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AUDIT OF BOSCART CONSTRUCTION, INC.

##### **AUDIT REPORT NUMBER 0-31**

## SEPTEMBER 30, 2000 

**This report may contain proprietary information subject to the
provisions of**

**18 USC 1905 and must not be released to the public or another agency
without permission of the Office of Inspector General.**

U.S. SMALL BUSINESS
ADMINISTRATION![](media/image5.png){width="1.3979166666666667in"
height="1.2895833333333333in"}

OFFICE OF INSPECTOR GENERAL

# **WASHINGTON, D.C. 20416**

  -----------------------------------------------------------------------
  **AUDIT REPORT**
  -----------------------------------------------------------------------
  **Issue Date: September 30, 2000**

  **Number: 0-31**
  -----------------------------------------------------------------------

**To:** Kerry L. Kirkland, Associate Deputy Administrator for Government

Contracting and Minority Enterprise Development

###  Thomas A. Dumaresq, Assistant Administrator for Administration

![](media/image6.png){width="1.8in" height="0.42291666666666666in"}
David R. Kohler, Deputy General Counsel

**From:** Robert G. Seabrooks, Assistant Inspector General for Auditing

**Subject:** Audit of Boscart Construction, Inc. (Boscart)

We completed an audit of SBA's (1) evaluation of Boscart's initial
eligibility for the 8(a) program, (2) process for ensuring the company's
continuing compliance with 8(a) program requirements, and (3) award and
administration of contracts with Boscart. The 8(a) program was created
to assist small business concerns owned and controlled by socially and
economically disadvantaged individuals develop their business skills and
become viable business firms. To be certified by SBA for participation
in the program, applicants must show that their firms are owned by
socially and economically disadvantaged individuals, meet SBA's small
business size standards, and have a reasonable potential for success, as
defined in SBA regulations. Firms in the program are eligible for
contracts that Federal agencies set aside for 8(a) firms and may receive
SBA technical assistance and management training. In fiscal year 1999,
about 6,000 small businesses participated in the program, and \$6
billion was awarded in 8(a) contracts.

SBA's Office of Procurement and Grants Management is responsible for
administering and acquiring contractual services for SBA in accordance
with applicable Federal requirements. The Office of Government
Contracting and Minority Enterprise Development (GC&MED) is responsible
for determining the eligibility of firms for the 8(a) program.

In September 1997, SBA certified Boscart Construction Inc., a general
contracting company, solely owned by its president, for participation in
the 8(a) program. In October 1997, SBA appointed Boscart's owner to its
National Small Business Development Center (SBDC) Advisory Board. In May
1998, SBA hired Boscart's owner's spouse as a GS-15 Schedule C
(political appointee) in the Office of Capital Access. Between February
and September 1998, SBA awarded six contracts to Boscart that ultimately
totaled \$658,310 in value, as shown in the table below.

  -------------------- -------------------- ----------------------- ---------------------------
  [Contract            [Date]{.underline}   [Amount]{.underline}    [Description]{.underline}
  No.]{.underline}                                                  

  SBAHQ-98-M-0324      2/3/98               \$ 3,910                5^th^ floor build out

  SBAHQ-98-V-0021      2/19/98              1,980                   4^th^ floor conf. room
                                                                    doors

  SBAHQ-98-M-0468      3/25/98              2,378                   Fabricate door

  SBAHQ-98-V-0068      6/19/98              122,900                 Design Wash. Design Ctr.

  SBAHQ-98-C-0012      8/17/98              36,434                  Demolition, etc

  SBAHQ-98-C-0014      9/1/98               [490,708]{.underline}   8^th^ floor renovations

  Total                                     \$ 658,310              
  -------------------- -------------------- ----------------------- ---------------------------

The last three contracts were funded by the Small Disadvantaged Business
(SDB) program.

## OBJECTIVES AND SCOPE

The objectives of our audit were to determine whether SBA (1) properly
evaluated Boscart's initial eligibility for the 8(a) program and ensured
its continuing compliance with 8(a) program requirements, and (2)
awarded and administered its contracts with Boscart in accordance with
its internal procedures and applicable regulations. We reviewed SBA's
files related to Boscart, its owner and the owner's spouse, and
interviewed various SBA and contractor personnel. We also analyzed
accounting information and amounts paid to Boscart for services rendered
and contract performance. We conducted fieldwork during the period
February to August 2000. The audit was conducted in accordance with
Government Auditing Standards.

