U.S. Department of Labor Office of Inspector General

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Report Title: Robinson Steel Construction Company (RSC)

Report Number: 18-94-015-03-370

Issue Date: July 14, 1994

($64,341 Questioned)

RSC is a for-profit private company that was awarded a fixed-price contract to provide heating, fire alarm and egress improvements at the St. Louis Job Corps Center. The contract was terminated for the convenience of the Government and RSC, with its two subcontractors, proposed a settlement of $261,677. The OIG performed an agreed-upon-procedures review to assist the Contracting Officer (CO) in arriving at an equitable settlement of the terminated contract.

OIG questioned $29,129 of the $188,566 proposed for direct termination costs. We found incorrect indirect cost rate calculations by RSC's two subcontractors, incorrect charging of supervisor's labor costs, and inappropriate charging of interest on an alleged late payment by the Government.

OIG also question $35,212 of the $54,254 claimed for settlement expenses. We found that the project manager and three secretaries proposed more hours than what was recorded on their timesheets; suspension overhead was claimed for a period in which the suspension order stated there would be no additional cost to the Government; costs were proposed in excess of what was paid and for training that had nothing to do with the terminated contract; and one of the subcontractors' claimed time charge as settlement expenses was excessive.

OIG also found $8,712 in claims for supplies (and related general and administrative expenses) for which we were unable to verify whether or not the items were actually used at the job site. The CO issued the report to the contractor; however, the CO has not received a response. The CO is writing to the contractor giving him an additional 30 days to respond before he makes a final decision.