GAO

United States General Accounting Office

Report to the Chairman, Committee on 

Governmental Affairs, U.S. Senate

September 1999 HUD EEO 

INVESTIGATION

Contracting and 

Process Irregularities 

in HUD’s Investigation 

of the IG

GAO/OSI-99-6

Page 1 GAO/OSI-99-6 HUD Contracts for EEO Investigation of IG

United States General Accounting Office

Washington, D.C. 20548

Office of Special Investigations

B-282123 Letr

September 8, 1999

The Honorable Fred Thompson

Chairman, Committee on Governmental Affairs

United States Senate

Dear Mr. Chairman:

In February 1998, the Deputy Assistant Inspector General (IG) for 

Investigation for the U.S. Department of Housing and Urban Development 

(HUD) filed an Equal Employment Opportunity (EEO) complaint with 

HUD's Office of Departmental EEO. The complaint alleged that HUD's IG, 

Susan Gaffney, had discriminated against him because of his race. On 

December 14, 1998, you requested that we assist the Committee in 

reviewing matters concerning that EEO complaint. Specifically, you asked 

that we determine (1) whether HUD had awarded contracts concerning the 

EEO complaint to outside firms in accordance with applicable government 

standards and (2) whether HUD's actions were justified when it deviated 

from its standard EEO process by contracting with firms not on the 

General Services Administration's (GSA) schedule of contractors.1

Results in Brief HUD's awarding of contracts to two law firms to investigate the Deputy 

Assistant IG's EEO complaint deviated from HUD's standard EEO 

investigation process and did not comply with the requirements of the 

Federal Acquisition Regulation (FAR). From February 12, 1998, to 

August 5, 1998, HUD followed its standard EEO process of reviewing the 

complainant's allegations for acceptance, contracting with a GSA-schedule 

firm to investigate the accepted allegations, and conducting the 

investigation. On August 5, 1998, however, HUD officials put the 

investigation on hold. On that same day, HUD deviated from its normal 

EEO process and requested proposals from a limited number of non-GSA1

GSA directs and manages the Federal Supply Schedule program, which provides federal 

agencies with a simplified process for obtaining commonly used commercial supplies and 

services at prices associated with volume buying. GSA issues Federal Supply Schedules 

containing information necessary for ordering. Ordering offices then place delivery orders 

directly with schedule contractors for the supplies and services they require. (48 C.F.R. 

§ 8.401)
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schedule firms to conduct this same investigation. HUD violated the FAR 

when it failed to synopsize this requirement in the Commerce Business 

Daily (CBD) and inappropriately limited the competition to seven firms. 

HUD awarded contracts to two law firms on August 26, 1998. Its lastminute amendment to the Request for Quotations (RFQ) to accommodate a 

joint proposal from the two firms and other actions by HUD officials 

contributed to an appearance that HUD manipulated the procurement 

process in order to direct the contract awards to the two firms. Although 

the usual cost for any type of EEO investigation at HUD is approximately 

$3,000, these contracts totaled about $100,000.

The significant role played in this procurement by Harold Glaser, then 

Deputy General Counsel for Programs and Regulations, was also 

extraordinary. Mr. Glaser took the lead in suspending the GSA-schedule 

firm's investigation and contracting with the non-GSA-schedule firms. His 

actions included compiling the list of potential contractors, contacting the 

Deputy Assistant IG's counsel to request an extension of time to complete 

the investigation, evaluating the proposals, reviewing the investigative 

plan, and consulting with the firms during the investigation.

HUD officials told us that they deviated from the standard EEO process for 

a number of reasons, including their perception of an environment of 

pervasive racial discrimination in the Office of the Inspector General (OIG) 

and the high rank and unique positions of both the Deputy Assistant IG and 

IG Gaffney. The justifications HUD provided for deviating from its usual 

EEO process were largely subjective and therefore difficult to assess. 

However, information we found substantially contradicts several factors 

cited as justifications for HUD's deviation.

Certain HUD officials served to impede our investigation. Specifically, HUD 

insisted on having an outside attorney present as “agency counsel” during 

interviews of HUD employees and prevented us from interviewing several 

HUD employees who may have possessed information critical to our 

investigation. While we would have preferred to have access to these 

individuals, we were able to gather sufficient information by employing 

other procedures.
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Introduction

HUD's Standard EEO 

Process

Both Sandra Chavis, Director of HUD's Office of Departmental EEO, and 

Sandra Hobson, Director of HUD's EEO Division (within the Office of 

Departmental EEO), explained to us the steps that are involved in handling 

any EEO complaint. According to the two directors, the first step in HUD's 

EEO process is the filing of an informal complaint by an employee. One or 

more EEO counselors are then assigned to the case in this initial stage. 

Their job includes advising the complainant concerning the EEO process, 

reviewing each of the allegations in the complaint, and attempting to 

resolve them. If any allegation in an informal complaint cannot be resolved 

at this stage, the complainant may file a formal complaint.2

If a formal complaint is filed, it is reviewed within the Office of 

Departmental EEO, which informs the complainant of the allegations it has 

accepted for investigation. The next step, according to Ms. Chavis, is to 

contract with an appropriate firm on the GSA schedule for an investigation. 

The investigation must be completed within 180 days of the formal 

complaint filing date unless the complainant agrees to an additional 

90 days. After the investigation, Ms. Chavis, as Director of the Office of 

Departmental EEO, renders a final agency decision concerning the case, 

which may be appealed to the Equal Employment Opportunity Commission 

(EEOC) or a district court. A complainant may file a civil action in a district 

court if HUD has not issued a final agency decision after 180 days from the 

time that the formal complaint was filed.