## RESULTS OF AUDIT

SBA's process for evaluating Boscart's initial 8(a) program eligibility
was flawed because it relied on inaccurate and unverified financial
information. Subsequently, the agency did not ensure the company's
compliance with 8(a) program requirements by accepting a contract on the
company's behalf for which it was not eligible. In addition, SBA did not
comply with (1) its standards of conduct regulations by awarding
contracts without required approvals and (2) Federal Acquisition
Regulations (FAR) by not documenting significant contract actions. As a
result, the Agency has reduced assurance that its programs and
operations are achieving their intended purposes, in accordance with
prescribed policies, procedures and ethical requirements.

SBA managers provided comments to a draft of this report during several
meetings. They also stated that they had insufficient time to provide a
full response. A summary of their comments along with the OIG evaluation
is presented after each finding.

# **Finding 1: Eligibility for Admission to the 8(a) Program**

SBA's process for determining Boscart's initial 8(a) program eligibility
was flawed because it relied on inaccurate and unverified financial
information. On the Personal Financial Statements submitted with the
company's 8(a) application, the company's owner and her spouse did not
disclose significant amounts of unpaid Federal taxes. Nor did they
disclose another significant debt, a defaulted loan, which resulted in a
judgment against them for \$133,000 plus interest in 1992.

Had SBA known of these liabilities, it could have impacted on the
determination that Boscart was eligible for program entry. Companies
must possess reasonable prospects for success in order to be eligible
for the program. One of the factors SBA evaluates in assessing potential
for success is financial capacity. The undisclosed liabilities, although
personal, could have had a material impact on Boscart's financial
capacity because a small business concern can be significantly impacted
by the owner's financial capability. SBA may have declined Boscart had
it known of the undisclosed liabilities.

SBA relies partly on unverified information provided by applicants in
making initial eligibility determinations, e.g. personal liabilities.
Had SBA obtained a personal credit report on Boscart's owner, SBA would,
in all probability, have known that the owner significantly understated
her personal liabilities. The assessment of potential for success would
have been based on a more accurate picture of the firm's financial
capacity, which was significantly worse than what SBA thought was the
case when it made its determination.

Under current regulations, if a credit report had been obtained, SBA
could have found Boscart ineligible for program entry for three reasons:
(1) providing false information to SBA, (2) lacking business integrity
as demonstrated by the civil judgment, and (3) failure to pay
significant financial obligations to the Federal government.

**Recommendation**

1A. We recommend that the Associate Deputy Administrator for GC&MED,
suspend Boscart from the 8(a) program based on the owner's
non-disclosure of significant personal liabilities.

**SBA Management's Response**

SBA management stated that it is not clear that knowledge of significant
debt owed by Boscart's owner would have led to a different eligibility
determination. SBA management further stated that business prospects for
success are not the same as an owner's borrowing potential and the
personal debt of Boscart's owner does not necessarily show a lack of
business integrity. SBA management did, however, agree to consider
whether suspension might be appropriate along with termination.

**OIG Evaluation of Management's Response**

We agree that it is not clear that knowledge of the undisclosed personal
debts would have led to a different 8(a) program eligibility
determination in 1997. Under current regulations, however, the
non-disclosure of those debts would preclude the company's acceptance
into the program. SBA management's proposed action of considering
whether to suspend Boscart from the 8(a) program is responsive to our
recommendation.

**Finding 2: Compliance with 8(a) Program Requirements**

Although Boscart did not submit 1997 financial statements in accordance
with SBA requirements, and was, therefore, ineligible for 8(a) contract
awards, SBA accepted on the company's behalf a sole source 8(a) contract
ultimately valued at \$490,708.

Under Title 13 CFR § 124.602 (b),

> \[8(a)\] Participants with gross annual receipts between \$1,000,000
> and \$5,000,000 must submit to SBA reviewed annual financial
> statements prepared by a licensed independent public accountant within
> 90 days after the close of the concern's fiscal year.

