The Washington Metropolitan Area Transit Authority is out more than $4 million after it reached a settlement with the United States following allegations that it used federal grant money to fund a transit project without following federal guidelines. The settlement follows a two-year-old whistleblower complaint filed in U.S. District Court for D.C.
In 2010, Metro awarded a grant to Virginia-based Metaformers, Inc. to integrate the transit agency’s financial and business systems for a total cost of $14 million. Metro funded the project with about $9 million in grants from the Federal Transit Agency.
But, according to a press release from D.C.’s U.S. Attorney’s Office, a condition of the grant money was that Metro would “comply with statutes, regulations, and FTA rules mandating full and open competition when procuring goods and services using FTA grant funds” and would not award contracts in a way that caused a conflict of interest. The agency allegedly violated these rules in awarding the contract.
In 2009, Metro had awarded Metaformers a relatively small $256,000 contract, using a full and open competition process before it decided to grant it to them. But a year later, when the agency awarded the $14 million contract, it allegedly awarded the contract with no competition and with no justification for doing so.
“The American people have a right to know that their government is following rules and regulations in spending the taxpayers’ money,” U.S. Attorney Ron Machen saidin a press release. “Our office has targeted government contractors who fail to meet their obligations, and this settlement shows that we expect agencies that receive federal funding to honor the integrity of the contracting process as well.”
In a statement, WMATA said it settled the case to “avoid protracted litigation and expense for Metro’s customers and the region’s taxpayers.”
The statement did not address the allegations in the case, but said that Metro has made great improvements in its procurement, accounting, and grants management.
Just as we have reformed the safety culture, WMATA has been working to overhaul financial controls, and has made substantial progress in procurement, accounting and grants management. WMATA’s financial management has been strengthened with an improved procurement manual, training hundreds of personnel on revised procurement policies, new procedures to tighten grants management compliance, and the hiring of a new Chief Financial Officer with deep transit industry experience to spearhead continued change.
This year, WMATA has also advanced many corrective actions in response to the Federal Transit Administration’s Financial Management Oversight (FMO) Report. Recently, a 60-day progress report was submitted to FTA, and WMATA clearly laid out its follow up actions publicly at the July meeting of its Board Finance & Administration Committee. The next update to the Board will be provided at the Committee’s next meeting in September.