Nine federal agencies have begun a review of an estimated $70 million in existing government contracts with scandal-ridden Enron Corp. and Arthur Andersen LLP to determine whether they are being carried out “in accordance with contract terms and proper business practices.”

Office of Management and Budget Director Mitch Daniels called for the review in a letter to the General Services Administration (GSA) Friday, which oversees contracting for the federal government. Copies of the letter were forwarded to the individual agencies that have contracts with the two companies.

In addition to agency review of existing contracts, Daniels asked the GSA to determine whether the business practices of Enron and Andersen were sufficient to meet the regulatory requirements for the award of future government contracts. If the companies are not meeting the terms of existing contracts, he suggested that the GSA consider suspending them.

Daily reports about “document shredding, manipulative accounting practices, and other activities” suggest Enron and Andersen have fallen short of government standards for contractors, the letter indicated, and “could reflect poorly on these corporate entities and their ability to provide quality work.”

The Federal Procurement Data System reports that numerous federal agencies have contracts with Enron and Andersen, Daniels said, adding that there was “significant contract activity” between the federal government and the troubled companies through the third quarter of last year.

Federal government regulations require that “firms seeking to do business with the government [must] have a satisfactory record of business ethics and integrity,” he noted.

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