###### Title 13 CFR §124.503 (c) provides further that 

> > *Once SBA determines that a procurement is suitable to be accepted
> > as an 8(a) sole source contract, SBA will normally accept it on
> > behalf of the Participant . . . provided that . . . the Participant
> > has submitted required financial statements to SBA.*[^1]

On June 25, 1998, SBA's Washington District Office (WDO) sent a letter
notifying the company that it needed to provide reviewed financial
statements for 1997. The letter also stated:

> > *Firms whose financial statements are overdue and/or incomplete
> > cannot be awarded 8(a) contracts and may be subject to termination
> > from the 8(a) program.*

In September 1998, although Boscart still had not submitted the required
statements, the WDO accepted on Boscart's behalf a sole source 8(a)
contract ultimately valued at \$490,708. As of May 2000, Boscart still
had not submitted required financial statements, and SBA was taking
steps to terminate the company from the 8(a) program.

#### Recommendation

2A. We recommend that the Associate Deputy Administrator for GC&MED, in
conjunction with the Associate Administrator for Field Operations,
reinforce the need for staff involved in the acceptance of 8(a) awards
to ensure that program participants are in compliance with program
requirements before accepting awards on their behalf.

**SBA Management's Response**

SBA management stated that these regulatory requirements are procedural
in nature, for SBA's benefit, and can be waived when appropriate. Also,
sole source contracting opportunities can be extended to firms that are
delinquent in submitting financial statements. SBA management further
stated that Boscart was not given unusual or special treatment. SBA
management agreed with the recommendation to the extent of reviewing and
clarifying the provisions relative to the appropriate handling of
non-compliance with these provisions.

**OIG Evaluation of Management's Response**

The Agency responded that the "regulatory requirements are procedural in
nature, for SBA's benefit, and can be waived when appropriate." We
believe that (a) the Agency's acceptance of a contract for which the
company was ineligible and (b) its response to the audit undermine the
integrity of the 8(a) program and weaken the agency's control
environment. We also believe the regulations are clear regarding (a) the
requirement for 8(a) companies to submit annual financial statements and
(b) the acceptance of sole-source contracts on a company's behalf --
provided the company has submitted the required financial statements.
The agency's June 1999 letter was also clear that the company was
ineligible for 8(a) contract awards until it submitted the required
statements.

# 

# We do not agree with the implication that the procedural nature of the regulations reduces the need for compliance with them. Nor do we agree with the implication that because the regulations are for SBA's benefit, the need for compliance is reduced. Firstly, the regulations are not only for SBA's benefit. They are also for the benefit of 8(a) program participants, other procuring agencies, Congress, and the taxpayer. Secondly, even if the regulations were only for SBA's benefit, without a justified and documented decision waiving the requirements by someone with appropriate authority, they should be complied with. In this case, there is no indication that SBA intended to waive the requirement. Instead, the agency subsequently began termination proceedings against the company for not submitting required statements. 

# 

# We are also concerned with management's statement that "Boscart was not given unusual or special treatment." This appears to say that non-compliance with 8(a) program regulations is a common and usual occurrence.

Lastly, if SBA had complied with and enforced its regulations, the
outcome for the company may have been more favorable. As it turned out,
the award of the construction contract appears not to have benefited the
company. Cost overruns, claims against the surety, etc. indicate that
the contract may have actually damaged the company's prospects for
success. If SBA had required Boscart to submit the required statements
before accepting the contract, the agency may have determined that the
company was not financially prepared for such a large contract and that
it needed other forms of business development assistance.

**Finding 3: Standards of Conduct and Advisory Board Procedures**

> SBA did not comply with its Standards of Conduct regulations, by
> awarding Boscart contracts without obtaining required Standards of
> Conduct Committee approvals. All of the Boscart contracts were awarded
> while the company's owner was a member of the National SBDC Advisory
> Board[^2] and therefore, required the approval of the Standards of
> Conduct Committee. In addition, the Agency did not comply with its
> Advisory Board procedures, because it did not obtain Standards of
> Conduct Committee approval for Boscart's owner's appointment to the
> SBDC Advisory Board.

