Metro has agreed to pay nearly $5 million to settle a whistleblower lawsuit after
a former employee alleged that the transit agency violated federal
rules by awarding a $14 million contract without seeking competitive
bids, government officials and attorneys in the case said Wednesday.
also has agreed to pay $390,000 to the former worker to settle his
claim that he was fired in retaliation for speaking out about the no-bid
contract, according to the U.S. Attorney’s Office in the District,
which announced the settlements and sharply criticized Metro’s conduct.
American people have a right to know that their government is following
rules and regulations in spending the taxpayers’ money,” U.S. Attorney
Ronald C. Machen Jr. said in a statement. After investigating the former
Metro worker’s allegations, Machen’s office joined in the
whistleblower’s federal lawsuit.
Although Metro officials admitted
no wrongdoing in settling the contracting matter and the
wrongful-termination claim, the multimillion-dollar payments are another
financial black eye for the transit agency — one of several
embarrassments in recent years involving allegations of misspending and
mismanagement of federal grant money.
More than half of the
$14 million no-bid contract was paid with grants from the Federal
Transit Administration, authorities said.
“Our office has targeted
government contractors who fail to meet their obligations,” Machen
declared, “and this settlement shows that we expect agencies that
receive federal funding to honor the integrity of the contracting
process as well.”
Metro also is on the hook for nearly $190,000 in
legal fees for the plaintiff, meaning that the settlements will cost
the transit authority about $5.6 million, attorneys in the case said.
issue was a contract awarded in 2010 to Metaformers, a McLean-based
computer technology consulting company hired to oversee an integration
of the transit service’s financial and business computer systems.
Russell J. Gaspar, an attorney for the firm, said Wednesday that “It is
our understanding” that the investigation found no “improper or unlawful
conduct on the part of Metaformers.”
The awarding of that no-bid contract appears symptomatic of a broader problem detailed this year in an FTA-commissioned audit.
report, covering April 2012 to March 2013, paints a troubling picture
of Metro’s procurement practices, saying the agency awarded millions of
dollars in no-bid contracts and appeared to steer work to preferred
vendors even though they lacked adequate qualifications. The report did
not name any vendors.
The audit also found other examples of
questionable management, including instances in which Metro might have
overbilled the federal government and, in at least one case, an employee
continuing to be paid after leaving the agency.
As a result,
Metro’s use of federal grant money has been restricted until federal
transit officials are satisfied that Metro has implemented procedures to
ensure that U.S. funds are properly managed. In the meantime, according
to an internal Metro report, the agency has been forced to increase
borrowing to cover expenses and might have to postpone or scrap some
Metro spokesman Dan Stessel said
the transit agency, while conceding no wrongdoing in the Metaformers
matter, agreed to the settlements “to avoid protracted litigation and
expense for Metro’s customers and the region’s taxpayers.”
Metro’s response to the critical audit, Stessel said any improper
contracting procedures involving Metaformers resulted from poor
financial systems that were in place before General Manager Richard
Sarles took charge of the Washington Metropolitan Area Transit Authority
“WMATA has been working to overhaul financial controls,
and has made substantial progress in procurement, accounting and grants
management,” Stessel said in an e-mail. He added that the agency’s
“financial management has been strengthened with an improved procurement
manual” and that “hundreds” of employees have been trained in new
procedures “to tighten grants management compliance.”
Kissal, who was Metro’s chief financial officer during the period
covered by the audit and was a defendant in the whistleblower lawsuit,
resigned in April after the audit’s findings were made public. Kissal’s
replacement, Dennis Anosike, a former chief financial officer of the
Chicago Transit Authority, was hired last month.
As Metro copes
with allegations of improper financial management, it also is trying to
persuade the Washington-area jurisdictions that foot the bill for the
transit network to invest in Metro in the years ahead.
example, Metro is seeking local leaders’ support for $26 billion in
proposed improvements to the aging subway, including building a second
Potomac River tunnel and upgrading its electrical system to allow for
more eight-car trains. Also, in June, Metro approved a plan that
includes new taxes or fees in the region over the next decade to raise
$6 billion for rapid transit.
Metro’s budget for the current
fiscal year is nearly $3 billion, much of it coming from the District,
Maryland, Virginia and federal governments as well as suburban counties
and municipalities served by WMATA.
The whistleblower lawsuit was
filed in 2012 by Shahiq Khwaja of McLean, who worked for Metro for a
year beginning in September 2010 and was involved in upgrading WMATA’s
troubled integrated financial-management system. He said he was fired
after he complained about the awarding of the no-bid contract.
sued Metro under the federal False Claims Act, which allows private
citizens to sue on behalf of the U.S. government in alleging improper
use of government resources and share in the proceeds of successful
cases. After looking into Khwaja’s claims, federal authorities joined
the litigation this year.
In his lawsuit, Khwaja alleged that the
work performed by Metaformers under the $14 million contract could have
been done at a much lower cost by another qualified company had Metro
solicited bids. He also alleged that WMATA officials, overall, tried to
steer about $40 million worth of work to Metaformers.
settlements, however, focused only on how WMATA awarded the contract,
not on Metaformers’ performance or allegations of overspending.
One of Khwaja’s attorneys, David Colapinto,
said that Metro agreed to pay $4.2 million to the federal government,
about $600,000 to the D.C. government and about $155,000 to Khwaja to
settle the no-bid contract matter. In addition, out of the federal
government’s $4.2 million, Khwaja will get $996,480, the U.S. Attorney’s
Wednesday morning, Machen announced the $4.2 million payment. Later in the day, lawyers for the plaintiffs said
that Metro had also reached a settlement with the D.C. government,
increasing the total amount that the transit authority will pay.
for Khwaja’s claim that his firing by Metro was retaliatory, Machen
said that after an investigation, the U.S. Department of Transportation
“found that the weight of evidence indicated that Mr. Khwaja’s
disclosures [about the no-bid contract] were a contributing factor in
his termination.” Rather than fight the matter in court, Machen said,
Metro agreed to a $390,000 settlement with Khwaja.
would not have recovered these funds . . . without Mr. Khwaja stepping
forward,” Colapinto said in a statement, calling the settlements a
“testament to Mr. Khwaja’s courage . . . in the face of resistance and
hostility from his superiors.”
Mary Pat Flaherty contributed to this report.