HOUSING agency cancels contract with PricewaterhouseCoopers

<br>WASHINGTON (AP) _ The Department of Housing and Urban Development is canceling a contract with accounting giant PricewaterhouseCoopers after accusations that a department official improperly steered

Wednesday, June 6th 2001, 12:00 am

By: News On 6

WASHINGTON (AP) _ The Department of Housing and Urban Development is canceling a contract with accounting giant PricewaterhouseCoopers after accusations that a department official improperly steered work to the company.

The New York-based company, which denies any wrongdoing, agreed to return some money after the housing agency's inspector general recommended that HUD revoke the contract and hire another firm.

``HUD's procurement integrity was compromised and HUD may not have received the best value'' on two contracts worth $12.9 million, Sandy Elion, a district inspector general, wrote in a report released Wednesday.

PricewaterhouseCoopers spokesman David Nestor said the company disagrees with the allegations and believes ``both the agency and taxpayers have benefitted from our work.''

Elion said HUD's deputy chief financial officer wanted to work with the company on Federal Housing Administration matters because of a previous relationship with the company.

The unnamed official asked the company to draw up objectives for two contracts, which the agency then used to solicit bids, according to Elion's report. The company bid on those contracts in 1999 and 2000 and received them. The inspector general said that broke federal guidelines.

With one of the contracts, competing companies were given just one week to prepare their paperwork, while PricewaterhouseCoopers had months, the report said. The company did not submit the lowest bid, the inspector general said.

Nestor said the company did not prepare the contract objectives before submitting bids.

``PricewaterhouseCoopers won these contracts fair and square, without regard to any relations or unfair advantage,'' Nestor said.

Elion recommended HUD ``take appropriate administrative and disciplinary actions'' against the department official responsible.

Daniel R. Murphy, the agency's chief of staff, said the agency had stripped the official of contracting duties and other actions would be considered.

Murphy also said the agency would institute new ``safeguards to ensure a fair and open competition,'' while barring PricewaterhouseCoopers from rebidding for the criticized contract. Other contracts the company has with HUD are not affected.

The company has agreed to repay more than $700,000, according to the report.