Chronology of Subject 

Complaint and Contracting 

Events

On November 12, 1995, IG Gaffney appointed an African-American male as 

the OIG's Deputy Assistant IG for Investigation. The Deputy Assistant IG 

subsequently applied and was not accepted for the position of Assistant IG 

for Investigation. On December 9, 1997, the IG selected a white male, who 

had served as Associate Counsel to the IG, for the position. That same day 

the Deputy Assistant IG learned that he would not receive a Senior 

Executive performance-based bonus.

2

According to Ms. Chavis, only the allegations that the counselors have received, reviewed, 

and attempted to resolve become part of the formal investigation.
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On January 14, 1998, the Deputy Assistant IG filed an informal complaint, 

alleging that he was discriminated against because of his race when he was 

not selected for the position of Assistant IG for Investigation, when he was 

not awarded a Senior Executive performance-based bonus, and when 

management treated him disparately in work assignments. The complaint 

further alleged that these actions were part of a pattern and practice of 

discrimination in the OIG involving many aspects of employment. On 

February 12, 1998, after attempts to resolve the informal complaint through 

counseling had failed, the Deputy Assistant IG filed a formal complaint. On 

May 15, 1998, Ms. Hobson accepted the first two allegations in the 

complaint for investigation but rejected the third because the Deputy 

Assistant IG had declined to complete the counseling process for this 

allegation.3

Following its standard process, on May 26, 1998, HUD contracted for a 

formal investigation of the two accepted allegations with a GSA-schedule 

investigative firm, Counter Technology Inc. (CTI), for $2,700. HUD's usual 

cost for any EEO investigation is approximately $3,000. Ms. Chavis and 

Ms. Hobson told us that because they had believed this to be a high-profile 

case, they contracted with CTI, a firm that had a record of providing HUD 

with high-quality investigative reports. Additionally, Ms. Hobson insisted 

that CTI assign its best investigator. CTI began its investigation by June 11, 

1998, and proceeded, with an approved investigative plan, to schedule and 

conduct interviews of pertinent individuals. CTI fully expected to complete 

the investigation by August 11, 1998, HUD's 180-day deadline for issuing a 

final agency decision.

However, in the middle of July 1998, the General Counsel asked Howard 

Glaser, then HUD's Deputy General Counsel for Programs and Regulations 

and now Counsel to the Secretary, to review a request from IG Gaffney for 

legal representation in the EEO investigation. Mr. Glaser told us that in 

responding to the IG's request he had asked Ms. Chavis and Ms. Hobson 

about the status of the investigation. According to Mr. Glaser, they told him 

that no investigator had been assigned and no investigation was underway. 

Mr. Glaser stated that he became very concerned because at this time the 

180-day deadline for completing the investigation was only 10 or 20 days

3

On Sept. 25, 1998, Ms. Chavis informed the Deputy Assistant IG's attorney that HUD had 

reversed its earlier decision and accepted all of the complainant's allegations for 

investigation.
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away. Mr. Glaser told us that he had reported this information to HUD's 

Deputy Secretary, Saul N. Ramirez, Jr.

After Mr. Glaser contacted Deputy Secretary Ramirez to discuss the 

complaint, Mr. Ramirez asked Ms. Hobson about the status of the case.4

According to Deputy Secretary Ramirez, she told him that no investigation 

was underway. Deputy Secretary Ramirez told us that he called a meeting 

with Mr. Glaser, Ms. Hobson, and Ms. Chavis.5

 He recalled that the meeting 

had focused on the high level of the officials involved and the timeliness of 

the EEO process, among other matters. At this meeting, Deputy Secretary 

Ramirez decided to deviate from the normal process and hire a non-GSAschedule firm to investigate the complaint. According to Mr. Ramirez, 

Mr. Glaser recommended the decision, Ms. Chavis concurred with the 

decision, and Ms. Hobson disagreed.

We were unable to determine whether Mr. Glaser or Deputy Secretary 

Ramirez knew that CTI was already investigating the complaint when they 

decided to hire a non-GSA-schedule firm. They told us that Ms. Chavis 

and/or Ms. Hobson had informed them that no investigation was underway 

when they first inquired about the status of the EEO case, even though this 

information was incorrect. Moreover, both officials said Ms. Chavis and 

Ms. Hobson were in the meeting in which the decision was made to hire a 

non-GSA-schedule firm; and yet, here again, they did not learn that an 

investigation was underway. Instead, Mr. Glaser told us that he learned 

sometime after the non-GSA-schedule firms had begun their investigation 

that a CTI investigator had been assigned to the case and that he 

immediately directed the EEO office to suspend CTI's contract. Deputy 

Secretary Ramirez, on the other hand, told us that it was later on the day 

that the meeting was held with Mr. Glaser, Ms. Hobson, and Ms. Chavis that 

Ms. Hobson told him for the first time that HUD had contracted with a GSAschedule contractor a few days earlier but that HUD had already 

terminated the contract. The CTI investigation, however, was put on hold 

on August 5, 1998—after the meeting at which the hiring of a non-GSA4

Deputy Secretary Ramirez told us that he first became aware of the Deputy Assistant IG's 

complaint in the summer of 1998 when he received a copy of the complaint in the normal 

course of business. His next involvement occurred when he was contacted by Mr. Glaser.

5

We asked Deputy Secretary Ramirez to check his calendar to ascertain the exact date of the 

meeting, but he was unable to find the meeting scheduled on his calendar. He was able to 

tell us only that the meeting had occurred in the summer of 1998.
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schedule firm was decided upon and well before those firms began their 

investigation. The CTI contract was thereafter terminated.