Title 13 CFR § 105.302, (Assistance to employees or members of
quasi-government organizations) provides:

> > *The Standards of Conduct Committee must approve SBA
> > assistance*[^3]*, other than Disaster loans . . . to a person if its
> > sole proprietor, general partner, officer, director or stockholder
> > with a 10 percent or more interest (or a household member) is a
> > member or employee of a Small Business Advisory Council*[^4] *or is
> > a SCORE volunteer.*

In October 1997, the SBA Administrator appointed Boscart's owner to a
three year term on the National SBDC Advisory Board, and subsequently
the Agency awarded the company six sole source contracts. The Agency did
not, however, obtain Standards of Conduct Committee approval for any of
these awards.

In addition, when Boscart's owner was appointed to the SBDC Advisory
Board, SBA did not comply with its Standard Operating Procedure 90 54 4
(SBA Advisory Councils) which states:

> *No person can be appointed to an Advisory Council if he or she
> already is an applicant for or recipient of SBA assistance (other than
> disaster loans . . .) [without]{.underline} prior written approval of
> the Standards of Conduct Committee, which will determine if there is
> any significant conflict of interest or the appearance of a conflict
> of interest . . . .*
>
> Boscart was accepted into the 8(a) program in September 1997, prior to
> the owner's appointment to the SBDC Advisory Board. Under 13 CFR §
> 105.201, the owner was, therefore, a recipient of SBA assistance.
> SBA's Standards of Conduct Committee did not, however, approve her
> appointment to the Advisory Board.

> **Recommendation**

> 3A. We recommend that the Designated Agency Ethics Official review the
> Agency's policies and procedures for ensuring compliance with the
> Agency's Standards of Conduct Regulations and revise those policies
> and procedures as necessary. The Agency should as part of this process
> develop means for sharing and accessing essential information between
> Agency offices, e.g., a more effective "vetting" process.
>
> **SBA Management's Response**
>
> SBA management agreed with the finding and recommendation.
>
> **Finding 4: Ethics Opinion Regarding Boscart Contracts**

An ethics opinion regarding SBA contracts with Boscart was inconsistent
with the facts and with the Office of Government Ethics' government-wide
treatment of spouses for purposes of conflict of interest analyses.
After SBA's Assistant Administrator for Administration became aware that
Boscart's owner's spouse was a SBA employee, he requested advice from
the Designated Agency Ethics Official (DAEO), asking whether Boscart's
"continued performance of the contract violated any ethics laws,
regulations or policies."

The DAEO responded in a memorandum dated September 2, 1998: *" Based on
the facts presented, it is our opinion that neither the award or the
performance of the Boscart contract violates ethics laws, regulations,
or policies."* The DAEO provided the following rationale for this
conclusion:

> > *The contract was awarded prior to \[his\] SBA employment, he is not
> > an owner, officer, or director of Boscart, and he has no official
> > Agency duties that relate to Boscart or the 8(a) program.*
>
> This statement *"the contract was awarded prior to \[his\] SBA
> employment"* was inaccurate for two reasons. First, SBA awarded
> Boscart [three]{.underline} contracts, not just one, related to the
> "design and construction of new office space for the SDB and HubZone
> programs" -- the subject of the DAEO's memorandum. Second, Boscart's
> owner's spouse began employment at SBA on May 25, 1998, and the first
> of the three subject contracts was awarded on June 19, 1998, three
> weeks later.

Accordingly, the facts suggest that contractual assistance to Boscart
may have needed the prior approval of the Standards of Conduct Committee
in accordance with 13 CFR §105.204 (Assistance to SBA employees or
members of their household) which states:

> > *Without the prior written approval of the Standards of Conduct
> > Committee, no SBA assistance, other than Disaster loans . . . shall
> > be furnished to a person when the sole proprietor, partner, officer,
> > director or significant stockholder of the person is an SBA employee
> > or a household member.*
>
> The DAEO's memorandum also stated:

-   *\[Boscart's owner's spouse\] states that he and his wife are
    > legally separated and planning a divorce. They no longer share a
    > household.*

```{=html}
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```
-   *. . . future assistance to Boscart, if \[he and his wife\]
    > reconcile their differences and she becomes a member of his
    > household, will require standards of conduct approval.*

> In the latter statement, the DAEO indicated that contracts with
> Boscart did not require standards of conduct approval, because the
> company's owner and her spouse were separated and did not share a
> household. Title 13 CFR § 105.201 provides:
>
> > *Household member means spouse and minor children of an employee,
> > all blood relations of the employee and any spouse who resides in
> > the same place of abode with the employee.\
> > *

The DAEO's opinion indicated that Boscart's owner was not a "household
member" for standards of conduct purposes, because she and her spouse
were separated. According to an attorney at the Office of Government
Ethics (OGE), however, for purposes of both 18 USC § 208 (actual
conflicts of interest) and 5 CFR § 2635.502 (appearance of conflicts)
(both government-wide authorities), OGE views a legal separation as
having no impact on the definition of \"spouse,\" when determining
whether there is an actual conflict or an appearance of a conflict of
interest. In other words, even when two married individuals have a legal
separation agreement and are living apart, they are treated as a married
couple by OGE for purposes of performing conflict of interest analyses.

#### Recommendation

4A. We recommend that the Deputy General Counsel revise 13 CFR §105.201
to clarify that an employee's spouse should be considered a "household
member," whether or not the spouse resides in the same place of abode
with the employee, so long as they are legally married.

#### SBA Management's Response

SBA management stated that SBA's regulations deal only with receipt of
Agency assistance, not with conflict of interest cases covered by OGE
regulations. SBA management agreed to review its regulations on this
point, but stated that it may elect to treat a separated spouse
differently from the OGE regualtions.

**OIG Evaluation of Management's Response**

Management's comments are responsive to the recommendation.

**Finding 5: Contract Administration**

SBA did not properly administer two of its contracts with Boscart. It is
not clear from the files that contract requirements were completed in
accordance with the statements of work. Certain aspects of the
administration of Boscart's contracts did not comply with various
provisions of the Federal Acquisition Regulations (FAR). Also SBA
increased one of the contracts by \$70,000, more than eight months after
the contract completion date, without any rationale in the file to
justify the amount of the increase.

Contract No. SBAHQ-98-V-0068

On June 19, 1998, SBA awarded Boscart a fixed-price contract in the
amount of \$17,250 for design of 15,000 square feet of office space on
the 8^th^ floor of the Washington Design Center. The work was to be
completed by July 31, 1998. On August 11, 1998, SBA modified this
contract to extend the completion date to October 30, 1998, and increase
the scope of work. Under the modified contract, the price was increased
to \$52,900, and Boscart was to design an additional 31,000 square feet
of office space on the 2^nd^, 5^th^ and 8^th^ floors of the Washington
Office Center. It is not clear from the contract files whether Boscart
completed all of the work specified.

##### Contract No. SBAHQ-98-C-0014

On September 1, 1998, SBA awarded Boscart a \$406,029 contract for
construction of new office space on the 8^th^ floor of the Washington
Design Center. The contract required the company to complete the project
by September 30, 1998. On September 28, 1998, the SBA program office (GC
& MED) approved a requisition to add \$70,000 to the contract for
"unforeseen construction increases." On September 30, 1998, the SBA
Contracting Officer sent Boscart a letter (see Attachment 1) that
appears to be a change order under the changes clause of the contract
(FAR clause 52.243-4). The letter authorized Boscart "to proceed" and
"to incur costs in an amount not to exceed \$70,000." The letter also
stated that "the contract will be increased by that amount."

Paragraph (d) of FAR Part 52.234-4 Changes clause provides, in part

> *If any change under this clause causes an increase or decrease in the
> Contractor's cost of, or the time required for the performance of any
> part of the work under this contract, whether or not changed by any
> such order, the Contracting Officer shall make an equitable adjustment
> and modify the contract in writing.*

Despite the Contracting Officer's letter stating the contract price will
be increased and the requirement of FAR 52.242-4(d), the construction
contract was not modified for the \$70,000 increase.

The contract also required Boscart to obtain payment and performance
bonds within 10 days of the contract award. Under FAR § 52.228, Boscart
should have provided the bonds before work began. Boscart did not,
however, provide the bonds until October 6, 1998, over a month after
