of a senior LANL manager.”
The inspection also said, “we also discovered that the consultant did not disclose his spousal relationship with the senior LANL manager at the time of the award.”

The lab said in a statement: "“When our ethics office became aware of this consulting contract and reviewed the

facts, the Lab found the arrangement did not comply with internal policies relating
to contracts with near relatives of employees. As a result, the contract was
terminated and the government was reimbursed. Since then, the lab has put in place a
new process to help ensure compliance with policies for consulting agreements.”

In addition, the report noted that the senior manager did not notify LANL ethics officials or her superior of a potential conflict of interest involving her spouse’s consulting agreement until five months after the consultant agreement was awarded.

The report further substantiated the allegations that:

• Work was performed before the consultant agreement was signed. “Specifically, we round that the consultant was paid $4,700 for services performed prior to the award of the consultant agreement.”

• The consultant charged for work that was not performed. Specifically, the consultant charged two hours for a discussion on environmental matters that never took place.

The report said the two events were included in the initial $13,800 invoice submitted by the consultant to LANL. Before notifying the IG, the field office brought its attention to Los Alamos National Security LLC, which runs LANL.
LANS then determined that the consultant agreement did not confirm to prescribed LANL procedures and processes. The report said that LANL reimbursed the federal government $23,100, the total amount paid to the consultant.
In the report, LANS officials unveiled a number of corrective actions that were intended to prevent similar situations from occurring in the future.
LANL completed an internal audit of consultant agreements on May 10, 2013, according to the report.
To address the issues related to spousal relationships, the audit identified the following corrective measures:

• Formation of a review team in May 2013 to pre-screen all requests for service contracts to be awarded to individuals having near-relatives or spouses working at LANL.

• Preparation of a commuication to management by the Ethics and Audits group concerning conflict of interest disclosures for senior managers. It was required that the Ethics and Audits Group must give its approval to enter into subcontracts with spouses of LANL employees.

And that’s not all.
Lab director Charlie McMillan issued an email stating that when circumstances dictate, contracting for a named specialist, whether through consultant agreements, task order agreements, staff augmentation or otherwise, will be examined by a review team to prescreen requests before awarding a subcontract.
The review team was to be comprised of employees in oversight roles in Acquisition Services Management, LANL, Counsel and the Ethics and Audits Group.
The report also cited a number of contributing factors.
LANL officials who sponsored the consultant agreement failed to recognize and address apparent conflict of interest issues, and a LANL official signed the agreement requisitions, which did not provide required supplemental information.
Therefore, the official missed the fact that the consultant was a spouse to a senior LANL official.
In addition, the consultant and the senior LANL manager did not fully understand the requirements related to conflicts of interest.
During the LANL internal audit, according to the report, the consultant indicated he thought the issue of conflict of interest only applied to organizations such as corporations, not individuals. The senior manager explained that she did not know she had to report the personal conflict of interest related to her spousal relationship until she was required to update her LANL form 1991.
The consultant, meanwhile, told a LANL official that he believed he charged LANL for services performed after the agreement was signed but before it was actually rewarded.
However, both LANL and field office officials said that invoicing for services prior to award was inappropriate.