When we attempted to determine what Ms. Hobson and Ms. Chavis had 

told Deputy Secretary Ramirez and Mr. Glaser about the status of the 

investigation, HUD officials refused to allow us to reinterview Ms. Hobson 

and Ms. Chavis. Mr. Glaser told us, however, that it made no difference 

when he learned of the CTI investigation because HUD officials had 

decided that they wanted to contract with a more credible outside 

investigator.

Once the decision was made to procure the services of a non-GSA-schedule 

contractor, Mr. Glaser became deeply involved in the reprocurement of the 

investigative services. Mr. Glaser told us that he wanted to issue a solesource contract to Deval Patrick or someone of similar stature. Mr. Patrick, 

a partner with the firm Day, Berry & Howard, LLP, had previously served as 

an Assistant Attorney General in the U.S. Department of Justice's Civil 

Rights Division and had gained national recognition as chairman of Texaco 

Inc.'s Equality and Fairness Task Force, formed as part of the 1996 

settlement of a race discrimination suit brought by Texaco's AfricanAmerican employees. However, on the advice of HUD procurement 

personnel, Mr. Glaser decided to conduct a limited competition. 

To do this, Mr. Glaser contacted the Deputy Assistant IG's lead attorney 

sometime before August 11, 1998, the original deadline of the EEO 

complaint investigation, and asked if he would agree to a 90-day extension 

to complete the EEO investigation. During the conversation, Mr. Glaser 

stated that HUD was contracting with Mr. Patrick to conduct the 

investigation. The lead attorney agreed verbally to the extension.6

Mr. Glaser also wrote a Statement of Work (SOW), tailored after the 

standard GSA-schedule EEO investigation SOW, specifically adding a 

requirement that an attorney conduct the investigation. Mr. Glaser then 

contacted Kumiki Gibson, an attorney with Williams & Connolly who had 

worked as a trial attorney in the Justice Department's Civil Rights Division 

and as Counsel to Vice President Albert Gore, Jr., and asked her to provide 

a list of potential contractors. Mr. Glaser developed a source list based on 

this conversation. Despite the fact that the SOW called for an attorney to 

conduct the investigation, the final list of seven sources included only two 

6

On Aug. 12, 1998, the complainant's lead attorney agreed in writing to an Aug. 11, 1998, 

formal request from HUD's EEO Division for a time extension to complete the investigation.
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law firms, Mr. Patrick's and Ms. Gibson's. The other sources on the list 

were investigative and accounting firms. Mr. Glaser provided the list to 

HUD procurement personnel to prepare an RFQ7

 to each firm, which was 

issued on August 5, 1998. It required all proposals to be submitted by 

August 11, 1998.

HUD received a proposal from Decision Strategies/Fairfax International on 

August 10, 1998, and Day, Berry & Howard, LLP on August 11, 1998. Day, 

Berry & Howard, LLP's proposal was expressly contingent upon the award 

of a separate contract to Ms. Gibson and Williams & Connolly. Because the 

RFQ called for only one contractor, that same day the HUD Contracting 

Officer signed an amendment,8

 allowing HUD to award separate contracts 

for portions of the SOW and extending the time for receipt of proposals to 

August 12, 1998. HUD received Williams & Connolly's proposal on 

August 12, 1998. Although the proposals of Williams & Connolly and Day, 

Berry & Howard, LLP were conditioned upon dividing the tasks in the SOW 

between the two firms, neither proposal described how the tasks were to 

be divided. By a letter dated August 20, 1998, 8 days after the extended time 

for receipt of proposals, Ms. Gibson informed HUD that Williams & 

Connolly would focus on specific incidents or acts of alleged 

discriminatory conduct and Day, Berry & Howard, LLP would focus on 

alleged systematic problems, such as discriminatory practices. Mr. Glaser 

and two other HUD officials evaluated the three proposals and 

recommended awarding separate contracts to Williams & Connolly and 

Day, Berry & Howard, LLP.

On August 26, 1998, HUD awarded purchase orders to Williams & Connolly 

in the amount of $49,875 and to Day, Berry & Howard, LLP in the amount of 

$48,000. Mr. Glaser told us that he reviewed the investigative plan and 

spoke with the investigators concerning various issues during the 

investigation. Despite his deep involvement in the formation and 

administration of these contracts, Mr. Glaser denied being the Government 

Technical Representative (GTR) and referred to his role as such as a myth. 

After IG Gaffney testified before your Committee concerning Mr. Glaser's 

involvement in the EEO process, Mr. Glaser instructed that the contract be

7

Although HUD identified the solicitation as a Request for Quotations, HUD and the offerors 

referred to their responses as proposals.

8

Although the amendment was signed on Aug. 11, 1998, its effective date was Aug. 10.
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modified to remove his name as the GTR and to substitute Ms. Chavis's 

name in that role. 

Upon learning of the contracts with outside law firms for the EEO 

investigation, IG Gaffney sent two letters to the EEOC—dated 

September 1, 1998, and September 2, 1998—requesting that EEOC assume 

responsibility for the subject EEO complaint. As the basis for her request, 

the IG accused senior HUD management of misconduct in hiring outside 

firms to investigate the EEO complaint and in creating an environment in 

which she was unable to obtain a fair investigation regarding that 

complaint. EEOC denied this request on September 11, 1998. IG Gaffney 

renewed her request on September 15, 1998. On October 28, 1998, HUD 

contracted with Donald Bucklin of Squire, Sanders & Dempsey, in the 

amount of $100,000, to assist HUD in defending against the Deputy 

Assistant IG's EEO complaint. Among other tasks, Mr. Bucklin was to 

prepare a report defending HUD's handling of the EEO investigation. On 

November 10, 1998, the EEOC again denied IG Gaffney's request that 

EEOC assume responsibility for the EEO investigation. On December 23, 

1998, Mr. Bucklin issued his report, which concluded that HUD's 

contracting procedures for the outside investigators were appropriate and 

consistent with federal acquisition law and regulations.9

On December 29, 1998, Deputy Secretary Ramirez referred the subject EEO 

case to EEOC for final decision. As impetus, the referral letter cited what 

HUD considered to be inappropriate intervention in that agency's decisionmaking process by a HUD OIG audit of the EEO complaint process and by 

our investigation. On January 29, 1999, EEOC declined the referral, stating 

that despite HUD's request, EEOC does not draft final agency decisions 

because it is an appellate body concerning such decisions.