work had started and the company had been paid about \$144,000. In order
to obtain the bonds, Boscart signed an agreement providing for SBA to
make subsequent contract payments through a lockbox for the benefit of
the bonding company.

The project encountered a series of delays and difficulties, including
cost overruns, a mechanics lien and claims of more \$178,000 by
subcontractors against the surety company that bonded the contract. On
March 3, 1999, SBA sent Boscart a letter (see Attachment 2) stating:
"effective immediately, you are hereby directed to cease all further
work toward completion of the punchlist items." [^5] The letter cited
the company's failure to complete 80 percent of the punchlist, and
stated "another contractor will complete the punchlist items, and the
cost will be deducted from your contract." Subsequently, in June 1999,
the company submitted a request to SBA for an additional \$322,000 --
based on cost overruns, modifications, etc.

Although the March 1999 letter directing the company to cease work on
the punchlist and the Agency's subsequent interactions with the company
had many of elements of a contract termination, the agency did not
follow the procedures described in FAR Part 49 - Termination of
Contracts. Instead, according to agency officials, all open issues were
settled in a negotiation using procedures authorized by FAR 33.214 -
Alternative Dispute Resolution (ADR).[^6]

Specifically, in July 1999, according to SBA officials, *"SBA settled
all open issues in controversy by:*

(1) *Increasing the amount of the [design]{.underline} contract*[^7]
    *and paying Boscart an additional \$70,000, and*

(2) *Not requiring Boscart or the surety company to complete the items
    on the punchlist. (SBA subsequently paid other contractors over
    \$15,000 to complete some of these items.)*

(3) *Determining that all contracts were completed in a satisfactory
    manner."*

Under FAR Part 33.214, "*the objective of using ADR is to increase the
opportunity for relatively inexpensive and expeditious resolution of
issues in controversy."* Under FAR Part 33.201, *"Issue in controversy"
means a material disagreement between the Government and the contractor
which*

(1) *May result in a claim or*

(2) *Is all or part of an existing claim.*

There was, however, no evidence in the contract files to support the
need for ADR. Although SBA officials informed us they did not agree with
Boscart's \$322,000 request, there was no evidence of a review or
analysis of the request to specify the basis for a "material
disagreement." There was also no documentation to support that the
agency's actions involved a settlement. The \$70,000 increase to the
design contract, which more than doubled the contract price, was
supported by the September 1998 requisition to modify the construction
contract -- for "unforeseen construction increases." The payment of the
\$70,000 was supported by a request for payment from Boscart for
unspecified work performed on the design contract. The construction
contract file had no documentation relating to (a) Boscart's request for
a \$322,000 increase, (b) the resolution of the punchlist items, or (c)
the justification for "determining that the contracts were completed in
a satisfactory manner." In fact, the last evidence of communication with
Boscart in the construction contract file was the letter directing the
company to cease work on the punchlist items.

The lack of documentation describing and supporting these actions and
circumstances did not comply with FAR Part 4.801(b) requirements that:

> *The documentation in the files (see 4.803) shall be sufficient to
> constitute a complete history of the transaction for the purpose of
> --*

(1) *Providing a complete background as a basis for informed decisions
    at each step in the acquisition process;*

(2) *Supporting actions taken;*

(3) *Providing information for reviews and investigations; and*

> *(4) Furnishing essential facts in the event of litigation or
> congressional inquiries.*

Without documentation describing and supporting the circumstance and
actions related to the administration of these contracts, we were not
able to fully evaluate their propriety.

#### Recommendation

5A. We recommend the Assistant Administrator for Administration take
appropriate actions and complete the documentation of the contract
files, for the two Boscart contracts discussed above, to comply with the
requirements of the FAR.

**SBA Management's Response**

SBA management did not believe its contract administration was flawed.
SBA management further stated that Boscart did an exceptional job in
meeting SBA's design requirements, and in fact performed work that
exceeded the value of the contract. SBA also obtained an amicable
solution to cost overrun problems, and agreed to increase the value of
the design contract by \$70,000. SBA management did, however, agree to
complete documentation of the contract file.

**OIG Evaluation of Management's Response**

We do not agree with management's assertion that the contract
administration was not flawed. We believe the absence of documentation
supporting actions taken and the resolution of various issues is a
