Drayage Contract at GSA's Franconia, Virginia, Depot

GAO was asked to review a contract awarded by the General Services Administration (GSA) for drayage services at the Franconia, Virginia, Depot. Specifically, GAO was asked to determine whether: (1) the contractor's wage and benefit compensation practices were legal, and (2) the efficiency of the warehouse had been adversely affected by the contractor's performance. The record showed that, in September 1980, after formal advertisement, GSA awarded the drayage contract to the George W. Smyth, Jr., Company. The contract was effective for a 1-year period and could be renewed by mutual agreement of the parties involved. The renewal was to be in 1-year increments, but it was not to extend beyond 3 years from the first effective date. As the new contractor, the Smyth Company decided not to hire most of the former contractor's employees even though several had more than 20 years of service at the depot. Subsequently, complaints began to surface concerning problems that allegedly resulted from the contractor's performance. GSA, however, consistently stated that, until June 1981, the contractor's performance was adequate. At that time, the service deteriorated, and the contractor was repeatedly warned of contract violations. Finally, the Smyth Company advised GSA that it no longer had funds to fulfill its contract obligations and asked that the contract be terminated. GSA immediately requested three companies to file rates for the drayage service on an interim basis and, from these companies, selected Bailey Express, Inc. to perform the remainder of the contract period.

In its review, GAO found that, although the contractor's compensation practices have been properly referred to the Department of Labor for investigation, the Department has not rendered a decision on the legality of the contractor's actions. Additionally, GAO found that the problems regarding the delay in orders and customers picking up their own orders were not generally the contractor's fault, but the result of a hiring freeze, budget cuts, and a new computer program installed at the depot. When the contractor's performance deteriorated and began to impact on the depot's efficiency, GSA quickly corrected the situation by modifying the previous contract and by selecting an interim contractor who appears to be performing well. GAO believes that the changes in the new contract should improve depot operations significantly.