On April 20, 1999, based on HUD's failure to issue a final agency decision, 

the Deputy Assistant IG filed suit in the District Court for the District of 

Columbia. The Deputy Assistant IG alleged in his complaint that the EEO 

investigation had been completed in December 1998. On June 28, 1999, a 

HUD official confirmed that the investigation was complete but told us that 

9

In reviewing HUD's contracting procedures relative to the Deputy Assistant IG's EEO 

complaint, we reviewed Mr. Bucklin's report. We found that the report contained factual 

errors and incorrect legal citations. See HUD: Review of Bucklin Report Prepared to Assist 

HUD in Defending Against EEO Complaint by HUD's Deputy Assistant Inspector General

(GAO/OSI-99-16R, Aug. 3, 1999).
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because HUD is no longer required to issue a final agency decision, the 

report will not be finalized.

FAR Violations in HUD 

Purchase Orders for 

EEO Investigation of 

IG

The Competition in Contracting Act (CICA) (41 U.S.C. § 253 (a)(1)(A) 

(1994)) requires full and open competition in government procurements. A 

few exceptions to this requirement are authorized by 41 U.S.C. section 253 

(c)(3)(C); FAR section 6.3. Before awarding a contract using 

noncompetitive procedures, an agency must prepare a written Justification 

and Approval (J&A) containing sufficient facts and rationale to justify the 

specific exemption relied upon. (41 U.S.C. § 253 (f)(3); FAR § 6.303-2)

HUD's J&A for limiting the competition to seven offerors cites the expert 

exception to full and open competition (41 U.S.C. § 253(c)(3)(C); FAR 

§ 6.302-3(a)(2)(iii)) as authority for limiting competition and not 

synopsizing in the CBD. However, HUD did not present in its J&A, or in its 

subsequent submission to us, any justification for concluding that the 

contractors should be considered experts for the purpose of the expert 

exception to full and open competition.

The expert exception to full and open competition was added to CICA by 

section 1055 of the Federal Acquisition Streamlining Act of 1994 (Pub. L. 

No. 103-355, § 1055, 108 Stat. 3243, 3265 (1994)) to allow agencies to 

acquire the services of an expert for any current or anticipated litigation or 

dispute.10 Neither the statute nor its legislative history defines the term 

“expert” or indicates any reason for the addition of the exception, and 

CICA is similarly silent. While the FAR provides a few examples of the 

services an expert might provide, neither it nor any other section of the 

FAR defines the term “expert.”

In the only judicial or GAO decision interpreting the expert exception to 

full and open competition, the Comptroller General sustained a bid protest 

against the U.S. Air Force, finding that a sole-source contract to an 

incumbent litigation-support contractor was not justified by the expert 

exception to full and open competition. (SEMCOR, Inc.; H.J. Ford 

Associates, Inc., B-279794, B-279794.2, B-279794.3 July 23, 1998.) After 

considering several definitions of the term “expert” proposed by the 

10An expert exception to full and open competition for armed services acquisitions was also 

added to CICA by the Federal Acquisition Streamlining Act of 1994 (Pub. L. No. 103-355, 

§ 1005, 108 Stat. 3243, 3254 (1994)).
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parties—as well as 31A Am. Jur. 2d at 19-20, 61-65, Expert and Opinion 

Evidence, sections 1, 55-58—the Comptroller General concluded the 

following:

“For the purpose of the exception ... experts may be individuals who possess special skill or 

knowledge of a particular subject, that may be combined with experience, which enables 

them to provide opinions, information, advice, or recommendations to those who call upon 

them.”

Regardless of whether the investigation of the Deputy Assistant IG's EEO 

complaint constituted a current or anticipated litigation or dispute, we do 

not believe that the services provided by the law firms here meet this 

definition. While providing legal advice could qualify an individual as an 

expert, it is not at all clear how much of the work performed for HUD 

involved this service. Indeed, HUD hired the law firm of Squire, Sanders & 

Dempsey exclusively to provide “expert services to the Department 

officials and attorneys to assist in the defense of claims asserted” in the 

EEO case brought by the Deputy Assistant IG. Furthermore, there is no 

reason to believe that EEO investigators possess the special skill or 

knowledge that would render them experts for the purpose of the CICA 

exception, since it is reasonable to conclude that many competent 

providers of such services exist and that such investigations are 

commonplace. Accordingly, we believe that HUD could not properly rely 

upon the expert exception to limit competition in this procurement.

In a March 9, 1999, memorandum to us, HUD maintained that even if it 

improperly relied upon the expert exception, HUD properly conducted the 

procurement using the simplified acquisition procedures of FAR part 13. 

While the simplified acquisition procedures allow limited competition for 

contracts with an anticipated value of less than $100,000, FAR section 

5.101(a)(1) requires that agencies synopsize contract actions with an 

anticipated value in excess of $25,000 in the CBD. HUD argues that because 

synopsis in the CBD can add up to 45 days to the procurement process, its 

urgent need for the services would have justified an exception to the 

synopsis requirement.