significant deficiency. Without adequate documentation, the propriety of
various actions and resolution of issues can not be determined. At best,
this leaves open the possible appearance of impropriety.

**\* \* \* \***

The findings and recommendations in this audit report are based on the
conclusions of the Auditing Division. The recommendations are subject to
review, management decision and corrective action by your office in
accordance with existing Agency procedures for audit follow-up and
resolution.

Please provide us your management decision for each recommendation
within 30 days. Your management decisions should be recorded on the
attached SBA Forms 1824, Recommendation Action Sheet, and show either
your proposed corrective action and target date for completion, or
explanation of your disagreement with our recommendations.

Should you or your staff have any questions, please contact Robert
Hultberg, Director, Business Development Programs Group at (202)
205-7204

Attachments.

Attachment 1

![](media/image5.png){width="1.3979166666666667in"
height="1.2895833333333333in"}

September 30, 1998

Barbara Turner

Boscart Construction, Inc.

1080 Wisconsin Ave., NW, Suite 300

Washington, DC 20007

Subject: Contract SBAHQ-98-C-0014, Eight Floor Renovations

Dear Ms. Turner.

The Small Business Administration's Office of Procurement and Grants
Management has reviewed and approved your proposal for the estimated
additional amount of \$70,000.00 under the subject contract. The
contract will be increased in that amount. Therefore, you are hereby
authorized to incur costs in an amount not to exceed \$70,000.00.

All services rendered should be in accordance with your proposal. Any
variation should be discussed with the Contracting Officer immediately
prior to making any changes. Your Contracting Officer Technical
Representative for this effort is Michelle Hodges. She can be contacted
at (202) 205-7018.

This notification is authorization to proceed. However, please note that
acceptance of your proposal is subject to final negotiations, which
should take place within the next 30 days. Please refer to the
requisition number 8.6368.0356 in all correspondence relative to this
action.

If you have any questions, please call me at (202) 205-7051.

\`

Sincerely,

Deborah M. Woods

Contracting Officer

![](media/image5.png){width="1.3979166666666667in"
height="1.2895833333333333in"} Attachment 2

March 3, 1999

Barbara Turner

Boscart Construction, Inc.

1080 Wisconsin Ave., NW, Suite 300

Washington, DC 20007

Subject: Contract SBAHQ-98-C-0014, 8^th^ Floor Renovations

Dear Ms. Turner:

This letter is in reference to the punchlist items for the subject
contract.

In our letter of December 16, 1998, the prompt and timely completion of
the punchlist was stressed. In addition, in our meeting of December 17,
1998, you stated that completion of the punchlist items would begin on
January 4, 1999. To date, approximately 80 percent of the punchlist
items have not been completed.

Therefore, effective immediately, you are hereby directed to cease all
further work towards completed of the punchlist items. Another
contractor will complete the punchlist items, and the cost will be
deducted from your contract.

If you have any questions regarding this matter, please contact me at
(202) 205-7051.

Sincerely,

Deborah M. Woods

Contracting Officer

cc: Michelle Hodges, COTR

###### Attachment 3

####### AUDIT REPORT DISTRIBUTION

# Recipient Number of Copies

Administrator 1

Deputy Administrator 1

General Counsel, Office of General Counsel 2

Associate Deputy Administrator for Management & Administration 1

Associate Administrator for Minority Enterprise Development 1

Office of Chief Financial Officer

Attention: Jeffrey Brown 1

General Accounting Office 2

[^1]: 8(a) program contracts involve three party agreements through
    which SBA accepts the contract on behalf of the 8(a) participant,
    enters into a contract with the procuring government agency and
    subcontracts to the 8(a) participant. In this case, SBA was also the
    procuring government agency, so the contract was between SBA's
    Office of Procurement and its Washington District Office.

[^2]: This board was established by law to advise and confer with SBA on
    SBDC policy matters.

[^3]: SBA assistance is defined in 13 CFR § 105.201 as "*financial,
    contractual, grant, managerial or other aid, including size
    determination, section 8(a) participation, licensing, certification,
    and other eligibility determinations made by SBA."*

[^4]: Under the Federal Advisory Committee Act, "an advisory committee
    means any committee, board, commission, council . . . established .
    . . in the interest of obtaining advice. . . ."

[^5]: A punchlist is a list of discrepancies that need to be corrected
    by the contractor. In this case, the three page punchlist described
    such items as HVAC system, millwork, doors, and finish work that
    needed to be completed.

[^6]: Under FAR Part 33.201, *"Alternative Dispute Resolution" (ADR)
    means any type of procedure or combination of procedures voluntarily
    used to resolve issues in controversy.*

[^7]: All design contract funds had been either expended or deobligated
    in September 1998.