Watchdog: Follow the Money

FMCS under congressional fire after Examiner report on widespread waste and fraud

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House Oversight Committee officials led by Darrell Issa, R-Calif., have launched an investigation into multiple allegations of wrongdoing at the Federal Mediation and Conciliation Service.

The investigation was prompted by a Washington Examiner series in October that reported employees spending hundreds of thousands of tax dollars to pamper themselves and terminating employees who dared blow the whistle.

The FMCS is an obscure 230-employee agency that provides labor-management arbitration services in government and the private sector.

On Wednesday, the committee sent three letters demanding answers — one to FMCS head George H. Cohen, an appointee of President Obama who used federal funds to purchase artwork painted by his wife, champagne, $200 coasters and a $1,300 chair; another to the Office of Special Counsel, which FMCS employees asked to investigate contracting fraud and were subsequently pushed out of FMCS; and a third to the National Labor Relations Board Inspector General, who looked into and substantiated employee claims of fraud, but took no corrective actions.

The House watchdog committee's scrutiny is the first sign of repercussions for questionable activities that often involved active participation by the tiny agency’s top officials.

In a six-page letter to Cohen, Issa drew parallels between FMCS and the General Services Administration, whose extravagant employee conferences the committee notably investigated, leading to the resignations and firings of several top GSA officials.

“Like at GSA, there appears to be a culture of waste and mismanagement at FMCS. The FMCS spent several thousands of dollars on unnecessary and frivolous items from a company called Image Pointe that provided, among other things, towels with the FMCS logo, coasters, hats, and lights," Issa said. "Spending taxpayer dollars on unnecessary items is reminiscent of the IRS Small Business/Self-Employed Division’s 2010 Anaheim, California, conference, for which the agency purchased thousands of dollars worth of goodie bags and plastic squirting fish.”

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Federal Workers Max Out at Taxpayer Expense

A five-part series by the Washington Examiner watchdog team
Tuesday: Bureaucrats at tiny agency buy legions of luxuries with purchase cards
Wednesday: Reckless FMCS spending goes straight to the top
Thursday: FMCS heads forced whistleblower to retract fraud complaint
Friday: Federal officials cede authority to outsiders who write own contracts
Monday: FMCS fired wounded warrior whistleblower after ICU stay
Data: FMCS salaries and bonuses
View the whole series

Got tips?

Do you know more about what's going on at the FMCS -- or any other federal agency? Contact Luke Rosiak at lrosiak@washingtonexaminer.com.

Issa also pointed out that Obama directed agencies to cut spending on “extraneous promotional items.”

In another of the letters, the Issa committee cited the Examiner series and said, "FMCS employees purchased many items for their personal use with their [government purchase cards].

"In addition to leasing a vehicle and service charges, these items included cell phones for family members, high-end cable and internet packages for home use, furniture for a home office, a Bose stereo system, two high-definition televisions, bluetooth earpieces, leather-bound Kindle e-readers, $200 table lamps, coat racks costing almost $400, air purifiers, a television cabinet costing $2,300, thumb drives that cost $500 each, and $30,000 worth of picture frames over two years."

The spending on luxuries, such as $1,000 for a television in an in-office gym, is “extremely serious,” the letter continued.

“The FMCS is required to abide by government-wide contracting regulations set forth in the Federal Acquisition Regulation (FAR). The purpose of the FAR is twofold.

"First, the FAR is designed to ensure there is a level playing field during competition for government contracts.

"Furthermore, the FAR seeks to make sure the government and the taxpayer get the best possible deal. Unfortunately, this committee is not confident that the FMCS is implementing either of these objectives.”

Issa said FMCS employee "Mike Colandria 'wrote to the GSA that, because several colleagues raised issues to that agency, they have ‘been under constant harassment by the senior executive staff (directors office) and ... had disciplinary action taken against several.' The retaliation described in Colandria’s e-mail is totally unacceptable."

The committee gave Cohen two weeks to turn over documentation concerning FMCS employees' use of government purchase cards; The Paper's Edge, a seemingly nonexistent company started by a just-retired FMCS official to which the agency paid $85,000; teleworking (some high-paid FMCS employees rarely came into the office); bonuses (most employees got them); and the firm that was supposed to audit FMCS.

As the Examiner reported, Cohen has refused to say whether any services were received from The Paper's Edge and why no other company could bid for the business.

The committee noted in the letters that the Office of Special Council’s finding that FMCS had retaliated against Berkina Porter, an action that earned FMCS special ire from the panel because many of its investigations, especially the Fast and Furious probe, were made possible by whistleblowers.

"Not surprisingly, just a few weeks after reporting the waste and improper contracting practices, Tanya Pelcher-Herring, the second whistleblower and a wounded and widowed veteran, was fired," Issa wrote to the Office of Special Counsel.

FMCS officials did not respond to an Examiner request for comment.

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