FAR section 5.202(a)(2) provides an exception to the requirement for 

synopsis in situations of unusual or compelling urgency where the 

government would be seriously injured if the agency complies with the 

requirement. We do not believe that sufficient urgency existed to justify an 

exception to the synopsis requirement.
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HUD prepared the J&A for this procurement on August 4, 1998, 6 days 

before the deadline for completing the investigation. The J&A explains the 

urgency of the procurement as follows:

“It is also crucial that the investigation be accomplished in a timely manner in view of the 

potential consequences (i.e. the integrity of the Department in fulfilling it's [sic] mission) of 

having a highly visible individual (the HUD IG) charged with ‘allegations' and no action 

being taken immediately by the Department.”

This explanation ignores the fact that HUD contracted with an investigative 

firm through GSA's multiple-award-schedule contract on May 26, 1998, to 

conduct the EEO investigation. After receiving HUD's approval of its 

investigative plan, that firm began conducting interviews with the 

expectation of completing the investigation within the 180-day limit. As 

HUD had processed the complaint in a timely fashion, no urgent 

requirement existed to contract with another investigator; and HUD cannot 

justify its failure to synopsize on that basis.

Deputy Secretary Ramirez stated that he was unaware of these facts in the 

summer of 1998 when he decided to hire a law firm to conduct the 

investigation. Moreover, Deputy General Counsel Glaser informed us that, 

for several reasons, including his perception of an environment of 

pervasive racial discrimination in the OIG and the need for a more credible 

investigator, HUD would have hired another contractor regardless of 

whether he and Deputy Secretary Ramirez knew that another firm had 

begun the investigation. Assuming these statements are true, Deputy 

Secretary Ramirez's tardy decision, which was based on facts known to 

HUD since February 1998, did not create a compelling urgency that would 

allow HUD to deviate from procurement procedures.

An agency may not avoid competition requirements, such as synopsis of 

proposed contract actions, on the basis of a lack of advance acquisition 

planning. (10 U.S.C. § 2304(f)(5)(A); FAR § 6.301(c)(1).) FAR section 7.101 

defines acquisition planning as the following:

“[T]he process by which the efforts of all personnel responsible for an acquisition are 

coordinated and integrated through a comprehensive plan for fulfilling the agency need in a 

timely manner and at a reasonable cost.”
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The Deputy Assistant IG filed his EEO complaint on February 12, 1998, 

placing HUD on notice of the need for an investigation to be completed 

within 180 days. Cognizant that this was a high-profile case, the Director of 

HUD's EEO Division handpicked an investigative firm off the GSA 

schedule. Coordination with Deputy Secretary Ramirez in a timely fashion 

would have enabled the agency to decide whether the EEO Director's 

selection of a GSA firm was appropriate. Since Deputy Secretary Ramirez 

claimed, however, that he was not aware of the complaint until the summer 

of 1998, when he received a copy in the normal course of business, HUD 

officials did not engage in proper advance planning. HUD therefore created 

the urgency on which it now relies. Given these circumstances, we do not 

believe that HUD has shown a reasonable basis for avoiding competition 

requirements.11

Deviations From 

Standard Procedures

The decision to use non-GSA-schedule firms to conduct the EEO 

investigation was a significant deviation from HUD's standard EEO 

process. Ms. Chavis told us that she was shocked that HUD spent 

approximately $100,000 on this investigation when the typical EEO 

investigation, including those against Senior Executive Service (SES) 

members, costs approximately $3,000. She also informed us that other 

high-ranking HUD officials had filed EEO complaints since the Deputy 

Assistant IG's complaint and that HUD assigned GSA-schedule contractors 

to investigate each of these complaints. In a separate case, according to 

Ms. Chavis, one complainant specifically requested the same type of 

investigation that the Deputy Assistant IG had received.

The degree of involvement in this matter by Mr. Glaser is equally 

extraordinary. As Mr. Glaser acknowledged during our interview, he is 

widely perceived as Secretary Andrew Cuomo's “right-hand man” and his 

“hammer.” In his position as Deputy General Counsel for Programs and 

Regulations, Mr. Glaser had served as the GTR for legal service contracts 

but had had no responsibility for EEO or procurement matters. 

Nonetheless, he took the lead in terminating the CTI contract and 

contracting with Mr. Patrick and Ms. Gibson, to include compiling the list 

of potential contractors, contacting the Deputy Assistant IG's counsel to 

request an extension of time to complete the investigation, evaluating the 

11Each of the reasons advanced by Deputy Secretary Ramirez and Deputy General Counsel 

Glaser for contracting with the law firms existed at the time HUD contracted with the GSAschedule firm on May 26, 1998.
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proposals, reviewing the investigative plan, and consulting with the firms 

during the investigation.

Both Ms. Hobson and Ms. Chavis told us that Mr. Glaser's involvement in 

this investigation was unprecedented. According to Ms. Chavis, she was so 

concerned by Mr. Glaser's order to terminate the CTI contract that she met 

with Deputy Secretary Ramirez to confirm the independence of her office. 

The Deputy Assistant IG's attorney told us that he had never before been 

contacted by an agency's Office of General Counsel, rather than the EEO 

office, to request an extension of an EEO investigation. Mr. Glaser had so 

clearly taken control of the investigation that the Contracting Officer listed 

Mr. Glaser, rather than a representative of the EEO office, as the GTR.

