No-Bid Contracts Mark Obama Administration

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Thursday, 14 Nov 2013 01:13 PM

By Jennifer G. Hickey

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From the Obamacare website to Michelle Obama's "Let's Move" anti-obesity logo, the administration is increasingly doling out no-bid contracts, prompting allegations of favoritism and questions about shoddy work.

Federal agencies awarded $115.2 billion in no-bid contracts in fiscal 2012, an 8.9 percent increase from $105.8 billion in 2009, even as total contract spending decreased by 5 percent during the period.

The jump followed President Barack Obama's 2009 statement that no-bid contracts were "wasteful" and "inefficient" and that his administration would "dramatically reform the way we do business on contracts across the entire government."

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Some of the contractors have failed miserably, as in the case of CGI Federal, which won a $290 million no-bid contract to develop the HealthCare.gov website. After the website rollout debacle, CGI Federal was given a contract extension to try to fix the problem.

Questions have been raised over how the Canadian company – whose vice president is a college classmate of Michelle Obama – received the no-bid contract after compiling a track record of mishaps.

Other no-bid contracts, such as the one for the first lady's anti-obesity project, have raised concerns that the administration is rewarding political allies.

Judicial Watch recently released documents obtained through the Freedom of Information Act that showed a marketing firm with political ties to the Obama campaign was awarded a $100,000 contract to design the "Let's Move" logo for the childhood anti-obesity campaign.

Documents from the Department of Agriculture – the agency that distributes funds for the $4.5 billion Healthy, Hunger-Free Kids Act championed by the first lady – said the contract was non-competitive because the firm "had specific expertise in performing the type of work needed for this program."

The firm, Shepardson, Stern & Kaminsky, had served as the official agency for Obama for America's youth initiatives in 2008 and 2012, and was the recipient of a $2 million deal from the Department of Education for the “TEACH” teacher recruitment campaign in 2010.

According to their website, the firm helped produce the controversial Obama ad "My First Time," in which actress Lena Dunham breathlessly describes her first time voting.

One document obtained by Judicial Watch is an email from a USDA deputy director asking, "What did we get for our money . . . any deliverable? I know this is an unauthorized commitment: however the contractor still must provide evidence of what is being paid for."

Judicial Watch charged "the arrangement violates federal contracting rules."

Another contract that drew criticism from lawmakers and demands for an investigation was the $443 million sole-source contract to Siga Technologies in May 2011 to deliver 1.7 million doses of an experimental smallpox drug, even though there were questions about whether it was needed.

The controlling shareholder of Siga is billionaire Ronald O. Perelman, a prominent Democratic Party donor. After two years, the Health and Human Services inspector general determined no laws were violated but said it was unclear whether Siga "knowingly misrepresented its size" so it could meet the threshold as a small business.

Contracts awarded without competition made up about 23 percent of money awarded last year, compared with 20 percent in fiscal 2009, says an analysis by Bloomberg Government.

Problems associated with no-bid contracts run across multiple federal agencies

The General Accountability Office found the Small Business Administration often failed to properly apply sole-source policy. While a written justification is required for sole-source contracts over $20 million, only three of the 14 no-bid contracts that were awarded by the SBA included the required submission, GAO said in a 2012 report.

"We found that in most cases, SBA did not discuss the new justification requirements in its correspondence to agencies," the GAO reported.

The GAO earlier this year also concluded the Defense Department failed to justify several sole-source contracts. From October 2009 to September 2012, the Pentagon awarded more than 50 no-bid contracts worth more than $20 million, the GAO said.

A review of contracts found six cases in which Pentagon officials failed to "meet the new justification requirement because contracting officials were not aware of the requirement or because they were confused about the type of justification to complete," the GAO said.

In 2010, Democratic Sen. Claire McCaskill of Missouri and Republican Sen. Susan Collins of Maine called into question sole-source contracts totaling more than $1.3 million issued by the U.S. Postal Service.

Not only did the procurement lack sufficient competition, the lawmakers noted in a letter to USPS administrators, but the recipients appeared "to have had prior business relationships with the senior official responsible for the program and oversight of the contract."

After conducting an examination, the USPS' IG reported that 359 contracts were awarded to former postal service executives without competition and, in three circumstances, the former employees were hired at nearly twice their former pay to advise new executives.

Scott Amey of the Project on Government Oversight says accurately calculating the number of sole-source contracts awarded annually is difficult because it depends on how the contracts are measured and which government data is used in the analysis.

For example, an extension of an existing contract may not be viewed as a separate contract itself.

In 2007, CGI Federal was awarded a broad contract to perform technology services, and an extension was awarded in September 2011 to work specifically on HealthCare.gov. That extension is considered a "delivery order" rather than a contract because it grew out of an existing contract.

Amey says that should not dissuade lawmakers from seeking greater transparency and accountability in government contracting, particularly as more contracts are given for services, rather than for tangible targets.

"In a lot of these instances, the procurement specialists might have to cut corners, so they tend to simply go back to the incumbents. It is very easy for a contractor to go back to someone they already know," Amey tells Newsmax.

In some respects, Amey says, it is going to be more difficult to avoid sole-source contracts, as some industries are becoming more consolidated.

"Particularly in Defense and now in IT and the medical field, there has been a lot of consolidation in those industries, which has lessened the number of firms from which  procurers have to choose," says Amey, who adds that a comprehensive examination of how contracts are awarded and assessed needs to be performed.


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