Iraq Contract
Questions raised about ethics of Iraq contract By Seth Borenstein
Knight Ridder Newspapers
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Notebook: Death rate rises again in MarchWASHINGTON — A Virginia company that got a
$240 million federal contract to develop "a
competitive private sector" in Iraq helped write
the specifications for the work that knocked its
competitors out of the running, a federal
investigation has found. A draft memo by the inspector general at the
U.S. Agency for International Development
blasts the agency for giving a competitive
advantage to BearingPoint, a consulting
company that's in court defending itself against
allegations of other contracting irregularities
and disclosures that its officials inaccurately
stated its profits in 2003. BearingPoint spent five months helping the
USAID write the job specifications and got
permission to spend money to train employees
to work in Iraq long before the contract went out
for public bid. The firm's competitors had only a week to come
up with their own bids for the complicated
program after final revisions were made, the
inspector general found. Assistant Inspector General Bruce Crandlemire
wrote in the March 22 report that the procedure
creates a "significant appearance of conflict of
interest," but seems to be legal. It's an example of the government ignoring
contracting rules that are designed to get good
deals and good services for taxpayers, said
Pete Singer, an expert in government
contracting at the Brookings Institution, a
moderate research center. "We've basically abandoned the best of a free
market and created the worst of a monopoly for
ourselves," Singer said Friday. Others agreed. "No company who gets to write a contract
should get the contract," said Keith Ashdown,
the vice president of the liberal fiscal-watchdog
group Taxpayers for Common Sense. "It's akin
to bringing Babe Ruth to a Little League
baseball game."
BearingPoint, formerly KPMG Consulting, and
its employees have given more than $117,000
to the 2000 and 2004 Bush election campaigns,
more than any other major Iraqi contractor,
according to the Center for Responsive Politics,
a watchdog group that tracks campaign
contributions. The company disputes the inspector general's
(IG) conclusions. "BearingPoint was selected through a
transparent and competitive bidding process to
undertake the challenging economic
governance project in Iraq," spokesman John
Schneidwind wrote in an e-mail. He noted that
the company did similar work for the USAID in
Afghanistan, in Montenegro and in Serbia's
province of Kosovo. At the start, the USAID intended to give
BearingPoint a no-bid contract because it had
used the company for most of its economic-
reform contracts in the past, according to the IG. So from January through May 2003, USAID and
BearingPoint officials worked on 16 versions of
what the work and the budget would look like.
Last April, the USAID reversed itself and
decided to put the contract up for public bidding. The agency's attorneys decided the bidding
process would have "substantial fairness," even
with BearingPoint's earlier work, if competitors
had four weeks to prepare their proposals, the
IG wrote. But that's not what happened. On May 28, the USAID sent draft specifications
to 10 potential contractors, then issued a final
request for proposals June 6. The deadline was
June 30. A week before the deadline, the USAID added
an amendment to its specifications that
required much more work from potential
bidders, the IG found. Only one other company,
Booz Allen Hamilton, bid on the contract. On Aug. 14, BearingPoint told the Securities and
Exchange Commission that it had overstated its
net income by $10.8 million for the first three
quarters of its fiscal year 2003. Last March, an $80 million BearingPoint
computer information-services contract in
Florida was withdrawn after critics complained
about the company's close ties to Gov. Jeb
Bush, President Bush's brother. Another BearingPoint contract in Florida, worth
$3 million, was challenged by competitors, who
charged that the company helped write the
state's bid specifications. The resulting lawsuits are pending.
K
Knight Ridder
(view)
Questions raised about ethics of Iraq contract By Seth Borenstein
Knight Ridder Newspapers
E-mail this article
Print this article
Search archiveRelated stories
Notebook: Death rate rises again in MarchWASHINGTON — A Virginia company that got a
$240 million federal contract to develop "a
competitive private sector" in Iraq helped write
the specifications for the work that knocked its
competitors out of the running, a federal
investigation has found. A draft memo by the inspector general at the
U.S. Agency for International Development
blasts the agency for giving a competitive
advantage to BearingPoint, a consulting
company that's in court defending itself against
allegations of other contracting irregularities
and disclosures that its officials inaccurately
stated its profits in 2003. BearingPoint spent five months helping the
USAID write the job specifications and got
permission to spend money to train employees
to work in Iraq long before the contract went out
for public bid. The firm's competitors had only a week to come
up with their own bids for the complicated
program after final revisions were made, the
inspector general found. Assistant Inspector General Bruce Crandlemire
wrote in the March 22 report that the procedure
creates a "significant appearance of conflict of
interest," but seems to be legal. It's an example of the government ignoring
contracting rules that are designed to get good
deals and good services for taxpayers, said
Pete Singer, an expert in government
contracting at the Brookings Institution, a
moderate research center. "We've basically abandoned the best of a free
market and created the worst of a monopoly for
ourselves," Singer said Friday. Others agreed. "No company who gets to write a contract
should get the contract," said Keith Ashdown,
the vice president of the liberal fiscal-watchdog
group Taxpayers for Common Sense. "It's akin
to bringing Babe Ruth to a Little League
baseball game."
BearingPoint, formerly KPMG Consulting, and
its employees have given more than $117,000
to the 2000 and 2004 Bush election campaigns,
more than any other major Iraqi contractor,
according to the Center for Responsive Politics,
a watchdog group that tracks campaign
contributions. The company disputes the inspector general's
(IG) conclusions. "BearingPoint was selected through a
transparent and competitive bidding process to
undertake the challenging economic
governance project in Iraq," spokesman John
Schneidwind wrote in an e-mail. He noted that
the company did similar work for the USAID in
Afghanistan, in Montenegro and in Serbia's
province of Kosovo. At the start, the USAID intended to give
BearingPoint a no-bid contract because it had
used the company for most of its economic-
reform contracts in the past, according to the IG. So from January through May 2003, USAID and
BearingPoint officials worked on 16 versions of
what the work and the budget would look like.
Last April, the USAID reversed itself and
decided to put the contract up for public bidding. The agency's attorneys decided the bidding
process would have "substantial fairness," even
with BearingPoint's earlier work, if competitors
had four weeks to prepare their proposals, the
IG wrote. But that's not what happened. On May 28, the USAID sent draft specifications
to 10 potential contractors, then issued a final
request for proposals June 6. The deadline was
June 30. A week before the deadline, the USAID added
an amendment to its specifications that
required much more work from potential
bidders, the IG found. Only one other company,
Booz Allen Hamilton, bid on the contract. On Aug. 14, BearingPoint told the Securities and
Exchange Commission that it had overstated its
net income by $10.8 million for the first three
quarters of its fiscal year 2003. Last March, an $80 million BearingPoint
computer information-services contract in
Florida was withdrawn after critics complained
about the company's close ties to Gov. Jeb
Bush, President Bush's brother. Another BearingPoint contract in Florida, worth
$3 million, was challenged by competitors, who
charged that the company helped write the
state's bid specifications. The resulting lawsuits are pending.