HUD's Justifications 

for Deviating From 

Standard Procedures

HUD officials acknowledged that the contracting and investigative 

procedures employed in this case deviated from HUD's usual EEO process 

but insisted that the deviation was justified for a number of reasons. HUD 

officials told us that they deviated from the normal process because of their 

perception that there is an environment of pervasive racial discrimination 

in the OIG. Those officials told us that a contributing factor to this 

perception is that HUD headquarters is staffed predominantly by AfricanAmericans, that HUD serves a predominantly minority clientele, and that 

minorities have been traditionally underrepresented in the OIG. According 

to the officials, this perception was reinforced by recent congressional and 

mayoral complaints against the IG for racial bias in the OIG's selection of 

three cities with African-American mayors as sites for HUD's Urban Fraud 

Initiative.12 HUD officials told us that it was their understanding that the 

OIG had an excessive number of EEO complaints when compared with 

other HUD entities. However, they did not specify the number of 

complaints upon which they were relying. These officials also referred to a 

recent meeting with members of the OIG staff who had complained about 

discrimination problems in the OIG. The officials further stated that they 

had taken these concerns seriously.

HUD officials further told us that they had no choice but to contract for an 

outside investigator with unquestionable credentials to conduct the EEO 

investigation. They felt this was necessary in part because of the persons 

12To combat fraud involving HUD funding, HUD mortgage insurance, and public housing in 

urban areas, the HUD OIG, with assistance from the U.S. Department of Justice, developed 

the HUD Urban Fraud Initiative.
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Page 14 GAO/OSI-99-6 HUD Contracts for EEO Investigation of IG

involved and the serious nature of the allegations. They noted that the 

complainant is the Deputy Assistant IG for Investigation, a member of the 

SES, and the highest-ranking African-American official in OIG. For further 

support, they stated that the allegations involve a presidentially appointed 

member of the SES who they feared would retaliate against OIG employees 

for participating in the EEO process. In support of their position, they also 

asserted that the allegations are broad in scope, focusing not only on 

discrete personnel actions but also on the environment in the OIG, which 

was described by the complainant as containing pervasive racism. HUD 

officials additionally told us that HUD's African-American employees 

wanted a credible outside investigator and would judge the senior 

management's commitment to equal opportunity by how this case was 

handled.

Many of the justifications HUD provided to us for deviating from its usual 

EEO process are subjective in nature and therefore difficult to assess. 

Moreover, some of the justifications HUD presented to us appear to be 

based on only the speculation of the HUD officials. For example, Deputy 

Secretary Ramirez's perception that the OIG had an environment of 

pervasive racial discrimination was based solely on what he had heard and 

read in the newspapers. Although his perception had existed for some time 

prior to the Deputy Assistant IG's complaint, he admitted that he had never 

inquired of HUD employees if such conditions existed nor had HUD's 

Office of Departmental EEO told him that the OIG had extensive problems 

concerning EEO issues. Indeed, when we inquired, we found that the OIG 

did not have an excessive number of EEO complaints, which contradicted 

what Mr. Glaser and others had told us. Additional information we found 

substantially contradicted several other factors cited as justifications for 

HUD's actions.

Not an Excessive Number of 

EEO Complaints in the OIG

Mr. Glaser expressed concern about the high number of EEO complaints by 

employees in the OIG especially when compared with the number of 

complaints in other HUD units. He cited this as a factor supporting the 

choice to contract with non-GSA-schedule law firms. Mr. Glaser added that 

during Secretary Cuomo's tenure (1997-present), HUD's Office of General 

Counsel, with about half as many EEO complaints as the OIG, was a good 

basis for comparison when considering the two offices' relative size and 

personnel composition.

The Director of HUD's EEO Division provided us data indicating that the 

rate of EEO complaints filed by OIG employees was equal to or below that 
B-282123

Page 15 GAO/OSI-99-6 HUD Contracts for EEO Investigation of IG

of HUD's overall filing rate for 3 of the 5 fiscal years, including the most 

recent 3 years, since IG Gaffney was sworn in in 1993. Further, since the 

IG's confirmation, the OIG's rate of complaint filing had never been the 

highest in HUD and had always been much lower than that of HUD's Office 

of the Secretary. Indeed, the OIG's rate of EEO complaint filings was never 

twice that of the Office of General Counsel during Secretary Cuomo's 

administration. In fiscal year 1998, it was lower than that of the Office of 

General Counsel. See table 1.

Table 1: EEO Complaints Filed as a Percentage of Total Employees in Units

Unit FY 94 FY 95 FY 96 FY 97 FY 98

Region 1 0.2 a

Region 2 0.2 a

Region 3 0.4 a

Region 4 1.0 a

Region 5 0.9 a

Region 6 1.7 a

Region 7 0.8 a

Region 8 0.4 a

Region 9 1.1 a

Region 10 0.5 a

Office of the Secretary 5.0 7.5 8.8 10.3 17.5

Field Management 30.0 0.9 0.0 0.6 0.3

Community Planning and 

Development

1.2 0.7 0.2 2.5 1.0

Office of General Counsel 1.9 1.4 0.6 1.4 1.3

Office of Legislative and 

Congressional Relations

0.0 0.0 0.0 0.0 6.7

Government National Mortgage 

Association

0.0 0.0 1.6 0.0 1.8

Office of Housing 3.9 1.3 1.0 1.5 1.7

Office of Public and Indian Housing 1.7 1.4 1.4 2.3 1.2

Office of Fair Housing and Equal 

Opportunity

10.4 5.1 2.8 6.3 3.5

Policy Development and Research 0.0 0.0 0.0 0.0 1.0

Administration 1.3 0.7 1.0 1.8 0.9

Office of Inspector General 2.2 2.0a 1.0 1.7 1.1

Office of the Chief Financial Officer 1.6 0.3 0.0 0.0 0.0

Continued
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Page 16 GAO/OSI-99-6 HUD Contracts for EEO Investigation of IG

Note: Percentages are based on the number of unit employees at the end of the fiscal year and the 

number of complaints filed in the unit during the fiscal year.

a

In 1995, part way through fiscal year 1995, HUD began counting its regional employees (for reporting 

purposes) as part of the headquarters-based units in which they functioned. The OIG, however, had 

always counted its employees as headquarters-based; none had been included in previous regional 

figures.

