Best, Judah: Testimony. Memorandum of law. Boulay, Peter: Testimony Plan for Increasing Emphasis on FSS Quality Assuran Brotherton, Ronald: Testimony - Fowell, Andrew J.: Testimony- Testimony.. Art Metal blind footnote file: How Art Metal handled plaints. Inglesby, Leo: Testimony. Kurens, Philip J.: Testimony Levine, Barry: Testimony. Lowell, Arthur: Testimony Maloney, Jerry: Testimonoy_ Testimony Prepared statement__ Phipps, Harold: Testimony- Testimony.. Supplemental memorandum. Scott, Robert: Testimony.. Skolnik, Bernet: Testimony. Letter to Arthur S. Lowell from Judah Best, July 3, 1979. Slimak, William: Testimony. Spiegel, Isidore: Testimony. Stein, Jacob A.: Testimony. Terry, Dolly: Testimony- Testimony Report: Examination of "Upholstered, Rotary, Molded Plast Prepared statement. Additional material submitted for the record: Letter to Marvin Doyle from Henry S. Beidler, polygraphist, Febr Communication to Senator Chiles concerning Anthony Pionzi Interview of Neal Umstot, Douglas Mackenzie, Harold Phipps, an Interview of Paul Freedman, March 16, 1979. CONTINUED INVESTIGATION INTO FRAUD AND MISMANAGEMENT IN GENERAL SERVICES ADMINISTRATION WEDNESDAY, JULY 18, 1979 U.S. SENATE, SUBCOMMITTEE ON FEDERAL SPENDING PRACTICES AND OPEN GOVERNMENT, Washington, D.C. The Subcommittee on Federal Spending Practices and Open Government met, pursuant to notice, at 9 a.m., in room 1318, Dirksen Office Building, Hon. Lawton Chiles (chairman of the subcommittee) presiding. Present: Senator Chiles, Danforth, Pryor, and Nunn. OPENING STATEMENT OF SENATOR CHILES Senator CHILES. The Senate Subcommittee on Federal Spending Practices and Open Government today opens 3 days of hearings into the relationship between the General Services Administration and one of its biggest metal furniture producers, Art Metal, U.S.A. The relationship between the Nation's office supplier and Art Metal began more than a decade ago and in the last 10 years more than $200 million tax dollars have been paid this firm. One of the questions we want to resolve in our hearings is whether the taxpayer has gotten his money's worth. We want to determine whether Art Metal is, as its president told us under oath last fall, a company of honor and good name. We will hear today from General Services Administration employees who have made a special survey of Art Metal furniture now stored in Federal warehouses. They will tell us whether Art Metal is indeed a supplier of well-built furniture or whether the taxpayer is getting bilked. We will also hear today from Federal employees of their efforts over the years to persuade GŠA to obtain the furniture it paid for. If their story is to be believed, the General Services Administration over the past decade has allowed and encouraged Federal agencies to use Art Metal furniture. How and why this encouragement came about if the furniture is substandard is something we want to trace. Art Metal testified before us last September that the number of complaints against its metal furniture was very small. That claim, we will hear today, may be true because of the Government's policies which kept complaints out of official channels. But when there was a well-founded complaint, we want to know what Art Metal did to rectify the situation. Did it promptly answer those complaints which did make it through the redtape, or did it take steps to cover up, to invent excuses or to simply ignore those who thought the Government should get a dollar's worth of goods for a dollar's worth of taxes? When Art Metal appeared before us last fall it invited this subcommittee to look at its manufacturing plant and at its books. We did both, and the findings, as our hearings will show, are incredible. The head of Art Metal told us that our factfinding mission would show that Art Metal has, and I quote, "saved the Government tens of millions of dollars; yes, tens of millions of dollars." I will leave it to the Congress and the American people to decide if that quote is indeed true or whether the reverse is true and Art Metal has cost us tons of money and left us with warehouses and offices full of shoddy furniture. Our first panel this morning will be Mr. Joseph Colletti and Mr. John Costello, GSA quality assurance specialists, GSA region 5 in Chicago, Ill. Mr. Colletti and Mr. Costello were detailed to the subcommittee in late October 1978 to tender technical assistance during the visit to Art Metal by the subcommittee staff. As details of the subcommittee, Mr. Colletti and Mr. Costello after the initial visit to Art Metal in Newark, N.J., visited 7 of the 10 major GSA supply depots throughout the country in Fort Worth, Tex., Stockton, Calif., Chicago, Ill., Kansas City, Mo., Garden City, Ga., Denver, Colo., and Auburn, Wash. Mr. Colletti and Mr. Costello inspected temporary and general office furniture in Stockton manufactured by Art Metal and other competing manufacturers. Mr. Colletti is a branch chief in the Quality Control Division in Chicago. Mr. Costello is in the Cincinnati office. Both are regarded as furniture experts in their field by GSA. Mr. Colletti and Mr. Costello would you both stand and take the oath? [Whereupon, Joseph Colletti and John Costello were duly sworn, and were examined and testified as follows:! Senator CHILES. Mr. Colletti will you begin by telling us what your findings were as a result of your November 1978 visit to the Art Metal plant? TESTIMONY OF JOSEPH COLLETTI, BRANCH CHIEF, QUALITY CONTROL DIVISION, CHICAGO, ILL., GSA; AND JOHN COSTELLO, GSA QUALITY ASSURANCE SPECIALIST, REGION 5 Mr. COLLETTI. Mr. Chairman, we determined during our visit of the Art Metal plant that at that time Art Metal had 22 open GSA contracts for metal office furniture. Art Metal was authorized to ship under a quality approved manufacturer's program on 17 of the 22 contracts. The quality assurance manufacturers' program allows manufacturers to ship items on certification