Source: GAO analysis of HUD data.

Further, according to Ms. Hobson, OIG did not have a problem regarding 

the number of EEO complaints. Nor had the OIG come to her office's 

attention as having racial discrimination problems. According to 

Ms. Hobson, she also believed that the EEO Division had not made a 

finding of racial discrimination against IG Gaffney in the previous 5 years.

Justice and PCIE Found No 

Basis for Complaints of 

Racial Bias in Urban Fraud 

Initiative City Selection

Both Mr. Glaser and Stephen Carbury, HUD's Chief Procurement Officer, 

stated that the negative publicity surrounding IG Gaffney's selection of 

Baltimore, San Francisco, and New Orleans as sites for HUD's Urban Fraud 

Initiative was a factor in breaking with normal HUD contracting and 

investigative procedures and contracting with non-GSA-schedule law firms. 

The three cities had African-American mayors; and in March 1998, a U.S. 

Representative asked the President's Council on Integrity and Efficiency 

(PCIE)13 to investigate whether a pattern of racial bias in the OIG had led to 

the cities' selection.14 In April 1998, the National Conference of Black 

Mayors and the U.S. Conference of Mayors called on the Congress and 

others to authorize an inquiry into the matter.

Office of Lead Based Paint 0.0 0.0 4.0 10.7 4.3

HUD as a whole 1.4 1.4 1.0 2.0 1.5

Unit FY 94 FY 95 FY 96 FY 97 FY 98

Continued from Previous Page

13Established by executive order in 1981, PCIE is an interagency council charged with 

promoting integrity and effectiveness in federal programs. Its membership consists 

primarily of presidentially appointed and Senate-confirmed IGs. The chairman of PCIE is 

the Deputy Director for Management of the Office of Management and Budget. Among its 

other members is an official of the Federal Bureau of Investigation (FBI), designated by the 

Director of the FBI.

14In his letter to PCIE, Representative Elijah Cummings, when asking for an investigation, 

also indicated his concern about the lack of minorities in key positions within the HUD OIG 

and HUD itself. HUD officials also raised this and similar congressional concerns as 

supporting their decision to select non-GSA-schedule firms.
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Page 17 GAO/OSI-99-6 HUD Contracts for EEO Investigation of IG

As part of its normal process, PCIE initially presented the complaint it 

received against IG Gaffney to the Department of Justice's Public Integrity 

Section. PCIE requested a determination of whether the complaint, if 

proved, would constitute prosecutable violations of federal criminal law. 

Prior to HUD's award of the contracts to the non-GSA-schedule firms, the 

Justice Department determined that there was insufficient information to 

warrant a criminal investigation. This conclusion was subsequently 

reported to PCIE. Further, PCIE's Integrity Committee,15 after a thorough 

administrative review of the complaint, concluded in January 1999 that the 

complaint was not substantiated. It found no evidence to support the 

allegations of racial bias related to the selection of the three cities.

While HUD officials could not have known that PCIE would conclude that 

the complaint was unsubstantiated when they awarded the contracts, they 

could have learned that Justice had already determined that there was 

insufficient information to warrant a criminal investigation. HUD officials 

also could have known that the HUD OIG's Diversity Liaison Group 

supported the Urban Fraud Initiative and IG Gaffney's selection of the 

three selected cities when the group met in April 1998. The group, made up 

of minority and nonminority OIG employees, reaffirmed its support for the 

Urban Fraud Initiative and for the OIG's independence to make its own 

decisions, when it met later in April 1998 with the Chairman and members 

of the Subcommittee on Veterans Affairs, HUD, and Independent Agencies, 

House Committee on Appropriations.

Not Permitted to Determine 

Authenticity of Reported 

OIG Staff Discussions of 

Discrimination Problems

According to Mr. Glaser, about seven OIG employees came to Samuel 

Hutchinson, HUD's Associate General Counsel for Human Resources, and 

him asking to be removed from the OIG because of the office's racial 

climate and their treatment by managers. Mr. Glaser did nothing to address 

the issue. He cited this meeting and a meeting between those OIG staff and 

the Chairman of a congressional committee to complain about the OIG's 

racial climate as factors in deviating from HUD's usual EEO process to 

investigate the subject EEO complaint. Mr. Hutchinson repeatedly 

recommended that we speak with these and other OIG employees to hear 

their views about the OIG's racial climate. Yet when we requested to speak 

with the OIG staff who had reportedly spoken with Mr. Hutchinson, 

15The Integrity Committee, whose chairperson is PCIE's FBI representative, is responsible 

for receiving, reviewing, and referring for investigation allegations of wrongdoing against 

IGs and Deputy IGs.
B-282123

Page 18 GAO/OSI-99-6 HUD Contracts for EEO Investigation of IG

Mr. Glaser, and members of Congress, our request was denied; and we were 

told that they all wished to remain anonymous.

Unique Positions of Persons 

Involved and Seriousness of 

the Allegations

HUD officials also stated that their deviation from normal procedures was 

justified by the positions of the persons involved in the complaint and the 

nature of the allegations. The combination of the Deputy Assistant IG's 

position as the highest-ranking African-American in the OIG, the IG's 

unique position within the agency, and the serious nature of the allegations 

did make this a high-profile case. However, we found that HUD had 

previously handled other high-profile cases that shared many of the same 

characteristics without resorting to such extraordinary measures.

High Profile HUD officials cited the high profile, unique nature of this case as a reason 

for hiring a non-GSA-schedule investigator. However, Ms. Chavis and 

Ms. Hobson recognized early on that the case had a high profile and had 

already taken steps to ensure that it was handled by a high-quality 

investigator. Thus, HUD selected an investigative firm with a record of 

providing high-quality investigative reports and requested the firm's best 

investigator. According to Ms. Hobson, she was comfortable with the 

ability of the firm and the investigator. We found nothing to suggest that the 

actions of HUD's EEO professionals were not adequate to address the 

seriousness of this complaint.

Senior Positions of Persons 

Involved

HUD officials also cited the senior positions of those involved in the 

subject EEO complaint as a factor in going outside HUD's EEO 

procurement norm. The complainant, in an SES position as the Deputy 

Assistant IG for Investigation, was the highest-ranking African-American in 

the OIG. The official who allegedly discriminated against him, IG Gaffney, 

held a presidentially appointed SES position as head of the OIG. However, 

this was not the first time that HUD had dealt with an EEO complaint 

involving SES employees. In fact, two other HUD SES employees filed EEO 

complaints against other HUD SES officials during the same period as the 

subject complaint. The usual GSA-schedule investigators were assigned to 

their complaints.

No Indication That IG Would 

Retaliate

HUD officials referred to IG Gaffney's ability to retaliate against OIG 

employees who participate in the EEO process as another reason for using 

a non-GSA-schedule firm. They also voiced concern that the employees'
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Page 19 GAO/OSI-99-6 HUD Contracts for EEO Investigation of IG

fears of retaliation would have a chilling effect on their willingness to 

participate in the EEO investigation.16

This was not the first EEO complaint in which IG Gaffney was alleged to 

have discriminated against employees. According to a HUD OIG summary, 

between her appointment in 1993 and the subject EEO complaint in 

February 1998, IG Gaffney was named eight times in formal EEO 

complaints.17 HUD's Office of Departmental EEO did not take any special 

precautions in these complaints to protect the complainants or witnesses 

against retaliation or intimidation by the IG. Nor did we find evidence that 

IG Gaffney had retaliated against these employees. OIG's rate of 

complaints, which approximates that of HUD as a whole (see table 1), 

suggests that OIG employees are not afraid to use the EEO process. 

Moreover, when we assessed the minutes of an April 27, 1998, meeting 

between members of the Subcommittee on Veterans Affairs, HUD, and 

Independent Agencies, House Committee on Appropriations, and 

representatives of the OIG's 27-member Diversity Liaison Group, we found 

that the group had commented frankly about the OIG's minority recruiting, 

diversity, racial climate, and work environment. This too suggests that OIG 

employees feel free to speak their minds without fear of retaliation or 

intimidation by the IG.

We also found no evidence that a non-GSA-schedule firm was better 

equipped than a GSA-schedule firm to protect employees against 

retaliation. Moreover, title VII specifically protects employees from 

retaliation by employees for participating in the EEO process,18 and we 

found no evidence that this statutory provision was inadequate to protect 

employees from retaliation by the IG.

16On Oct. 19, 1998, OIG initiated an audit into the procurement of EEO investigative services 

by HUD's Office of Procurement and Contracts (OPC). Although HUD officials have cited 

this action as an example of IG Gaffney's abuse of her auditing power, it was an inquiry into 

the procurement of the EEO investigative services rather than an attempt to discourage 

HUD or OIG employees from participating in the EEO investigation. Moreover, OPC 

personnel do not appear to have been intimidated by IG Gaffney as they refused to provide 

the documents requested by the OIG team and promptly reported the incident to HUD 

management, who requested a PCIE investigation.

17As of July 19, 1999, four of the eight complaints had been dismissed and the dismissals 

upheld after appeal; two complaints had been settled; one complaint had been dismissed 

with the dismissal appealed to the EEOC; and no final agency decision had been reached 

regarding the eighth complaint, with the case thus ongoing.

1842 U.S.C. § 2000e-3(a) (1994).
Page 20 GAO/OSI-99-6 HUD Contracts for EEO Investigation of IG

Scope and 

Methodology

We conducted our investigation between December 1998 and March 1999. 

During that time, we interviewed HUD senior management officials, HUD 

procurement officials, HUD EEO officials, and senior officials of the HUD 

OIG. We also interviewed employees of EEOC and the complainant's 

attorneys. In addition, we reviewed documents, contracts, and statistical 

data pertinent to the scope of our investigation.

We requested an interview with the Secretary of HUD, Andrew Cuomo. Our 

request was denied. In addition, senior HUD management denied our 

requests to conduct initial and follow-up interviews of other pertinent HUD 

personnel, citing its ongoing EEO investigation, and insisted that 

Mr. Bucklin, acting as agency counsel, attend interviews of other HUD 

employees. Mr. Bucklin disrupted an interview with Deputy Secretary 

Ramirez by constantly objecting to our questions and taking breaks to 

confer with the Deputy Secretary outside of our presence. Although Gail 

Laster, HUD's General Counsel, wanted to talk with us without Mr. Bucklin 

present, HUD officials refused. Further, HUD officials requested that we 

interview a group of OIG employees who, the officials said, had complained 

about the OIG's racial climate. However, when we asked to do so, we were 

informed that the individuals wished to remain anonymous.

As agreed with your office, unless you announce its contents earlier, we 

plan no further distribution of this report until 30 days after the date of this 

letter. At that time, we will send copies of this report to interested 

congressional committees and make copies available to others upon 

request. If you have questions about our investigation, please contact me or 

Ronald Malfi at (202) 512-6722. John Ryan was a key contributor to this 

case.

Sincerely yours,

Robert H. Hast

Acting Assistant Comptroller General

 for Special Investigations

(600503) Letr
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