without being inspected by GSA inspectors. GSA's region 2 Quality Control Division personnel at the plant stated that the Quality Control Division processed an average of 150 inspection documents weekly. Art Metal also processed an average of 250 certifications weekly under the quality approved manufacturer's program. On the afternoon of November 1, a quantity of 23 lateral files were presented to Region 2 Quality Control Division for inspection. Art Metal's quality control division personnel had just completed their 100-percent inspection of these units and had determined them to be acceptable. Mr. Costello and I assisted the region 2 personnel in this inspection and asked them to remove several drawers from the files for the purpose of inspecting the interior surfaces of the cabinets. As a result of this routine inspection four major and four minor defects were found in the following areas: One: Spot welding was placed closer than one-half of the greatest dimension of the spot weld, indicating that they were not properly spaced in accordance to specification. Two: Excessive flash and splatter surrounded the weld on the interior surfaces. Three: The sharp edges of the splatters were sharp enough to cause personal injury to a user. Four: No lubrication. Five: Exterior sharp edges on the cabinet edges. Six: Thin paint or unpainted areas where the iron phosphate pretreatment coating was noted. This lot was subsequently rejected based on GSA's rejection criteria. Within an hour a second quantity of lateral files of the same type, size, and color with simulated wood tops was also rejected under the same GSA rejection criteria. Senator CHILES. So the Region 2 Quality Control Division found enough defects in the lots of lateral files inspected in your presence and at your suggestion rejected the lots? Mr. COLLETTI. That's correct. Senator CHILES. What happened then? Mr. COLLETTI. I would like to defer this question to Mr. Costello. Mr. COSTELLO. On the morning of November 2 an unscheduled meeting was held in the Office of the Federal Supply Service, Region 2 Quality Control Division Personnel, located on the premises of Art Metal Co. The reason for the meeting was a protest by Art Metal to the methods of inspection and judgment employed in rejecting the two lots of lateral files. The meeting was attended by Mr. Kurens, the president of Art Metal, and three of his staff, and by Region 2 Quality Control Division personnel and members of the subcommittee staff. During the 1-hour meeting, under the vociferous domination of Mr. Kurens, Mr. Kurens challenged the judgment and competence of the GSA Quality Control Division personnel attached to the subcommittee, meaning myself and Mr. Colletti, and inferred that the intimidating tactics employed made any impartial inspection evaluation impossible for Region 2 Quality Control Division personnel. Using a variety of vulgar terms he described the criticism of interior spotweld flash and improper location of weld as tactics intended to crucify Art Metal and to shut them down. He also contended that the methods employed in the inspection were not normal to e spection in reference to the removal of drawers and the us light for inspection of the cabinet interior. This method, I is an accepted inspection technique. Mr. Kurens stated that he had no intention of allow control people from another region to come in and inspect products, and stated that the continuance of such a practice for aggressive countermeasures. Mr. Mandell informed Mr. Kurens that the files had be on workmanship alone, and that the prerogative to accep belongs to Region 2 Quality Control Division alone. Mr. Colletti assured Mr. Kurens that the intention of th not vindictive or discriminatory with respect to Art Me instead a positive view to assist in the production of a c product as required by GSA contracts and specifications. The meeting ended by Art Metal stating that the two lots files would not be offered for reinspection but would be so mercial outlets. Senator CHILES. Mr. Colletti, at your duty station in regio employ inspection techniques used at Art Metal? Would you use a flashlight to look into the file cases and determine whe why would you use a flashlight? Mr. COLLETTI. We do whenever supplementary lighting is There are many times that products are offered to inspecto spection under a poor lighting condition, so many inspectors flashlights in their toolboxes and, therefore, they are used. Senator CHILES. It seems to me there shouldn't be anythi in trying to determine whether a drawer is going to work or pull is going to work if you are going to look at the inside. A is just to determine what is in the guts of the thing; is that Mr. COLLETTI. That's right, sir. Senator CHILES. What else did you observe during your vi Metal? Mr. COLLETTI. We also inspected double shell chairs and c rary style desks. The outgoing quality level for workmansh chairs appeared satisfactory. It was apparent that the cha being given extra care in relationship to other items since t were a relatively new product for the Art Metal Co. On the manufacture of the desk, we observed that Art M assembling desks with noticeable defects, such as paint runs, u areas, nicks on laminated plastic tops, and were packing de wet paint. Examination of the packing revealed incomplete c the container flaps, and strapping, which distorted shipping co by using an improperly fitted carton. Neither Art Metal nor region 2 personnel made any effort track and hold units for screening or keep defective merchand the production run from being loaded into a freight car. How tempts were made to correct new production. The workmanship quality of outgoing desks did not sat quirements nor did Art Metal satisfy the criteria nor GSA's approved manufacturer's program. Senator CHILES. What is the quality approved manufacture gram, and why do you say they wouldn't meet those criteria? |